<PAGE> 1
As filed with the Securities and Exchange Commission on August 26, 1998
1933 Act Registration No. 2-57526
1940 Act Registration No. 811-2699
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ___
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Post-Effective Amendment No. 45 X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 41 X
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(Check appropriate box or boxes.)
AIM GROWTH SERIES
--------------------------------------------------
(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
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Copy to:
<TABLE>
<S> <C> <C>
Michael A. Silver, Esq. Samuel D. Sirko, Esq. Arthur J. Brown, Esq.
INVESCO (NY), Inc. A I M Advisors, Inc. R. Darrell Mounts, Esq.
50 California Street, 27th Floor 11 Greenway Plaza, Suite 100 Kirkpatrick & Lockhart LLP
San Francisco, CA 94111 Houston, Texas 77046 1800 Massachusetts Avenue, N.W.,
(Name and Address of Agent for 2nd Floor
Service) Washington, D.C. 20036
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):
immediately upon filing pursuant to paragraph (b)
---
on (date) pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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X on September 8, 1998, pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2)
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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
Certain Series of the AIM Growth Series are "feeder funds" in a
"master/feeder" fund arrangement. This Post-Effective Amendment No. 45 includes
a manually executed signature page for one master trust, Growth Portfolio.
<PAGE> 2
AIM GROWTH SERIES
CONTENTS OF POST-EFFECTIVE AMENDMENT
THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF AIM GROWTH SERIES
CONTAINS THE FOLLOWING DOCUMENTS:
Facing Sheet
Contents of Post-Effective Amendment
Cross-Reference Sheet
Part A - Prospectuses - Class A and Class B
- AIM Basic Value Fund
- AIM Europe Growth Fund
- AIM International Growth Fund
- AIM Japan Growth Fund
- AIM Mid Cap Equity Fund
- AIM New Pacific Growth Fund
- AIM Small Cap Growth Fund
- AIM Worldwide Growth Fund
- Prospectuses - Advisor Class
- AIM Basic Value Fund
- AIM Europe Growth Fund
- AIM International Growth Fund
- AIM Japan Growth Fund
- AIM Mid Cap Equity Fund
- AIM New Pacific Growth Fund
- AIM Small Cap Growth Fund
- AIM Worldwide Growth Fund
Part B - Statements of Additional Information - Class A and Class B
- AIM Equity Funds: AIM Worldwide Growth Fund, AIM
International Growth Fund, AIM New Pacific Growth Fund,
AIM Europe Growth Fund, AIM Mid Cap Equity Fund and
AIM Japan Growth Fund
- AIM Small Cap Growth Fund and AIM Basic Value Fund
- Statements of Additional Information - Advisor Class
- AIM Equity Funds: AIM Worldwide Growth Fund, AIM
International Growth Fund, AIM New Pacific Growth Fund,
AIM Europe Growth Fund, AIM Mid Cap Equity Fund and
AIM Japan Growth Fund
- AIM Small Cap Growth Fund and AIM Basic Value Fund
Part C - Other Information
Signature Pages
- AIM Growth Series
- Growth Portfolio
Exhibits
<PAGE> 3
AIM GROWTH SERIES
CROSS-REFERENCE SHEET
(as required by Rule 495)
<TABLE>
<CAPTION>
N-1A ITEM NO. PROSPECTUS LOCATION
- ------------- -------------------
<S> <C> <C>
I. CLASS A AND CLASS B
PART A
Item 1 Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights
Item 4. General Description of Registrant . . . . . . Cover Page; Summary; Investment Program; Risk Factors;
Management; Organization of the Trust; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . . . . . See Annual Report
Item 6. Capital Stock and Other Securities . . . . Summary; Organization of the Trust; How to Purchase Shares;
Dividends, Distributions and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . Management; How to Purchase Shares; Terms and
Conditions of Purchase of the AIM Funds; Special Plans;
Exchange Privilege; Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . Special Plans; How to Redeem Shares;
Determination of Net Asset Value
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
II. ADVISOR CLASS PROSPECTUS LOCATION
-------------------
PART A
Item 1 Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary; Table of Fees and Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights
Item 4. General Description of Registrant . . . . . . Cover Page; Summary; Investment Program; Risk Factors;
Management; Organization of the Trust; General Information
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . Management; General Information
Item 5A. Management's Discussion of Fund Performance . . . . . . . . . . . . . . . . . . . . See Annual Report
Item 6. Capital Stock and Other Securities . . . . Summary; Organization of the Trust; How to Purchase Shares;
Dividends, Distributions and Tax Matters; General Information
Item 7. Purchase of Securities Being Offered . . . . . . . . . . Management; How to Purchase Shares; Terms and
Conditions of Purchase of the AIM Funds; Special Plans;
Exchange Privilege; Determination of Net Asset Value
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . Special Plans; How to Redeem Shares;
Determination of Net Asset Value
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not applicable
III. CLASS A AND CLASS B STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
PART B
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . Cover Page; Introduction; General Information
About the Funds; Miscellaneous Information
Item 13. Investment Objectives and Policies . . . . . . . . . . .Investment Objectives and Policies; Investment
Limitations; Options and Futures; Risk Factors;
Execution of Portfolio Transactions
Item 14. Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . Miscellaneous Information
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . Management; Miscellaneous Information
Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . Execution of Portfolio Transactions
Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . . . . General Information About the Funds
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . Net Asset Value Determination; How to Purchase and
Redeem Shares; Programs and Services For Shareholders
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . Investment Results
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
IV. ADVISOR CLASS STATEMENT OF ADDITIONAL INFORMATION LOCATION
--------------------------------------------
PART B
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . Cover Page; Introduction; General Information
About the Funds; Miscellaneous Information
Item 13. Investment Objectives and Policies . . . . . . . . . . Investment Objectives and Policies; Investment
Limitations; Options and Futures; Risk Factors;
Execution of Portfolio Transactions
Item 14. Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal Holders of Securities . . . . . . . . . . . . Miscellaneous Information
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . Management; Miscellaneous Information
Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . Execution of Portfolio Transactions
Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . . . . General Information About the Funds
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . Net Asset Value Determination; How to Purchase and
Redeem Shares; Programs and Services For Shareholders
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . Investment Results
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE> 5
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM BASIC VALUE FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM BASIC VALUE FUND, formerly AIM
America Value Fund (the "Fund"), which is one of several series investment
portfolios comprising AIM Growth Series (the "Trust"), an open-end, series,
management investment company.
The Fund is a diversified portfolio which seeks long-term capital appreciation
by investing all of its investable assets in the Value Portfolio (the
"Portfolio"), which, in turn, invests primarily in equity securities of
companies domiciled in the United States that, at the time of purchase, have
market capitalizations of greater than $500 million and that A I M Advisors,
Inc. ("AIM") believes to be undervalued in relation to long-term earning power
or other factors.
The Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................... 2
THE FUND.................................. 4
Table of Fees and Expenses.............. 4
Financial Highlights.................... 5
Performance............................. 6
Investment Program...................... 6
Risk Factors............................ 9
Management.............................. 9
Organization of the Trust and the
Portfolio............................ 12
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........... A-1
Introduction to The AIM Family of
Funds................................ A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares.................. A-1
Terms and Conditions of Purchase of the
AIM Funds............................ A-2
Special Plans........................... A-9
Exchange Privilege...................... A-12
How to Redeem Shares.................... A-14
Determination of Net Asset Value........ A-19
Dividends, Distributions and Tax
Matters.............................. A-19
General Information..................... A-23
APPLICATION INSTRUCTIONS.................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND AND THE PORTFOLIO
The Fund is a diversified series of the Trust. The Portfolio is a diversified
series of Growth Portfolio.
INVESTMENT OBJECTIVE. The Fund and the Portfolio each seeks long-term capital
appreciation.
PRINCIPAL INVESTMENTS. The Fund invests all of its investable assets in the
Portfolio, which, in turn, invests primarily in equity securities of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than $500 million and that AIM believes to be
undervalued in relation to long-term earning power or other factors.
INVESTMENT MANAGERS. The Portfolio is managed by AIM. AIM and its worldwide
asset management affiliates provide investment management and/or administrative
services to institutional, corporate and individual clients around the world.
AIM is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares. Initial
investments in any class of shares must be at least $500 and additional
investments must be at least $50. The minimum initial investment is modified for
investments through tax-qualified retirement plans and accounts initially
established with an Automatic Investment Plan. The distributor of the Fund's
shares is A I M Distributors, Inc.("AIM Distributors"), P.O. Box 4739, Houston,
TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
2
<PAGE> 7
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on a monthly basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund or the Portfolio will
achieve its investment objective. The Fund's net asset value will fluctuate,
reflecting fluctuations in the market value of the Portfolio's securities. The
Portfolio may engage in certain options and futures transactions to attempt to
hedge against the overall level of investment risk associated with its present
or planned investments. Such transactions involve certain risks and transaction
costs. See "Investment Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 8
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
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<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.73% 0.73%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses (after reimbursement includes interest
expense not subject to reimbursement).................. 0.70% 0.70%
---- ----
Total Fund Operating Expenses..................... 1.78% 2.43%
==== ====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended December 31, 1997
restated to reflect AIM's undertaking to limit the Fund's expenses effective
January 1, 1998 (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the annual rate of 1.75% and 2.40% of the average
daily net assets of the Fund's Class A and Class B shares, respectively. AIM
has voluntarily agreed to continue this limitation through May 31, 2000.
"Other expenses" include custody, transfer agency, legal, audit and other
operating expenses. See "Management" herein and the Statement of Additional
Information for more information.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $72 $108 $145 $251
Class B shares
Assuming a complete redemption at end of
period(2)..................................... $76 $109 $154 $263
Assuming no redemption........................... $25 $ 77 $131 $263
</TABLE>
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes deduction of the applicable contingent deferred sales charge.
(3) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S OR THE PORTFOLIO'S
PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 9
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report thereon also
is included in the Statement of Additional Information. The unaudited financial
statements and notes, for the semi-annual period ended June 30, 1998, are also
included in the Statement of Additional Information.
AIM BASIC VALUE FUND
(FORMERLY AIM AMERICA VALUE FUND AND PRIOR TO THAT GT GLOBAL AMERICA VALUE FUND)
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------------------------- -------------------------------
OCTOBER 18, 1995
SIX MONTHS (COMMENCEMENT SIX MONTHS
ENDED YEAR ENDED OF OPERATIONS) ENDED YEAR ENDED
JUNE 30, DECEMBER 31, THROUGH JUNE 30, DECEMBER 31,
1998 ----------------- DECEMBER 31, 1998 -----------------
(UNAUDITED) 1997(D) 1996(D) 1995(D) (UNAUDITED) 1997(D) 1996(D)
----------- ------- ------- ---------------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year........ $17.25 $14.65 $12.76 $11.43 $ 17.04 $14.54 $12.75
------ ------- ------ ------ ------- ------- ------
Net investment income (loss).............. 0.03**** 0.09*** (0.01)** 0.03* (0.03)**** (0.01)*** (0.10)**
Net realized and unrealized gain (loss) on
investments.............................. 1.09 3.87 1.94 1.30 1.09 3.83 1.93
------ ------- ------ ------ ------- ------- ------
Net increase (decrease) in net asset value
resulting from investment operations..... 1.12 3.96 1.93 1.33 1.06 3.82 1.83
------ ------- ------ ------ ------- ------- ------
Distributions to shareholders:
From net investment income............... -- (0.03) -- -- -- -- --
From net realized gain on investments.... -- (1.33) (0.04) -- -- (1.32) (0.04)
------ ------- ------ ------ ------- ------- ------
Total distributions................ -- (1.36) (0.04) -- -- (1.32) (0.04)
------ ------- ------ ------ ------- ------- ------
Net asset value, end of year.............. $18.37 $17.25 $14.65 $12.76 $ 18.10 $17.04 $14.54
====== ======= ====== ====== ======= ======= ======
Total investment return(a)(c)...... 6.49% 27.23% 15.12% 11.64% 6.16% 26.44% 14.35%
====== ======= ====== ====== ======= ======= ======
Ratios and supplemental data:
Net assets, end of period (in 000's)...... $8,869 $7,668 $2,529 $ 870 $20,175 $16,717 $5,503
Ratio of net investment income (loss) to
average net assets:
With reimbursement by INVESCO (NY),
Inc.(b)................................ 0.28% 0.56% (0.10)% 1.10% (0.37)% (0.09)% (0.75)%
Without reimbursement by INVESCO (NY),
Inc.(b)................................ (0.21)% (0.42)% (3.61)% (47.44)% (0.86)% (1.07)% (4.26)%
Ratio of operating expenses to average net
assets:
With reimbursement by INVESCO (NY),
Inc.(b)................................ 1.73% 1.99% 2.00% 2.00% 2.38% 2.64% 2.65%
Without reimbursement by INVESCO (NY),
Inc.(b)................................ 2.22% 2.97% 5.51% 50.54% 2.87% 3.62% 6.16%
Ratio of interest expense to average net
assets................................... N/A 0.03% N/A N/A N/A 0.03 N/A
Portfolio turnover rates(b)+.............. 132% 93% 256% N/A 132% 93% 256%
Average commission rate per share paid on
portfolio transactions................... $ 0.03 $0.0551 N/A $ 0.03 N/A N/A N/A
<CAPTION>
CLASS B
----------------
OCTOBER 18, 1995
(COMMENCEMENT
OF OPERATIONS)
THROUGH
DECEMBER 31,
1995(D)
----------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of year........ $11.43
------
Net investment income (loss).............. 0.01*
Net realized and unrealized gain (loss) on
investments.............................. 1.31
------
Net increase (decrease) in net asset value
resulting from investment operations..... 1.32
------
Distributions to shareholders:
From net investment income............... --
From net realized gain on investments.... --
------
Total distributions................ --
------
Net asset value, end of year.............. $12.75
======
Total investment return(a)(c)...... 11.55%
======
Ratios and supplemental data:
Net assets, end of period (in 000's)...... $1,254
Ratio of net investment income (loss) to
average net assets:
With reimbursement by INVESCO (NY),
Inc.(b)................................ 0.45%
Without reimbursement by INVESCO (NY),
Inc.(b)................................ (48.09)%
Ratio of operating expenses to average net
assets:
With reimbursement by INVESCO (NY),
Inc.(b)................................ 2.65%
Without reimbursement by INVESCO (NY),
Inc.(b)................................ 51.19%
Ratio of interest expense to average net
assets................................... N/A
Portfolio turnover rates(b)+.............. N/A
Average commission rate per share paid on
portfolio transactions................... N/A
</TABLE>
- ---------------------------
* Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(1.11) and
$(1.13) for Class A and Class B shares, respectively, from October 18,
1995 to December 31, 1995.
** Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(0.50) and
$(0.59) for Class A and Class B shares, respectively, for the year ended
December 31, 1996.
*** Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(0.07) and
$(0.17) for Class A and Class B shares, respectively, for the year ended
December 31, 1997.
**** Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment income (loss) per share would have been
$(.01) and $(.07) for Class A, Class B, respectively, for the six months
ended June 30, 1998.
+ Portfolio turnover rate and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon average shares
outstanding during the period.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE AVERAGE MONTHLY NUMBER
AMOUNT OF DEBT AMOUNT OF DEBT OF REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
---------- -------------- ----------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998.......... $ -- $2,167 1,593,391 $ 0.001
December 31, 1997....................... $ -- $ 778 930,597 $0.0008
</TABLE>
Average amount of debt outstanding during the period is calculated on a daily
basis.
5
<PAGE> 10
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Fund is long term
capital appreciation. The Fund seeks its investment objective by investing all
of its investable assets in the Portfolio, which, in turn, normally invests at
least 65% of its total assets in equity securities, including common stocks,
preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than $500 million and that AIM believes to be
undervalued in relation to long-term earning power or other factors. The
remainder of the Portfolio's assets may be invested in common stocks, preferred
stocks, convertible debt securities and warrants of companies domiciled in the
United States that are smaller than those defined above and non-convertible debt
securities, U.S. government securities and high quality money market
instruments, such as U.S. government obligations, high grade commercial paper,
bank certificates of deposit and bankers' acceptances, of issuers domiciled in
the United States. The Portfolio also may invest up to 10% of its total assets
in securities of foreign issuers in the form of ADRs or other similar securities
convertible into securities of foreign issuers. There can be no assurance that
the Fund or the Portfolio will achieve its investment objective.
INVESTMENT POLICIES. The debt obligations that the Portfolio may invest in are
limited to U.S. government securities and corporate debt securities of issuers
domiciled in the United States. The Portfolio will limit its purchases of debt
securities to investment grade obligations, as defined above.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Portfolio may employ one or more of the following strategies in
order to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In selecting issuers for the
Portfolio, AIM attempts to identify securities of issuers whose prospects and
growth potential, in AIM's opinion, are currently undervalued by investors. In
AIM's view, an issuer may show favorable prospects as a result of many factors,
including changes in management, shifts in supply and demand conditions in the
industry in which it operates, technological advances, new products or product
cycles, or changes in macroeconomic trends. The securities of such issuers may
be undervalued by the market due to many factors, including market decline,
tax-loss selling, poor economic conditions, limited coverage by the investment
community, investors' reluctance to overlook perceived financial, operational,
managerial or other problems affecting the issuer or the industry in which it
operates and other factors. AIM will attempt to identify those undervalued
issuers with the potential for attractive returns.
6
<PAGE> 11
For purposes of this Prospectus, an issuer typically is considered as
domiciled in the United States if it is (a) organized under the laws of, or has
its principal office in the United States, or (b) normally derives 50% or more
of its total revenues from business in the United States, provided that, in
AIM's view, the value of such issuer's securities tends to reflect developments
in the United States to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in the
United States and considered by AIM to be located in the United States may have
substantial foreign operations or subsidiaries and/or export sales exceeding in
size the assets or sales in the United States.
AIM allocates investments among fixed income securities of particular issuers
on the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. If
market interest rates decline, fixed income securities generally appreciate in
value and vice versa.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, AIM may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Portfolio may invest less than 65% of its total
assets in the types of securities covered by its primary investment policy.
Under a defensive strategy, the Portfolio may hold U.S. dollars and/or may
invest any portion of its assets in high quality domestic debt securities or
high quality money market instruments. To the extent the Portfolio adopts a
temporary defensive position, it will not be invested so as to achieve directly
its investment objective.
In addition, the Portfolio may hold U.S. dollars and may invest in domestic
debt securities or high quality money market instruments pending investment of
proceeds from new sales of Fund shares, or to meet its ordinary daily cash
needs. For a description of money market instruments, see "Temporary Defensive
Strategies" in the "Investment Objectives and Policies" section of the Statement
of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by AIM or
its affiliates ("Affiliated Funds"), that in turn are authorized to invest in
the securities of such countries. The Portfolio may invest up to 10% of its
total assets in other investment companies. As a shareholder in an investment
company, the Portfolio would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Portfolio would continue to pay its own management fees and other expenses. AIM
will waive its advisory fee to the extent that the Portfolio invests in an
Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemption of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of the Fund's shares than would be the case if the Portfolio did
not borrow.
A reverse repurchase agreement is a borrowing transaction in which the
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhance the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Fund's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates
7
<PAGE> 12
and prices. The price, which generally is expressed in yield terms, is fixed at
the time the commitment is made, but delivery and payment for the securities
take place at a later date. When-issued securities and forward commitments may
be sold prior to the settlement date, but the Portfolio will purchase or sell
when-issued securities or enter into forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Portfolio. If the
Portfolio disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Portfolio enters into a
transaction on a when-issued or forward commitment basis, the Portfolio will
segregate cash or liquid securities equal to the value of the when-issued or
forward commitment securities with its custodian and will mark to market daily
such assets. There is a risk that the securities may not be delivered and that
the Portfolio may incur a loss.
OPTIONS AND FUTURES TRANSACTIONS. The Portfolio may use options on securities,
options on indices, futures contracts and options on futures contracts to
attempt to hedge against the overall level of investment risk normally
associated with its portfolio. These instruments are 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 or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk
Factors -- Options and Futures Strategies" herein and "Options, Futures and
Currency Strategies" in the Statement of Additional Information.
In addition, the Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio or that AIM intends to include in the
Portfolio's holdings. The Portfolio also may buy and sell put and call options
on stock indexes to hedge against overall fluctuations in the securities markets
or market sectors generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Portfolio may invest in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") or other
similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets. See "Investment Objectives and Policies -- Depositary
Receipts" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval. The investment policies
of the Fund are identical to the investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is
not required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective. If a percentage restriction on investment or utilization
of assets in an investment policy or restriction is adhered to at the time an
investment is made, a later change in percentage ownership of a security or kind
of securities resulting from changing market values or a similar type of event
will not be considered a violation of the Fund's or Portfolio's investment
policies or restrictions.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or shareholders of the
Fund could require the Fund to redeem its interest in the Portfolio. Any such
redemption could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. In addition, a distribution in
kind could result in a less diversified portfolio of investments for the Fund
and could adversely affect its liquidity. Should such a distribution occur, the
Fund could incur brokerage fees or other transaction costs in converting such
securities to cash. Upon redemption, the Board would consider what action might
be taken, including the investment of all the investable assets of the Fund in
another pooled investment entity having substantially the same investment
objective as the Fund or the direct retention by the
8
<PAGE> 13
Fund of its own investment advisor to manage its assets in accordance with its
investment objective, policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the Portfolio. As of the date of this Prospectus, the Fund is the only
institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors,
if any, in the Portfolio. For example, as with all open-end investment
companies, if a large investor were to redeem its interest in the Portfolio, (1)
the Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns, and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. In addition, the value of debt securities held by the Portfolio
will fluctuate with changes in the perceived creditworthiness of the issuers of
such securities and with interest rates.
OPTIONS AND FUTURES TRANSACTIONS. Although the Portfolio is authorized to
enter into options and futures transactions, the Portfolio might not enter into
any such transactions. Options and futures transactions involve certain risks,
which include: (1) dependence on AIM's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
or in the appropriate market sector and movements in interest rates; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, futures contracts or options thereon and movements in the price of the
security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts or options thereon are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's and the Portfolio's Boards of Trustees have overall responsibility
for the operation of the Fund and the Portfolio, respectively. The Trust's and
the Portfolio's Boards of Trustees have approved all significant agreements
between the Trust and the Portfolio on the one side and persons or companies
furnishing services to the Fund and the Portfolio on the other, including the
investment management and administration agreement with AIM, the agreements with
AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM as the
investment manager of the Portfolio include, but are not limited to, determining
the composition of the investment holdings of the Portfolio and placing orders
to buy, sell or hold particular securities. In addition, AIM provides the
following administrative services to the Fund and the Portfolio: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Fund's and the
Portfolio's operations.
The Fund pays AIM administration fees, computed daily and paid monthly, at the
annualized rate of 0.25% of the Fund's average daily net assets. The Fund bears
its pro rata portion of the investment management and administration fees paid
by the Portfolio to AIM. The Portfolio pays AIM such fees, computed daily and
paid monthly, based on the average daily net assets of the Portfolio, at the
annualized rate of 0.475% on the first $500 million, 0.45% on the next $500
million, 0.425% on the next $500 million and 0.40% on all amounts thereafter.
The investment management and administration fees paid by the Fund and the
Portfolio are higher than those
9
<PAGE> 14
paid by most mutual funds. The Fund and Portfolio pay all expenses not assumed
by AIM, AIM Distributors or other agents. AIM has undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the maximum annual rate of 1.75% and 2.40% of the average daily net
assets of the Fund's Class A and Class B shares, respectively.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives.
AIM and its worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM is an indirect wholly owned subsidiary
of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of its Houston office, AIM draws upon
the expertise, personnel, data and systems of other offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), San Francisco,
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Portfolio, AIM employs a team approach, taking advantage of its investment
resources around the world.
The investment professionals primarily responsible for the portfolio
management of the Portfolio are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ----------- -------------------- -------------------
<S> <C> <C>
Bret W. Stanley Portfolio Manager Portfolio Manager for the Portfolio since 1998. He has
Houston since 1998 been associated with AIM and/or its subsidiaries since
1998 and has been an investment professional since 1998.
From 1994 to 1998, he was Vice President and portfolio
manager with Van Kampen American Capital Asset Management,
Inc. From 1991 to 1994, he was Vice President, Securities
Analyst and portfolio manager with Gulf Investment
Management.
Evan G. Harrel Portfolio Manager Portfolio Manager for the Portfolio since 1998. He has
Houston since 1998 been associated with AIM and/or its subsidiaries since
1998 and has been an investment professional since 1983.
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. From 1987 to
1994, he was Vice President and Principal of Fayez Sarofim
& Co.
</TABLE>
With respect to the Portfolio, AIM utilizes a team approach that relies on its
bottom-up, research-intensive, process-driven stock selection capability to
build various investment portfolios. AIM's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set AIM's firmwide economic forecasts and sector and industry
allocations and portfolio management teams responsible for stock selection
decisions. While individual members of AIM's investment team are assigned
primary responsibility for the day-to-day management of the Portfolio along with
similarly managed accounts, the Portfolio is reviewed on a regular basis by the
applicable investment team to monitor compliance with applicable investment
guidelines.
In placing orders for the Portfolio's portfolio securities transactions, AIM
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, AIM may consider a broker/dealer's sale of shares of the
AIM Funds as a factor in considering through whom portfolio transactions will be
effected. Brokerage transactions for the Portfolio may be executed through
affiliates of AIM. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs that the Portfolio
will bear directly and could result in the realization of net capital gains that
would be taxable when distributed to shareholders. See "Dividends, Distributions
and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements.") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors
10
<PAGE> 15
and its predecessor. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges in respect of the outstanding Class B shares attributable to the
distribution efforts of AIM Distributors and its predecessor; provided, however,
that a complete termination of the Class B shares master distribution plan (as
defined in the plan) would terminate all payments by the Fund of asset based
sales charges and service fees to AIM Distributors. Termination of the Class B
shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
11
<PAGE> 16
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST AND THE PORTFOLIO
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business
trust on May 7, 1998. On May 29, 1998, the Trust acquired the assets of and
assumed the liabilities of G.T. Global Growth Series, a Massachusetts business
trust. The Fund constitutes one of the eight separate and distinct series
portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of a fund may
vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Growth Portfolio, a Delaware business trust. Under Delaware law, the Fund and
other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Growth Portfolio's Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Portfolio and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Portfolio or a trustee. The Agreement and Declaration of
Trust also provides for indemnification from the Portfolio property for all
losses and expenses of any shareholder held personally liable for the
Portfolio's obligations. Thus the risk of an investor incurring financial loss
on account of such liability is limited to circumstances in which the Portfolio
itself would be unable to meet its obligations and where the other party was
held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust, to the
Fund and to the Portfolio.
12
<PAGE> 17
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
A-1
<PAGE> 18
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 19
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE> 20
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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
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<PAGE> 21
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
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<PAGE> 22
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
A-6
<PAGE> 23
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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<PAGE> 24
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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
A-8
<PAGE> 25
Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
A-9
<PAGE> 26
exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
A-10
<PAGE> 27
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
A-11
<PAGE> 28
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
A-12
<PAGE> 29
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
A-13
<PAGE> 30
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
A-14
<PAGE> 31
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 32
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
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<PAGE> 33
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 34
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
A-18
<PAGE> 35
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
<PAGE> 36
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
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<PAGE> 37
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 38
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 39
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 40
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 41
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 42
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
AVL-PRO-1
<PAGE> 43
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM EUROPE GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM EUROPE GROWTH FUND (the "Fund"),
which is one of several series investment portfolios comprising AIM Growth
Series (the "Trust"), an open-end, series, management investment company. The
Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in its Primary
Investment Area (as defined herein).
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling 1-
800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 44
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 11
Organization of the Trust............ 13
<CAPTION>
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the
AIM Funds......................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by AIM Advisors, Inc. ("AIM") and is
sub-advised and sub-administered by INVESCO (NY), Inc., (the "Sub-advisor"). AIM
and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 45
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund invests a significant portion of its assets in issuers in a
particular country or region of the world. As a result, the Fund may be subject
to greater risks and may experience greater volatility than a fund that is more
broadly diversified geographically.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 46
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.97% 0.97%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses............................................ 0.57% 0.57%
---- ----
Total Fund Operating Expenses..................... 1.89% 2.54%
==== ====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
rules regarding investment companies.
(2)Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "Terms
and Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales
Charges."
(3)Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.65% of the average daily net
assets of the Fund's Class A and Class B shares, through May 31, 2000. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional Information
for more information. AIM has voluntarily agreed to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rates of 2.00% and 2.65% of the average daily net
assets of the Fund's Class A and Class B shares respectively through May 31,
2000.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Funds, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $73 $112 $152 $265
Class B shares
Assuming a complete redemption at end of
period(2)..................................... $77 $112 $159 $274
Assuming no redemption........................... $26 $ 80 $137 $274
</TABLE>
(1)Assumes payment of maximum sales charge by the investor.
(2)Assumes deduction of the applicable contingent deferred sales charge.
(3)For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 47
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report thereon also
is included in the Statement of Additional Information. The unaudited financial
statements and notes, for the semi-annual period ended June 30, 1998, are also
included in the Statement of Additional Information. Information presented below
for the fiscal years ended December 31, 1988 to 1991 was audited by other
auditors that served as the Fund's independent accountants for those periods.
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------------------------
(UNAUDITED)(D) 1997(D) 1996(D) 1995(D) 1994(D) 1993(D) 1992(D) 1991
-------------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A+:
Per Share Operating Performance:
Net asset value, beginning of
period......................... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59 $ 9.33
-------- -------- -------- -------- -------- -------- -------- ----------
Net investment income........... 0.03 (0.04) (0.03) 0.04 0.06 0.05 0.11** 0.21
Net realized and unrealized gain
(loss) on investments and
foreign
currency....................... 3.90 1.48 2.16 0.95 (0.69) 2.36 (1.19) 0.19
-------- -------- -------- -------- -------- -------- -------- ----------
Net increase (decrease) in net
asset value resulting from
investment operations.......... 3.93 1.44 2.13 0.99 (0.63) 2.41 (1.08) 0.40
-------- -------- -------- -------- -------- -------- -------- ----------
Distributions:
Net investment income.......... -- -- -- (0.10) (0.05) (0.06) -- (0.14)
Net realized gain on
investments.................. -- (0.01) (0.12) (0.04) -- -- -- --
In excess of net investment
income....................... -- -- -- -- -- (0.02) -- --
In excess of net realized gain
on investments............... -- -- -- -- (0.13) -- -- --
-------- -------- -------- -------- -------- -------- -------- ----------
Total distributions....... -- (0.01) (0.12) (0.14) (0.18) (0.08) -- (0.14)
-------- -------- -------- -------- -------- -------- -------- ----------
Net asset value, end of year.... $ 18.25 $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59
======== ======== ======== ======== ======== ======== ======== ==========
Total investment
return(c)............... 27.44%(a) 11.20% 19.61% 9.86% (5.8)% 28.3% (11.3)% 4.3%
Ratios and supplemental data:
Net assets, end of period (in
000's)......................... $493,758 $407,004 $453,792 $483,375 $646,313 $854,701 $781,607 $1,211,709
Ratio of net investment income
(loss) to average net assets:
With expense reductions(b)..... 0.42% (0.29)% (0.26)% 0.38% 0.61% 0.6% 1.2%** 1.7%
Without expense
reductions(b)................ 0.41% (0.43)% (0.32)% 0.32% 0.53% N/A N/A N/A
Ratio of operating expenses to
average net assets:
With expense reductions(b)..... 1.73% 1.75% 1.82% 1.83% 1.73% 1.9% 2.0%** 1.8%
Without expense
reductions(b)................ 1.74% 1.89% 1.88% 1.89% 1.81% N/A N/A N/A
Ratio of interest expense to
average net assets+++.......... 0.28%(b) N/A N/A N/A N/A N/A N/A N/A
Portfolio turnover rate(b)++.... 40% 107% 123% 108% 91% 67% 65% 55%
Average commission rate per
share paid on portfolio
transactions++................. N/A $ 0.0533 $ 0.0277 N/A N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1990 1989* 1988*
---------- -------- ------
<S> <C> <C> <C>
CLASS A+:
Per Share Operating Performance:
Net asset value, beginning of
period......................... $ 10.94 $ 7.77 $ 7.76
---------- -------- ------
Net investment income........... 0.10 (0.02) (0.07)
Net realized and unrealized gain
(loss) on investments and
foreign
currency....................... (1.71) 3.19 0.87
---------- -------- ------
Net increase (decrease) in net
asset value resulting from
investment operations.......... (1.61) 3.17 0.80
---------- -------- ------
Distributions:
Net investment income.......... -- -- --
Net realized gain on
investments.................. -- -- (0.79)
In excess of net investment
income....................... -- -- --
In excess of net realized gain
on investments............... -- -- --
---------- -------- ------
Total distributions....... -- -- --
---------- -------- ------
Net asset value, end of year.... $ 9.33 $ 10.94 $ 7.77
========== ======== ======
Total investment
return(c)............... (14.7)% 40.7% 11.1%
Ratios and supplemental data:
Net assets, end of period (in
000's)......................... $1,428,677 $382,428 $8,376
Ratio of net investment income
(loss) to average net assets:
With expense reductions(b)..... 1.1% (0.6)% (1.0)%
Without expense
reductions(b)................ N/A N/A N/A
Ratio of operating expenses to
average net assets:
With expense reductions(b)..... 1.9% 1.9% 3.6%
Without expense
reductions(b)................ N/A N/A N/A
Ratio of interest expense to
average net assets+++.......... N/A N/A N/A
Portfolio turnover rate(b)++.... 34% 43% 153%
Average commission rate per
share paid on portfolio
transactions++................. N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate, average commission rate and ratio of interest
expense to average net assets are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* The per share data reflects a 2 for 1 stock split effective August 14,
1989.
** Includes reimbursement by the Sub-advisor of Fund operating expenses of
less than one cent per share. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.1% and the ratio of net
investment income to average net assets would have been 1.2%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) The selected per share data were calculated based upon average shares
outstanding during the period.
N/A Not Applicable.
5
<PAGE> 48
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------- DECEMBER 31,
(UNAUDITED)(D) 1997(D) 1996(D) 1995(D) 1994(D) 1993(D)
-------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B+
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 14.06 $12.73 $10.81 $ 9.97 $10.79 $ 9.02
-------- ------- ------- ------- ------- -------
Net investment income (loss)...................... (0.01) (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain (loss) on
investments and foreign currency................ 3.80 1.47 2.15 0.94 (0.69) 1.85
-------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value
resulting from investment operations............ 3.79 1.34 2.04 0.91 (0.69) 1.85
-------- ------- ------- ------- ------- -------
Distributions:
Net investment income........................... -- -- -- (0.03) -- (0.06)
Net realized gain on investments................ -- (0.01) (0.12) (0.04) -- --
In excess of net investment income.............. -- -- -- -- -- (0.02)
In excess of net realized gain on investments... -- -- -- -- (0.13) --
-------- ------- ------- ------- ------- -------
Total distributions....................... -- (0.01) (0.12) (0.07) (0.13) (0.08)
-------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 17.85 $14.06 $12.73 $10.81 $ 9.97 $ 10.79
======== ======= ======= ======= ======= =======
Total investment return(a)(c)............. 26.96% 10.55% 18.79% 9.20% (6.38)% 20.5%
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $119,844 $81,011 $87,092 $73,025 $81,602 $34,048
Ratio of net investment income (loss) to average
net assets:
With expense reductions(b)...................... (0.23)% (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%
Without expense reductions(b)................... (0.24)% (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b)...................... 2.38% 2.40% 2.47% 2.48% 2.38% 2.6%
Without expense reductions(b)................... 2.39% 2.54% 2.53% 2.54% 2.46% N/A
Ratio of interest expense to average net
assets++........................................ 0.28%(b) N/A N/A N/A N/A N/A
Portfolio turnover rate(b)++...................... 40% 107% 123% 108% 91% 67%
Average commission rate per share paid on
portfolio transactions++........................ N/A $0.0533 $0.0277 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ Portfolio turnover rate, average commission rate and ratio of interest
expense to average net assets are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) These selected per share data were calculated based upon average shares
outstanding during the period.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE
AVERAGE NUMBER OF AVERAGE AMOUNT
AMOUNT OF DEBT AMOUNT OF DEBT REGISTRANT'S SHARES OF DEBT
OUTSTANDING AT OUTSTANDING OUTSTANDING PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
- ---------- -------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998.......... $ -- $13,301,882 35,851,223 $ 0.371
December 31, 1997....................... $ -- $ 7,281,203 38,714,809 $0.1881
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 49
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Funds will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding the Fund's
performance is contained in that Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The 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.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of each
Fund will vary from time to time and past results are not necessarily
representative 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. It seeks its
objective by investing, under normal circumstances, at least 65% of its total
assets in equity securities of issuers domiciled in its Primary Investment Area,
as described below. There can be no assurance that the Fund will achieve its
investment objective. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. The Fund's Primary Investment Area includes the
following countries: Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey and the United Kingdom.
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from the Fund's Primary Investment Area.
The Fund is a regional fund for investors interested in a more geographically
concentrated investment but still desiring to diversify across multiple markets.
INVESTMENT POLICIES. The Fund may invest up to 35% of its total assets in the
equity securities of issuers domiciled outside of its Primary Investment Area.
Such investments may include: (a) securities of issuers in countries that are
not located in the Primary Investment Area but are linked by tradition, economic
markets, cultural similarities or geography to the countries in such Primary
Investment Area; and (b) securities of issuers located elsewhere in the world
that have operations in the Primary Investment Area or that stand to benefit
from political and economic events in the Primary Investment Area.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The Fund will limit
its purchases of debt securities to investment grade obligations. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories by Moody's Investors Service, Inc. ("Moody's") or by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the
7
<PAGE> 50
potential for growth of selected companies in each market relative to the risks
of investing in each such country. Among the factors to be considered are that
several of the markets are so-called developing countries, and their economies
and markets are less developed and more prone to uncertainty, instability and
risk than those of the other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has it principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in high
quality foreign or domestic money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is
8
<PAGE> 51
made. While a loan is outstanding, the borrower must maintain with the Fund's
custodian collateral consisting of cash, U.S. government securities or certain
irrevocable letters of credit equal to at least the value of the borrowed
securities, plus any accrued interest or such other collateral as permitted by
the Fund's investment program and regulatory agencies, and as approved by the
Board. The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral or
in recovery of the securities and possible loss of rights in the collateral
should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs"), or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Company's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
9
<PAGE> 52
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect the Fund's investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EEMU"). The EEMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is a
member of the EEMU may elect to participate in the EEMU and may supplement its
existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
CONCENTRATION. The Fund invests a significant portion of its assets in a
particular region of the world. As a result the Fund may be subject to greater
risks and may experience greater volatility than a fund that is more broadly
diversified geographically.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
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<PAGE> 53
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund including the
investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund pays all
expenses not assumed by AIM, the Sub-advisor, AIM Distributors or other agents.
Effective January 1, 1998, AIM has undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 2.00% and 2.65% of the average daily net assets of
the Fund's Class A and Class B shares, respectively.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Europe Fund pursuant to a master investment management
and administration agreement (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the above Fund pursuant to an investment
sub-advisory and sub-administration agreement. Prior to May 29, 1998, the
Sub-advisor was known as Chancellor LGT Asset Management, Inc. On May 29, 1998,
Liechtenstein Global Trust AG ("LGT"), the former indirect parent organization
of the Sub-advisor, consummated a purchase agreement with AMVESCAP PLC pursuant
to which AMVESCAP PLC acquired LGT's Asset Management Division, which included
the Sub-advisor and certain other affiliates. As a result of this transaction,
the Sub-advisor is now an indirect wholly owned subsidiary of AMVESCAP PLC.
Prior to the sale, the Sub-advisor and its worldwide asset management affiliates
provided investment management and/or administrative services to institutional,
corporate and individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
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<PAGE> 54
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/ OFFICE THE FUND PAST FIVE YEARS
- ------------ -------------------- -------------------
<S> <C> <C>
Nicholas J. Ford Portfolio Manager Portfolio Manager for the Sub-advisor since
London since 1998 February 1998 and Portfolio Manager for INVESCO GT
Asset Management PLC (London), an affiliate of the
Sub-advisor, since 1996. Director of Equities for
Lehman Brothers Global Asset Management PLC
(London) from 1994 to 1996. Portfolio Manager and
Head of European Equities for Hill Samuel
Investment Management PLC (London) from 1990 to
1994.
</TABLE>
In placing orders for the Fund's portfolio transactions, the Sub-advisor seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-advisor may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-advisor. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains that would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Company has adopted a Master
Distribution Plan applicable to Class A shares of the Fund (the "Class A Plan")
pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A shares of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
12
<PAGE> 55
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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<PAGE> 56
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
A-1
<PAGE> 57
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 58
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE> 59
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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-4
<PAGE> 60
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
A-5
<PAGE> 61
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
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The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
A-12
<PAGE> 68
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
A-13
<PAGE> 69
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
A-14
<PAGE> 70
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 71
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
A-16
<PAGE> 72
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 73
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
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- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
<PAGE> 75
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
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<PAGE> 76
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
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<PAGE> 77
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 78
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GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 79
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 80
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 81
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
ERG-PRO-1
<PAGE> 82
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM INTERNATIONAL GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
P
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM INTERNATIONAL GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in its Primary
Investment Area (as defined herein).
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information about the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 83
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 12
Organization of the Trust............ 14
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms of Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class Shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 84
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 85
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.98% 0.98%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses............................................ 0.49% 0.49%
---- ----
Total Fund Operating Expenses..................... 1.82% 2.47%
==== ====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
rules regarding investment companies.
(2)Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "Terms
and Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales
Charges."
(3)Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's, expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.65% of the average daily net
assets of the Fund's Class A and Class B shares, respectively through May 31,
2000. "Other expenses" include custody, transfer agency, legal, audit and
other operating expenses. See "Management" herein and the Statement of
Additional Information for more information.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Funds, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $73 $110 $149 $258
Class B shares
Assuming a complete redemption at end of
period(2)..................................... $77 $110 $156 $267
Assuming no redemption........................... $25 $ 78 $133 $267
</TABLE>
(1)Assumes payment of maximum sales charge by the investor.
(2)Assumes deduction of the applicable contingent deferred sales charge.
(3)For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 86
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report thereon is
also included in the Statement of Additional Information. The unaudited
financial statements and notes, for the semi-annual period ended June 30, 1998,
are also included in the Statement of Additional Information. Information
presented below for the fiscal years ended December 31, 1988 to 1991 was audited
by other auditors that served as the Fund's independent accountants for those
periods.
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ---------------------------------------------------------------
CLASS A+ (UNAUDITED)* 1997* 1996* 1995 1994 1993* 1992
-------- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss)................ 0.04 0.03 (0.01) 0.03 (0.04) 0.03 0.11
Net realized and unrealized gain (loss) on
investments................................ 0.81 0.69 0.84 0.32 (0.82) 2.78 (0.62)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value
resulting from investment operations....... 0.85 0.72 0.83 0.35 (0.86) 2.81 (0.51)
-------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income...................... -- (0.03) -- -- (0.04) -- (0.02)
Net realized gain on investments........... -- (1.94) (0.99) (0.24) (0.95) -- --
In excess of net realized gain on
investments.............................. -- -- -- (0.20) -- -- --
-------- -------- -------- -------- -------- -------- --------
Total distributions................... -- (1.97) (0.99) (0.44) (0.99) -- (0.02)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 8.52 $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
======== ======== ======== ======== ======== ======== ========
Total investment return(a)(c)............... 11.08% 8.51% 9.28% 3.88% (7.78)% 34.23% (5.83)%
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $143,958 $148,143 $196,601 $308,816 $430,701 $523,397 $421,693
Ratio of operating net investment income
(loss) to average net assets:
With expense reductions(b)................. 0.89% 0.35% (0.14)% 0.24% (0.04)% 0.3% 1.2%
Without expense reductions(b).............. 0.88% 0.22% (0.25)% 0.16% (0.09)% N/A N/A
Ratio of operating expenses to average net
assets:
With expense reductions(b)................. 1.90% 1.69% 1.80% 1.70% 1.70% 1.8% 1.9%
Without expense reductions(b).............. 1.91% 1.82% 1.91% 1.78% 1.75% --%(d) --%(d)
Portfolio turnover rate++(b)................ 51% 72% 74% 75% 96% 90% 89%
Average commission rate per share paid on
portfolio transactions++................... N/A $ 0.0269 $ 0.0267 N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
CLASS A+ 1991 1990 1989** 1988**
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 7.82 $ 9.25 $ 6.77 $ 5.71
-------- -------- -------- -------
Net investment income (loss)................ 0.14 0.10 0.01 (0.01)
Net realized and unrealized gain (loss) on
investments................................ 0.89 (1.42) 2.60 1.12
-------- -------- -------- -------
Net increase (decrease) in net asset value
resulting from investment operations....... 1.03 (1.32) 2.61 1.11
-------- -------- -------- -------
Distributions:
Net investment income...................... (0.11) (0.11) -- --
Net realized gain on investments........... -- -- (0.13) (0.05)
In excess of net realized gain on
investments.............................. -- -- -- --
-------- -------- -------- -------
Total distributions................... (0.11) (0.11) (0.13) (0.05)
-------- -------- -------- -------
Net asset value, end of period.............. $ 8.74 $ 7.82 $ 9.25 $ 6.77
======== ======== ======== =======
Total investment return(a)(c)............... 13.2% (14.3)% 38.6% 19.4%
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $463,851 $343,949 $136,975 $29,792
Ratio of operating net investment income
(loss) to average net assets:
With expense reductions(b)................. 1.5% 1.4% 0.1% (0.2)%
Without expense reductions(b).............. N/A N/A N/A N/A
Ratio of operating expenses to average net
assets:
With expense reductions(b)................. 1.9% 1.9% 1.9% 2.1%
Without expense reductions(b).............. --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate++(b)................ 83% 58% 82% 115%
Average commission rate per share paid on
portfolio transactions++................... N/A N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** The per share data reflects a 3 for 1 stock split effective August 14,
1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
5
<PAGE> 87
<TABLE>
<CAPTION>
SIX MONTH
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------- DECEMBER 31,
(UNAUDITED)* 1997* 1996* 1995 1994 1993*
------------ ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B+
Per Share Operating Performance:
Net asset value, beginning of period....................... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
------- ------- ------- ------- ------- -------
Net investment income (loss)............................... 0.01 (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain (loss) on investments..... 0.79 0.65 0.83 0.32 (0.82) 2.25
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value resulting from
investment operations.................................... 0.80 0.62 0.76 0.28 (0.92) 2.24
------- ------- ------- ------- ------- -------
Distributions:
Net investment income.................................... -- -- -- -- (0.04) --
Net realized gain on investments......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on investments............ -- -- -- (0.20) -- --
------- ------- ------- ------- ------- -------
Total distributions................................ -- (1.94) (0.99) (0.44) (0.99) --
------- ------- ------- ------- ------- -------
Net asset value, end of period............................. $ 8.16 $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
======= ======= ======= ======= ======= =======
Total investment return(a)(c).............................. 10.72% 7.71% 8.67% 3.15% (8.36)% 25.63%
Ratios and supplemental data:
Net assets, end of period (in 000's)....................... $49,567 $56,023 $64,102 $69,654 $71,794 $30,745
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b)............................... 0.24% (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%
Without expense reductions(b)............................ 0.23% (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b)............................... 2.55% 2.34% 2.45% 2.35% 2.35% 2.4%
Without expense reductions(b)............................ 2.56% 2.47% 2.56% 2.43% 2.40% --%(d)
Portfolio turnover rate++(b)............................... 51% 72% 74% 75% 96% 90%
Average commission rate per share paid on portfolio
transactions++........................................... N/A $0.0269 $0.0267 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
---------- -------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998........................ $ -- $ 36,211 25,043,954 $ 0.001
December 31, 1997............. $ -- $283,148 26,055,589 $0.0109
December 31, 1996............. $129,000 $131,860 32,830,494 $0.0040
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 88
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in its Primary
Investment Area, as described below. Equity securities in which the Fund may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. The Fund's Primary Investment Area includes
the following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada,
Chile, Colombia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal,
Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey, the United Kingdom and Venezuela but not the United States.
There can be no assurance that the Fund will achieve its investment objective.
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from the Fund's Primary Investment Area.
INVESTMENT POLICIES. The Fund is intended for investors seeking to complement
their U.S. equity investments with a professionally managed non-U.S. portfolio.
The Fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of its Primary Investment Area. Such investments may
include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
Under normal circumstances, the assets of the Fund are invested in the equity
securities of issuers domiciled in at least three different countries.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of
the Fund. The Fund will limit its purchases of debt securities to investment
grade obligations. "Investment grade" debt refers to those securities rated
within one of the four highest ratings categories by Moody's Investors Service,
Inc. ("Moody's") or by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Sub-advisor
to be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's to have speculative
characteristics. See the Statement of Additional Information for a description
of Moody's and S&P ratings.
7
<PAGE> 89
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as Euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll'
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
8
<PAGE> 90
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll'
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contract" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts "ADRs" or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless spe-
9
<PAGE> 91
cifically noted, the Fund's investment policies described in this Prospectus and
in the Statement of Additional Information are not fundamental policies and may
be changed by vote of the Trust's Board of Trustees, without shareholder
approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect the Fund's investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EEMU"). The EEMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is a
member of the EEMU may elect to participate in the EEMU and may supplement its
existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund, should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
10
<PAGE> 92
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be affected adversely by economic conditions in the countries in which they
trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
PACIFIC REGION COUNTRIES. The Fund may invest significantly in equity
securities of issuers located in Pacific region countries. Certain of the risks
associated with international investments are heightened for investments in
Pacific region countries. For example, some of the currencies of Pacific region
countries have experienced steady devaluations relative to the U.S. dollar, and
major adjustments have been made periodically in certain such currencies.
Moreover, recent currency devaluations in some Pacific region countries have
resulted in high interest rate levels and sharp reductions in economic activity
and have diminished prospects for short-term growth in corporate earnings.
Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Fund could
lose its entire investment in Hong Kong, if any. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
11
<PAGE> 93
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-advisor, AIM Distributors or other agents. Effective
January 1, 1998, AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
maximum annual rate of 2.00% and 2.65% of the average daily net assets of the
Fund's Class A and Class B shares, respectively.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-advisor, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the Sub-advisor to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-advisor was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-advisor, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-advisor and certain other
affiliates. As a result of this transaction, the Sub-advisor is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-advisor and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
12
<PAGE> 94
The investment professionals primarily responsible for the portfolio
management of the Fund are follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Roger Yates Portfolio Manager Global Chief Investment Officer and Portfolio
London since 1996 Manager for the Sub- advisor and INVESCO GT Asset
Management PLC (London) ("GT Asset Management"),
an affiliate of the Sub-advisor, since October
1997. International Chief Investment Officer and
Portfolio Manager for the Sub-advisor and GT Asset
Management from September 1996 to October 1997.
Chief Investment Officer and Portfolio Manager for
Europe and the United Kingdom for the Sub-advisor
and GT Asset Management from 1994 to September
1996. Investment Manager for Morgan Grenfell Asset
Management from 1988 to 1994.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities
London since 1992 and Portfolio Manager for the Sub-advisor and GT
Asset Management since 1996. Chief Investment
Officer for Japan and Portfolio Manager for
INVESCO GT Asset Management Asia Ltd. (Hong Kong),
an affiliate of the Sub-advisor and for the
Sub-advisor from 1992 to 1996. Director of Warburg
Asset Management (Tokyo) prior thereto.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares master distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Company has adopted a Master
Distribution Plan applicable to Class A shares of the Fund (the "Class A Plan")
pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A shares of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected insti-
13
<PAGE> 95
tutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of "G.T.
Global Growth Series," a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
14
<PAGE> 96
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
15
<PAGE> 97
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
A-1
<PAGE> 98
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 99
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE> 100
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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-4
<PAGE> 101
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
A-5
<PAGE> 102
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
A-6
<PAGE> 103
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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<PAGE> 104
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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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<PAGE> 105
Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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<PAGE> 106
exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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<PAGE> 107
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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<PAGE> 108
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
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Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
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<PAGE> 110
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
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<PAGE> 111
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 112
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
A-16
<PAGE> 113
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 114
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
A-18
<PAGE> 115
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
<PAGE> 116
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
A-20
<PAGE> 117
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 118
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 119
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 120
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 121
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 122
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
ITG-PRO-1
<PAGE> 123
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM JAPAN GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM JAPAN GROWTH FUND (the "Fund"),
which is one of several series investment portfolios comprising AIM Growth
Series (the "Trust"), an open-end, series, management investment company. The
Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in Japan.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 124
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 11
Organization of the Trust............ 13
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in Japan.
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge and are subject to a maximum contingent deferred sales charge of 5%
on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is AIM Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 125
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund invests a significant portion of its assets in issuers in a
particular country. As a result, the Fund may be subject to greater risks and
may experience greater volatility than a fund that is more broadly diversified
geographically.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 126
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.98% 0.98%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses (after reimbursement)...................... 0.67% 0.67%
---- ----
Total Fund Operating Expenses..................... 2.00% 2.65%
==== ====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
rules regarding investment companies.
(2)Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "Terms
and Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales
Charges."
(3)Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.65% of the average daily net
assets of the Fund's Class A and Class B shares, respectively, through May
31, 2000. "Other expenses" include custody, transfer agency, legal, audit and
other operating expenses. See "Management" herein and the Statement of
Additional Information for more information. With respect to Class A shares,
without reimbursements, "Other expenses" and "Total Fund Operating Expenses"
would have been 0.73% and 2.06%, respectively, for the Fund. With respect to
Class B shares, without reimbursements, "Other expenses" and "Total Fund
Operating Expenses" would have been 0.73% and 2.71%, respectively, for the
Fund.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $74 $115 $158 $277
Class B shares
Assuming a complete redemption at end of
period(2)..................................... $78 $115 $165 $285
Assuming no redemption........................... $27 $ 83 $142 $285
</TABLE>
(1)Assumes payment of maximum sales charge by the investor.
(2)Assumes deduction of the applicable contingent deferred sales charge.
(3)For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 127
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, and the unaudited financial
statements and notes for the semi-annual period ended April 30, 1998 are both
included in the Statement of Additional Information. Information presented below
for the fiscal years ended December 31, 1998 to 1991 was audited by other
auditors that served as the Fund's accountants for those periods.
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------------------
(UNAUDITED)* 1997* 1996* 1995* 1994 1993 1992 1991
------------ ------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A+:
Per Share Operating
Performance:
Net asset value, beginning
of period............... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48
------- ------- ------- -------- ------- ------- ------- -------
Net investment income
(loss).................. (0.00)(e) (0.08) (0.04) (0.04) (0.04) (0.14) --*** (0.09)
Net realized and
unrealized gain (loss)
on investments.......... 0.08 (0.70) (0.77) 0.26 0.79 3.05 (2.40) (0.23)
------- ------- ------- -------- ------- ------- ------- -------
Net increase (decrease) in
net asset value
resulting from
investment operations... 0.08 (0.78) (0.81) 0.22 0.75 2.91 (2.40) (0.32)
------- ------- ------- -------- ------- ------- ------- -------
Distributions:
Net realized gain on
investments and foreign
currency................ -- (0.02) (0.43) (1.37) (0.21) -- (0.06) --
------- ------- ------- -------- ------- ------- ------- -------
Total
distributions...... -- (0.02) (0.43) (1.37) (0.21) -- (0.06) --
------- ------- ------- -------- ------- ------- ------- -------
Net asset value, end of
period.................... $ 9.04 $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16
======= ======= ======= ======== ======= ======= ======= =======
Total investment
return(a)(c)....... 0.78% (7.99)% (7.43)% 1.94% 6.56% 33.45% (21.5)% (2.8)%
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $43,219 $44,583 $63,585 $111,105 $98,066 $88,487 $93,865 $61,519
Ratio of net investment
income (loss) to average
net assets:
With expense
reductions(b)........... (0.07)% (0.61)% (0.40)% (0.40)% (0.32)% (0.3)% --%*** (1.5)%
Without expense
reductions(b)........... (0.35)% (0.68)% (0.50)% (0.55)% (0.44)% N/A N/A N/A
Ratio of operating expenses
to average net assets:
With expense
reductions(b)........... 1.97% 1.99% 1.84% 1.99% 1.91% 2.1% 2.2%*** 2.2%
Without expense
reductions(b)........... 2.25% 2.06% 1.94% 2.14% 2.03% --%(d) --%(d) --%(d)
Portfolio turnover
rate(a)++................. 38% 58% 31% 67% 49% 104% 115% 251%
Average commission rate per
share paid on portfolio
transactions++............ N/A $0.0416 $0.0971 N/A N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1990 1989 1988**
------- ------- -------
<S> <C> <C> <C>
CLASS A+:
Per Share Operating
Performance:
Net asset value, beginning
of period............... $ 16.39 $ 10.57 $ 10.36
------- ------- -------
Net investment income
(loss).................. (0.05)**** (0.19) (0.20)
Net realized and
unrealized gain (loss)
on investments.......... (4.60) 6.57 2.44
------- ------- -------
Net increase (decrease) in
net asset value
resulting from
investment operations... (4.65) 6.38 2.24
------- ------- -------
Distributions:
Net realized gain on
investments and foreign
currency................ (0.26) (0.56) (2.03)
------- ------- -------
Total
distributions...... (0.26) (0.56) (2.03)
------- ------- -------
Net asset value, end of
period.................... $ 11.48 $ 16.39 $ 10.57
======= ======= =======
Total investment
return(a)(c)....... (28.7)% 60.7% 21.9%
Ratios and supplemental
data:
Net assets, end of period
(in 000's).............. $51,693 $48,405 $18,591
Ratio of net investment
income (loss) to average
net assets:
With expense
reductions(b)........... (1.2)%**** (1.6)% (1.5)%
Without expense
reductions(b)........... N/A N/A N/A
Ratio of operating expenses
to average net assets:
With expense
reductions(b)........... 2.2%**** 2.1% 2.2%
Without expense
reductions(b)........... --%(d) --%(d) --%(d)
Portfolio turnover
rate(a)++................. 138% 108% 150%
Average commission rate per
share paid on portfolio
transactions++............ N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 15,
1988.
*** Includes reimbursement by the Sub-adviser of Fund operating expenses of
$0.01. Without such reimbursement, the ratio of expenses to average net
assets would have been 2.3% and the ratio of net investment loss to
average net assets would have been (0.1)%.
**** Includes reimbursement by the Sub-adviser of Fund operating expenses of
$0.01. Without such reimbursement, the ratio of expenses to average net
assets would have been 2.4% and the ratio of net investment loss to
average net assets would have been (1.35)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
(e) Without reimbursement the net investment income (loss) per share would
have been reduced (increased) by $0.01 for Class A.
N/A Not Applicable.
5
<PAGE> 128
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------- DECEMBER 31,
(UNAUDITED)* 1997* 1996* 1995* 1994 1993*
------------ ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B++
Per Share Operating Performance:
Net asset value, beginning of period.................... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
------- ------- ------- ------- ------- ------
Net investment income (loss)............................ (0.04)** (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain (loss) on
investments........................................... 0.08 (0.66) (0.75) 0.25 0.79 1.90
------- ------- ------- ------- ------- ------
Net increase (decrease) in net asset value resulting
from investment operations............................ 0.04 (0.80) (0.86) 0.13 0.66 1.72
------- ------- ------- ------- ------- ------
Distributions:
Net realized gain on investments and foreign currency... -- (0.02) (0.43) (1.37) (0.21) --
------- ------- ------- ------- ------- ------
Total distributions............................... -- (0.02) (0.43) (1.37) (0.21) --
------- ------- ------- ------- ------- ------
Net asset value, end of period............................ $ 8.71 $ 8.67 $ 9.49 $ 10.78 $ 12.02 $11.57
======= ======= ======= ======= ======= ======
Total investment return(a)(c)..................... 0.46% (8.42)% (8.05)% 1.20% 5.81% 17.46%
Ratios and supplemental data:
Net assets, end of period (in 000's).................... $23,237 $24,250 $32,116 $41,274 $27,355 $3,699
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b).............................. (0.72)% (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%
Without expense reductions(b)+.......................... (1.00)% (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b).............................. 2.62% 2.64% 2.49% 2.64% 2.56% 2.7%
Without expense reductions(b)........................... 2.90% 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate(b)................................ 38% 58% 31% 67% 49% 104%
Average commission rate per share paid on portfolio
transactions(b)......................................... N/A $0.0416 $0.0971 N/A N/A N/A
</TABLE>
- ---------------
+ Portfolio turnover rate average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** Without reimbursement, the net investment income (loss) per share would
have been reduced (increased) by $0.01 for Class B.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998........................ $ -- $48,353 9,862,484 $ 0.005
Year ended December 31,
1997........................ -- -- 10,542,000 0.0000
Year ended December 31,
1996........................ 2,000,000 5,479 13,009,004 0.0004
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 129
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in Japan. Equity
securities in which the Fund may invest include common stocks, preferred stocks,
convertible debt securities and warrants to acquire such securities. There can
be no assurance that the Fund will achieve its investment objective.
INVESTMENT POLICIES. The Fund is designed for investors wishing to concentrate
their investment in the Japanese market but still desiring the professional
management, liquidity and diversification afforded by a mutual fund.
The Japan Fund may invest up to 35% of its total assets in the equity
securities of issuers domiciled outside of Japan. Such investments may include:
(a) securities of issuers in countries that are not located in Japan but are
linked by tradition, economic markets, cultural similarities or geography to
Japan; and (b) securities of issuers located elsewhere in the world that have
operations in Japan or that stand to benefit from political and economic events
in Japan.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depositary Receipts. The issuers of such
debt securities may or may not be domiciled in Japan. The Fund will limit its
purchases of debt securities to investment grade obligations. "Investment grade"
debt refers to those securities rated within one of the four highest ratings
categories by Moody's Investors Service, Inc. ("Moody's") or by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
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For purposes of this Prospectus, an issuer typically is considered as
domiciled in Japan if it is (a) organized under the laws of, or has its
principal office in Japan or (b) normally derives 50% or more of its total
revenues from business in Japan, provided that, in the Sub-advisor's view, the
value of such issuer's securities tends to reflect Japan's development to a
greater extent than developments elsewhere. However, these are not absolute
requirements, and certain companies incorporated in Japan and considered by the
Sub-advisor to be located in Japan may have substantial foreign operations or
subsidiaries and/or export sales exceeding in size the assets or sales in Japan.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as Euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The
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risks in lending portfolio securities, as with other extensions of secured
credit, consist of possible delay in receiving additional collateral or in
recovery of the securities and possible loss of rights in the collateral should
the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
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RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
CONCENTRATION. The Fund invests a significant portion of its assets in a
particular country. As a result, the Fund may be subject to greater risks and
may experience greater volatility than a fund that is more broadly diversified
geographically.
JAPAN. The Fund invests primarily in equity securities of issuers domiciled in
Japan. Accordingly, the Fund's performance will be closely tied to economic and
political conditions in Japan, and its performance is expected to be more
volatile than more geographically diversified funds. Changes in regulatory, tax
or economic policy in Japan could significantly affect the Japanese securities
markets and therefore the Fund's performance.
Japan's economic growth has declined significantly since 1990. The general
government position has deteriorated as result of weakening economic growth and
stimulative measures taken to support economic activity and to restore financial
stability. Although the decline in interest rates and fiscal stimulation
packages have helped to contain recessionary forces, uncertainties remain. Japan
is also heavily dependent upon international trade, so its economy is especially
sensitive to trade barriers and disputes.
The common stocks of many Japanese companies trade at high price-earnings
ratios, which may be attributable in part to inefficiencies associated with
Japanese corporate operations. Differences in accounting methods make it
difficult to compare the earnings of Japanese companies with those of companies
in other countries, especially the United States. In general, however, reported
net income in Japan is understated relative to U.S. accounting standards and
this is one reason why price-earnings ratios of the stocks of Japanese companies
have tended historically to be higher than those for U.S. stocks. In addition,
Japanese companies have tended to have higher growth rates than U.S. companies,
and Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are also not always
equally enforced.
In addition, Japan's banking industry is undergoing problems related to bad
loans and declining values in real estate.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)imperfect
correlation, or even no correlation, between movements in the price of options,
forward contracts, futures con-
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tracts or options thereon and movements in the price of the currency or security
hedged or used for cover; (3) the fact that skills and techniques needed to
trade options, futures contracts or options thereon or to use forward currency
contracts are different from those needed to select the securities in which the
Fund invests; (4) lack of assurance that a liquid secondary market will exist
for any particular option, futures contract or option thereon at any particular
time; (5) the possible loss of principal under certain conditions; and (6) the
possible inability of the Fund to purchase or sell a portfolio security at a
time when it would otherwise be favorable for it to do so, or the possible need
for the Fund to sell a security at a disadvantageous time, due to the need for
the Fund to maintain "cover" or to set aside securities in connection with
hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-advisor, AIM Distributors or other agents. Effective
January 1, 1998, AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
maximum annual rate of 2.00% and 2.65% of the average daily net assets of the
Fund's Class A and Class B shares, respectively.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administrative services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-advisor, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-advisor to the Fund pursuant to an
investment sub-advisory and sub-administrative agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-advisor was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-advisor, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-advisor and certain other
affiliates. As a result of this transaction, the Sub-advisor is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-advisor and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), \
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Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Fund, the Sub-advisor employs a team approach, taking advantage of its
investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------- -------------------- -------------------
<S> <C> <C>
Andrew Callender Tokyo Portfolio Manager Head of Investments for Japan and Portfolio
since 1997 Manager for the Sub- advisor and INVESCO GT Asset
Management Japan Ltd. (Tokyo), an affiliate of the
Sub-advisor, since 1997. Portfolio Manager for
INVESCO GT Asset Management Japan Ltd. from 1990
to 1997.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 on behalf of Class A shares of the Fund, and has entered into a
Master Distribution Agreement, dated May 29, 1998, on behalf of Class B shares
of the Fund (individually referred to as a "Distribution Agreement" or
collectively as the "Distribution Agreements.") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A and Class B shares of the Fund. 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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and services fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund.
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Thus, under the Class A Plan, even if AIM Distributors' actual expenses exceed
the fee payable to AIM Distributors thereunder at any given time, the Fund will
not be obligated to pay more than that fee. If AIM Distributors' expenses are
less than the fee it receives, AIM Distributors will retain the full amount of
the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets and assumed the liabilities of "G.T.
Global Growth Series", a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 act as counsel to the Trust and the
Fund.
13
<PAGE> 136
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
A-1
<PAGE> 137
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 138
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE> 139
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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-4
<PAGE> 140
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
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CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
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The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
A-10
<PAGE> 146
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
A-11
<PAGE> 147
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
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<PAGE> 148
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
A-13
<PAGE> 149
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
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<PAGE> 150
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
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<PAGE> 151
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
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REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
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exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
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- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
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<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
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<PAGE> 156
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
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<PAGE> 157
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 158
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 159
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 160
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 161
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
JPG-PRO-1
<PAGE> 162
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM MID CAP EQUITY FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM MID CAP EQUITY FUND, formerly AIM
Mid Cap Growth Fund (the "Fund"), which is one of several series investment
portfolios comprising AIM Growth Series (the "Trust"), an open-end series,
management investment company. The Fund is a diversified portfolio which seeks
long-term growth of capital by investing primarily in equity securities of
companies domiciled in the United States that, at the time of purchase, are
within the range of market capitalizations of companies that are included in the
Russell Mid Cap(TM) Index ("U.S. mid cap companies").
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 163
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 9
Management........................... 10
Organization of the Trust............ 12
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the
AIM Funds......................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of U.S.
mid cap companies.
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM"). AIM
and its worldwide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual
clients around the world. AIM is an indirect wholly owned subsidiary of AMVESCAP
PLC. AMVESCAP PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and retail segment of
the investment management industry in North America and Europe, and a growing
presence in Asia. AIM was organized in 1976 and, together with its subsidiaries,
currently advises approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 164
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 165
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Funds are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.72% 0.72%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses (after reimbursement)...................... 0.41% 0.41%
---- ----
Total Fund Operating Expenses..................... 1.48% 2.13%
==== ====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
rules regarding investment companies.
(2)Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "Terms
and Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales
Charges".
(3)Expenses are based on the Fund's fiscal year ended December 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional Information
for more information. Effective January 1, 1998, AIM has voluntarily agreed
to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the annual rates of 1.75% and 2.40%
of the average daily net assets of the Fund's Class A and Class B shares,
respectively, through May 31, 2000.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Funds, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $69 $100 $132 $223
Class B shares
Assuming a complete redemption at end of
period(2)..................................... $73 $100 $138 $231
Assuming no redemption........................... $22 $ 67 $115 $231
</TABLE>
(1)Assumes payment of maximum sales charge by the investor.
(2)Assumes deduction of the applicable contingent deferred sales charge.
(3)For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 166
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report thereon is
also included in the Statement of Additional Information. The unaudited
financial statements and notes, for the semi-annual period ended June 30, 1998,
are also included in the Statement of Additional Information. Information
presented below for the periods ended December 31, 1991 and prior thereto was
audited by other auditors, which served as the Fund's independent certified
accountants.
AIM MID CAP EQUITY FUND
(FORMERLY AIM MID CAP GROWTH FUND AND PRIOR TO THAT GT GLOBAL AMERICA MID CAP
GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 --------------------------------------------------------------------------
(UNAUDITED)* 1997 1996 1995 1994* 1993 1992 1991
------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A+
Per Share Operating Performance:
Net asset value, beginning of
year.............................. $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13 $ 11.89
-------- -------- -------- -------- -------- -------- -------- --------
Net investment income (loss)....... (0.14) (0.20) 0.03 0.24 0.04 (0.21) (0.11) 0.01
Net realized and unrealized gain
(loss) on investments............. 2.65 3.00 2.96 3.93 2.55 1.56 4.54 2.28
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net
asset value resulting from
investment operations............. 2.51 2.80 2.99 4.17 2.59 1.35 4.43 2.29
-------- -------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income............. -- -- -- (0.21) (0.02) -- -- (0.01)
Net realized gain on
investments..................... -- (2.56) (1.29) (2.58) (2.05) (1.30) (1.44) (0.04)
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions......... -- (2.56) (1.29) (2.79) (2.07) (1.30) (1.44) (0.05)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of year....... $ 23.52 $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12 $ 14.13
======== ======== ======== ======== ======== ======== ======== ========
Total investment return
(a)(c)..................... 11.95% 14.05% 15.65% 23.23% 15.69% 8.3% 31.7% 19.3%
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $238,024 $255,674 $343,427 $396,291 $196,937 $116,468 $166,712 $ 88,041
Ratio of net investment income
(loss) to average net assets:
With expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... (1.20)% (0.90)% 0.12% 1.24% 0.17% (0.7)% (1.1)% 0.0%
Without expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... (1.21)% (1.01)% 0.07% N/A N/A N/A N/A N/A
Ratio of operating expenses to
average net assets:
With expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... 1.59% 1.37% 1.36% 1.46% 1.58% 1.6% 1.8% 1.7%
Without expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... 1.60% 1.48% 1.41% --%(d) --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate (b)++...... 171% 190% 253% 71% 102% 92% 114% 156%
Average commission rate per share
paid on portfolio
transactions++.................... N/A $ 0.0574 $ 0.0536 N/A N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1990 1989 1988
-------- ------ ------
<S> <C> <C> <C>
CLASS A+
Per Share Operating Performance:
Net asset value, beginning of
year.............................. $ 12.84 $ 8.76 $ 8.56
-------- ------ ------
Net investment income (loss)....... (0.01) 0.10** (0.40)
Net realized and unrealized gain
(loss) on investments............. (0.94) 4.65 1.35
-------- ------ ------
Net increase (decrease) in net
asset value resulting from
investment operations............. (0.95) 4.75 0.95
-------- ------ ------
Distributions:
Net investment income............. -- (0.10) --
Net realized gain on
investments..................... -- (0.57) (0.75)
-------- ------ ------
Total distributions......... -- (0.67) (0.75)
-------- ------ ------
Net asset value, end of year....... $ 11.89 $12.84 $ 8.76
======== ====== ======
Total investment return
(a)(c)..................... (7.4)% 54.8% 11.1%
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 65,413 $9,930 $1,548
Ratio of net investment income
(loss) to average net assets:
With expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... (0.1)% 1.2%** (4.7)%
Without expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... N/A N/A N/A
Ratio of operating expenses to
average net assets:
With expense reductions and
reimbursement by INVESCO (NY),
Inc.(b)......................... 2.0% 1.9%** 5.1%
Without expense reductions and
reimbursement by INVESCO (NY), --% --%
Inc.(b)......................... (d) (d) --%(d)
Portfolio turnover rate (b)++...... 145% 133% 184%
Average commission rate per share
paid on portfolio
transactions++.................... N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** Includes reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Fund) operating expenses of $0.11. Without such reimbursement, the ratio
of expenses to average net assets would have been 3.3% and the ratio of
net investment income to average net assets would have been (1.2)%.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
5
<PAGE> 167
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ---------------------------------------- DECEMBER 31,
(UNAUDITED)* 1997 1996 1995 1994* 1993
------------ -------- -------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B+
Per Share Operating Performance:
Net asset value, beginning of year....................... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $15.90
-------- -------- -------- -------- ------- ------
Net investment income (loss)............................. (0.21) (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain (loss) on investments... 2.56 2.93 2.91 3.87 2.55 2.78
-------- -------- -------- -------- ------- ------
Net increase (decrease) in net asset value resulting from
investment operations.................................. 2.35 2.59 2.80 3.97 2.46 2.49
-------- -------- -------- -------- ------- ------
Distributions:
Net investment income.................................. -- -- -- (0.12) -- --
Net realized gain on investments....................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
-------- -------- -------- -------- ------- ------
Total distributions.............................. -- (2.56) (1.29) (2.70) (2.05) (1.30)
-------- -------- -------- -------- ------- ------
Net asset value, end of year............................. $ 22.66 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $17.09
======== ======== ======== ======== ======= ======
Total investment return (a)(c)................... 11.57%(a) 13.35% 14.82% 22.42% 15.06% 16.1%
Ratios and supplemental data:
Net assets, end of period (in 000's)..................... $243,093 $255,468 $334,590 $348,435 $80,060 $1,982
Ratio of net investment income (loss) to average net
assets:
With expense reductions (b)............................ (1.85)% (1.55)% (0.53)% 0.59% (0.48)% (1.3)%
Without expense reductions (b)......................... (1.86)% (1.66)% (0.58)% N/A N/A N/A
Ratio of operating expenses to average net assets (b):
With expense reductions (b)............................ 2.24% 2.02% 2.01% 2.11% 2.23% 2.2%
Without expense reductions (b)......................... 2.25% 2.13% 2.06% --%(d) --%(d) --%(d)
Portfolio turnover rate(b)++............................. 171% 190% 253% 71% 102% 92%
Average commission rate per share on portfolio
transactions++......................................... N/A $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares. All
capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE NUMBER OF
AMOUNT OF DEBT REGISTRANT'S
AMOUNT OF DEBT OUTSTANDING SHARES AVERAGE AMOUNT OF
OUTSTANDING AT DURING THE OUTSTANDING DEBT PER SHARE
END OF PERIOD PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998...... $6,652,000 $3,118,762 22,924,919 $ 0.136
Year ended December 31 1997......... $ -- 1,961,956 27,020,126 0.0726
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 168
- --------------------------------------------------------------------------------
PERFORMANCE
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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. 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 the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B 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, the Fund
may separate its cumulative and average annual returns into income results and
capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such practices will
have the effect of increasing that Fund's total return. The performance of each
Fund will vary from time to time and past results are not necessarily
representative 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Mid Cap Fund is long
term growth of capital. There can be no assurance that the Fund will achieve its
investment objective.
INVESTMENT POLICIES. The Fund seeks its investment objective by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of U.S. mid cap companies. Equity securities in which the Fund may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. The Fund may also invest up to 35% of its
total assets in the equity securities of (a) issuers domiciled in the United
States that, at the time of purchase, have market capitalizations outside the
range of market capitalizations of companies that are included in the Russell
Mid Cap Index; and (b) issuers domiciled outside the United States, including
(i) issuers linked by tradition, economic markets, cultural similarities or
geography to the United States; and (ii) issuers located elsewhere in the world
that have operations in the United States or that stand to benefit from
political or economic events in the United States. In addition, the Fund may
invest up to 35% of its total assets in investment grade debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Euro bonds and Depositary Receipts. The issuers of
such debt securities may or may not be domiciled in the United States. As of
June 30, 1998, market capitalizations of companies comprising the Russell Mid
Cap Index ranged from approximately $1.4 to $10.3 billion.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In selecting securities for the
Mid Cap Fund, AIM invests in equity securities judged by AIM to be undervalued
relative to its 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 market generally.
The primary emphasis of AIM's search for undervalued equity securities is in
four categories: (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 which 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."
For purposes of this Prospectus, an issuer typically is considered as
domiciled in the United States if it is (a) organized under the laws of, or has
its principal office in, the United States or any state thereof or (b) normally
derives 50% or more of its total revenues from business in the United States,
provided that, in AIM's view, the value of such issuer's securities tends to
reflect the United States
7
<PAGE> 169
development to a greater extent than developments elsewhere. However, these are
not absolute requirements, and certain companies incorporated in the United
States and considered by AIM to be located in that country may have substantial
foreign operations or subsidiaries and/or export sales exceeding in size the
assets or sales in the United States.
AIM allocates investments among fixed income securities of particular issuers
on the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. If
market interest rates decline, fixed income securities generally appreciate in
value and vice versa.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, AIM may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Fund may invest less than 65% of its total
assets in the types of securities covered by its primary investment policy.
Under a defensive strategy, the Fund may invest up to 100% of its total assets
in cash (U.S. dollars, foreign currencies or multinational currency units)
and/or high quality debt securities or money market instruments issued by
corporations or the U.S. or a foreign government. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in high
quality foreign or domestic money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by AIM or
its affiliates ("Affiliated Funds"), that in turn are authorized to invest in
the securities of such countries. The Fund may invest up to 10% of its total
assets in other investment companies. As a shareholder in an investment company,
the Fund would bear its ratable share of that investment company's expenses,
including its advisory and administration fees. At the same time, the Fund would
continue to pay its own management fees and other expenses. AIM will waive its
advisory fee to the extent that the Fund invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll'
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are often referred to as "derivatives,"
8
<PAGE> 170
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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Currency Strategies" herein and the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that AIM intends to include in the Fund's
portfolio. The Fund also may buy and sell put and call options on stock indexes
to hedge against overall fluctuations in the securities markets or market
sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and with interest
rates.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
AIM's ability to predict movements in the prices of individual securities,
fluctuations in the general securities markets or in the appropriate market
sector and movements in interest rates and currency markets; (2) imperfect
correlation, or even no correlation, between movements in the price of options,
forward contracts, futures contracts or options thereon and movements in the
price of the currency or security hedged or used for cover; (3) the fact that
skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
9
<PAGE> 171
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund are delegated to the officers of the Trust, subject always to the
investment objective and policies of the Fund and to the general supervision of
the Trust's Board, See "Trustees and Executive Officers" in the Statement of
Additional Information for information on the Trustees of the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM as the
investment manager of the Fund include, but are not limited to, determining the
composition of the portfolio of the Fund and placing orders to buy, sell or hold
particular securities. In addition, AIM provides the following administrative
services to the Fund: furnishing corporate officers and clerical staff;
providing office space, services and equipment; and supervising all matters
relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.725% on the first $500 million, 0.70% on the next $500 million, 0.675%
on the next $500 million, and 0.65% on amounts thereafter. The investment
management and administration fees paid by the Fund are higher than those paid
by most mutual funds. The Fund pays all expenses not assumed by AIM, AIM
Distributors or other agents. AIM has undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.75% and 2.40% of the average daily net assets of
such Fund's Class A and Class B shares, respectively.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administrative services agreement (the "Advisory Agreement"). AIM was organized
in 1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives.
AIM and its worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM is an indirect wholly owned subsidiary
of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of its Houston office, AIM draws upon
the expertise, personnel, data and systems of other offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), San Francisco,
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Fund, AIM employs a team approach, taking advantage of its investment
resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Joel E. Dobberpuhl Portfolio Manager Portfolio Manager for the Fund since 1998. He is
Houston since 1998 Vice President of AIM Capital. He has been
associated with AIM and/or its subsidiaries since
1990 and has been an investment professional since
1989.
Paul J. Rasplicka Portfolio Manager Portfolio Manager for the Fund since 1998. He is
Houston since 1998 Vice President of AIM Capital. He has been
associated with AIM and/or its subsidiaries since
1998 and has been an investment professional since
1982. From 1994 to 1998, Mr. Rasplicka was Vice
President and portfolio manager for INVESCO Trust
Company, an affiliate of AIM. He was also Vice
President of Chase Investment Counsel from 1992 to
1994.
</TABLE>
With respect to the Fund, AIM utilizes a team approach that relies on its
bottom-up, research-intensive, process-driven stock selection capability to
build the various investment portfolios. AIM's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set AIM's firmwide economic forecasts and sector and industry
allocations and portfolio management teams responsible for stock selection
decisions. While individual members of AIM's investment team are assigned
primary responsibility for the day-to-day management of the Fund, along with
similarly managed accounts, it is reviewed on a regular basis by the applicable
investment team to monitor compliance with applicable investment guidelines.
10
<PAGE> 172
In placing orders for the Fund's portfolio transactions, AIM seeks to obtain
the best net results. Consistent with its obligation to obtain the best net
results, AIM may consider a broker/dealer's sale of shares of the AIM Funds as a
factor in considering through whom portfolio transactions will be effected.
Brokerage transactions for the Fund may be executed through affiliates of AIM.
High portfolio turnover (over 100%) involves correspondingly greater brokerage
commissions and other transaction costs that the Fund will bear directly and
could result in the realization of net capital gains that would be taxable when
distributed to shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements.") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Company has adopted a Master
Distribution Plan applicable to Class A shares of the Fund (the "Class A Plan")
pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A shares of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales semi-
11
<PAGE> 173
nars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares of
beneficial interest. Shares of each Fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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<PAGE> 174
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
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<PAGE> 175
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 176
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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-4
<PAGE> 178
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
A-5
<PAGE> 179
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
A-6
<PAGE> 180
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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<PAGE> 181
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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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<PAGE> 184
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
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Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
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ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
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<PAGE> 188
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 189
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
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<PAGE> 190
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 191
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
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<PAGE> 192
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
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<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
A-20
<PAGE> 194
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 195
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 196
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 197
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 198
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 199
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
MCG-PRO-1
<PAGE> 200
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS --Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM NEW PACIFIC GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM NEW PACIFIC GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in its Primary
Investment Area (as defined herein).
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http:// www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 201
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 11
Organization of the Trust............ 14
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in Pacific region countries other than Japan.
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge and are subject to a maximum contingent deferred sales charge of 5%
on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 202
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, " The AIM Family of Funds" or the "AIM Funds").
Class A and Class B shares of the Fund may be exchanged for shares of other
funds in The AIM Family of Funds in the manner and subject to the policies and
charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases." Class B shareholders of the Fund may redeem all or a portion of
their shares at net asset value on any business day, less a contingent deferred
sales charge for redemptions made within six years from the date such shares
were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales
charge. See "How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on a monthly basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities. Securities of foreign companies may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies.
The Fund invests a significant portion of its assets in equity securities of
issuers in a particular region of the world. As a result, the Fund may be
subject to greater risks and may experience greater volatility than a fund that
is more broadly diversified geographically.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs, See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 203
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.97% 0.97%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses............................................ 0.61% 0.61%
---- ----
Total Fund Operating Expenses..................... 1.93% 2.58%
==== ====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds - Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM
has voluntarily agreed to limit the Fund's expenses effective January 1,
1998 (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.65% of the average daily net
assets of the Fund's Class A and Class B shares, respectively, through May
31, 2000. "Other expenses" include custody, transfer agency, legal, audit
and other operating expenses. See "Management" herein and the Statement of
Additional Information for more information.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Funds, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................... $74 $113 $154 $270
Class B shares
Assuming a complete redemption at end of
period(2)....................................... $78 $113 $161 $278
Assuming no redemption............................. $26 $ 81 $139 $278
</TABLE>
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes deduction of the applicable contingent deferred sales charge.
(3) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 204
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for Class A and Class B shares of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for the
fiscal year ended December 31, 1997, have been audited by PricewaterhouseCoopers
LLP, independent accountants, whose report thereon is included in the Statement
of Additional Information. The unaudited financial statements and notes, for the
semi-annual period ended June 30, 1998, are also included in Statement of
Additional Information. Information presented below for the periods ended
December 31, 1991 and prior thereto was audited by other auditors, which served
as the Fund's independent certified public accountants for those periods.
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 --------------------------------------------------------------------------
(UNAUDITED)* 1997* 1996* 1995* 1994 1993 1992 1991
------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A+:
Per Share Operating Performance:
Net asset value, beginning of
period......................... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30 $ 10.57
------- -------- -------- -------- -------- -------- -------- --------
Net investment income (loss).... 0.03*** 0.05 0.02 0.11 0.02 (0.03) 0.07 0.11
Net realized and unrealized gain
(loss) on investments.......... (1.50) (5.84) 2.44 0.79 (3.15) 6.23 (0.97) 1.25
------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net
asset value resulting from
investment operations.......... (1.47) (5.79) 2.46 0.90 (3.13) 6.20 (0.90) 1.36
------- -------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income.......... -- (0.03) -- (0.10) (0.01) -- (0.06) (0.08)
Net realized gain on
investments.................. -- (0.82) (1.81) (0.43) (0.55) (0.65) (0.03) (0.55)
In excess of net realized gain
on investments............... -- -- -- -- (0.07) -- -- --
------- -------- -------- -------- -------- -------- -------- --------
Total distributions...... -- (0.85) (1.81) (0.53) (0.63) (0.65) (0.09) (0.63)
------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period......................... $ 5.01 $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31 $ 11.30
======= ======== ======== ======== ======== ======== ======== ========
Total investment return(a)(c)... (22.69)% (44.24)% 20.04% 7.45% (19.73)% 60.61% (7.96)% 13.1%
Ratio and supplemental data:
Net assets, end of period (in
000's)......................... $86,769 $135,807 $361,244 $383,722 $404,680 $498,898 $281,418 $333,800
Ratio of net investment income
(loss) to average net assets:
With expense reductions(b)..... 1.21% 0.41% 0.17% 0.91% 0.11% (0.3)% 0.6% 1.0%
Without expense
reductions(b)................ 0.75% 0.14% 0.04% 0.86% N/A N/A N/A N/A
Ratio of operating expenses to
average net assets:
With expense reductions(b)..... 1.92% 1.66% 1.86% 1.89% 1.81% 1.9% 2.0% 2.0%
Without expense
reductions(b)................ 2.38% 1.93% 1.99% 1.94% --%(d) --%(d) --%(d) --%(d)
Ratio of interest expense to
average net assets++........... 0.09%(b) N/A N/A N/A N/A N/A N/A N/A
Portfolio turnover rate(b)++.... 92% 80% 93% 63% 87% 117% 72% 85%
Average commission rate per
share paid on portfolio
transactions++................. N/A $ 0.0066 $ 0.0032 N/A N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1990 1989** 1988
-------- -------- -------
<S> <C> <C> <C>
CLASS A+:
Per Share Operating Performance:
Net asset value, beginning of
period......................... $ 12.61 $ 8.74 $ 7.25
-------- -------- -------
Net investment income (loss).... 0.13 (0.01) 0.01
Net realized and unrealized gain
(loss) on investments.......... (1.51) 4.21 1.66
-------- -------- -------
Net increase (decrease) in net
asset value resulting from
investment operations.......... (1.38) 4.20 1.67
-------- -------- -------
Distributions:
Net investment income.......... (0.12) -- --
Net realized gain on
investments.................. (0.54) (0.33) (0.18)
In excess of net realized gain
on investments............... -- -- --
-------- -------- -------
Total distributions...... (0.66) (0.33) (0.18)
-------- -------- -------
Net asset value, end of
period......................... $ 10.57 $ 12.61 $ 8.74
======== ======== =======
Total investment return(a)(c)... (11.0)% 48.1% 23.2%
Ratio and supplemental data:
Net assets, end of period (in
000's)......................... $234,793 $170,071 $56,342
Ratio of net investment income
(loss) to average net assets:
With expense reductions(b)..... 1.1% (0.1)% 0.0%
Without expense
reductions(b)................ N/A N/A N/A
Ratio of operating expenses to
average net assets:
With expense reductions(b)..... 2.1% 2.0% 2.2%
Without expense
reductions(b)................ --%(d) --%(d) --%(d)
Ratio of interest expense to
average net assets++........... N/A N/A N/A
Portfolio turnover rate(b)++.... 75% 70% 107%
Average commission rate per
share paid on portfolio
transactions++................. N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate, average commission rate and ratio of interest
expense to average net assets are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** The per share data reflects a 2 for 1 stock split effective August 14,
1989.
*** Includes reimbursement of Fund operating expenses per share of $0.01.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
5
<PAGE> 205
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------------- DECEMBER 31,
CLASS B+ (UNAUDITED)* 1997* 1996* 1995* 1994 1993
-------- ------------ ------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
------- ------- -------- -------- -------- -------
Net investment income (loss)...................... 0.02** (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain (loss) on
investments..................................... (1.46) (5.67) 2.38 0.75 (3.15) 5.27
------- ------- -------- -------- -------- -------
Net increase (decrease) in net asset value
resulting from investment operations............ (1.44) (5.70) 2.32 0.78 (3.21) 5.17
------- ------- -------- -------- -------- -------
Distributions:
Net investment income........................... -- -- -- (0.02) -- --
Net realized gain on investments and foreign
currency...................................... -- (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on investments... -- -- -- -- (0.07) --
------- ------- -------- -------- -------- -------
Total distributions....................... -- (0.82) (1.81) (0.45) (0.62) (0.65)
------- ------- -------- -------- -------- -------
Net asset value, end of period.................... $ 4.84 $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
======= ======= ======== ======== ======== =======
Total investment return(a)(c)............. (22.77)% (44.65)% 19.28% 6.54% (20.30)% 46.30%
Ratio and supplemental data:
Net assets, end of period (in 000's).............. $36,779 $55,820 $151,805 $130,887 $120,171 $72,122
Ratio of net investment income (loss) to average
net assets:
With expense reductions and reimbursements(b)... 0.56% (0.24)% (0.48)% 0.26% (0.54)% (0.9)%
Without expense reductions and
reimbursements(b)............................. 0.10% (0.51)% (0.61)% 0.21% N/A N/A
Ratio of operating expenses to average net assets:
With expense reductions and reimbursements(b)... 2.57% 2.31% 2.51% 2.54% 2.46% 2.5%
Without expense reductions and
reimbursements(b)............................. 3.03% 2.58% 2.64% 2.59% N/A N/A
Ratio of interest expenses to average net
assets++........................................ 0.09% N/A N/A N/A N/A N/A
Portfolio turnover rate++(b)...................... 92% 80% 93% 63% 87% 117%
Average commission rate per share paid on
portfolio transactions++........................ N/A $0.0066 $ 0.0032 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ Portfolio turnover rate, average commission rate and ratio of interest
expense to average net assets are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** Includes reimbursement of Fund operating expenses per share of $0.01.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
---------- -------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998........................ $-- $1,080,208 30,379,121 $ 0.036
December 31, 1997............. $-- $3,020,567 33,807,469 $0.0893
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 206
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in its Primary
Investment Area, as described below. Equity securities in which the Fund may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. Countries in which the Fund may invest
include: Australia, Hong Kong, India, Indonesia, Malaysia, New Zealand,
Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand
(collectively, the "Primary Investment Area").
INVESTMENT POLICIES. Because the development of the world's economies and
stock markets is rapidly evolving, from time to time the Board of Trustees may
add or delete countries from the Fund's Primary Investment Area. There can be no
assurance that the Fund will achieve its investment objective.
The Fund is a regional fund for investors interested in a more geographically
concentrated investment but still desiring to diversify across multiple markets.
The Fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of its Primary Investment Area. Such investments may
include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depositary Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of
the Fund. The Fund will limit its purchases of debt securities to investment
grade obligations. "Investment grade" debt refers to those securities rated
within one of the four highest ratings categories by Moody's Investors Service,
Inc. ("Moody's") or by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Sub-advisor
to be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's to have speculative
characteristics. See the Statement of Additional Information for a description
of Moody's and S&P ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to
7
<PAGE> 207
take advantage of these economic and political factors. The Sub-advisor intends
to invest in such markets only after balancing the potential for growth of
selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as Euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund
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limits its loans of portfolio securities to an aggregate of 30% of the value of
its total assets, measured at the time any such loan is made. While a loan is
outstanding, the borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. government securities or certain irrevocable letters of
credit equal to at least the value of the borrowed securities, plus any accrued
interest or such other collateral as permitted by the Fund's investment program
and regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts "ADRs" or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
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RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be affected adversely by economic conditions in the countries in which they
trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
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In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
CONCENTRATION. The Fund invests a significant portion of its assets in a
particular region of the world. As a result, the Fund may be subject to greater
risks and may experience greater volatility than a fund that is more broadly
diversified geographically.
PACIFIC REGION COUNTRIES. The Fund invests primarily in equity securities of
issuers located in Pacific region countries other than Japan. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain such
currencies. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Fund could
lose its entire investment in Hong Kong, if any. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions,it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund or Portfolio to maintain
"cover" or to set aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
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The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-
advisor, AIM Distributors or other agents. Effective January 1, 1998, AIM has
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the maximum annual rate of 2.00%
and 2.65% of the average daily net assets of the Fund's Class A and Class B
shares, respectively.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the Fund pursuant to an investment sub-advisory and
sub-administration agreement. Prior to May 29, 1998, the Sub-advisor was known
as Chancellor LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of the Sub-advisor,
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included the Sub-advisor and
certain other affiliates. As a result of this transaction, the Sub-advisor is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-advisor and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Funds, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio
management of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------- -------------------- -------------------
<S> <C> <C>
Anna Tong Portfolio Manager Portfolio Manager for the Sub-advisor since June 1998 and
Hong Kong since 1998 a Managing Director and Chief Investment Officer for
INVESCO Asia Ltd. (Hong Kong) ("INVESCO Asia") since
April 1997. Managing Director for INVESCO International
(FE) Ltd. (Hong Kong) and a Director of INVESCO
Investment Management (HK) Ltd. (Hong Kong) since March
1985. INVESCO Asia, INVESCO International (FE) Ltd. and
INVESCO Investment Management (HK) Ltd. are affiliates of
the Sub-advisor.
Sammy Lau Portfolio Manager Portfolio Manager for the Sub-advisor since June 1998 and
Hong Kong since 1998 a Director of INVESCO Asia since January 1996. Associate
Director of INVESCO Asia from December 1994 to January
1996. Associate at J.P. Morgan (Hong Kong) from November
1993 to November 1994.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
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AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
13
<PAGE> 213
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of "G.T.
Global Growth Series," a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust. From time
to time the Trust may establish additional funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares of
beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
14
<PAGE> 214
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
A-1
<PAGE> 215
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 216
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE> 217
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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-4
<PAGE> 218
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
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CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
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The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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<PAGE> 224
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
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<PAGE> 226
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
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<PAGE> 227
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
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<PAGE> 228
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
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<PAGE> 229
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
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REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 231
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
A-18
<PAGE> 232
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
<PAGE> 233
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
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<PAGE> 234
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 235
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 236
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 237
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 238
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 239
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
NPG-PRO-1
<PAGE> 240
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM SMALL CAP GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM SMALL CAP GROWTH FUND, formerly
AIM Small Cap Equity Fund (the "Fund"), which is one of several series
investment portfolios comprising AIM Growth Series (the "Trust"), an open-end,
series, management investment company.
The Fund is a diversified portfolio which seeks long-term capital appreciation
by investing all of its investable assets in the Small Cap Portfolio (the
"Portfolio"), which, in turn, invests primarily in equity securities of
companies domiciled in the United States that, at the time of purchase, have a
market capitalization less than that of the largest company in the Russell
2000--Registered Trademark-- Index ("U.S. small cap companies").
The Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling
1-800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 241
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 9
Management........................... 10
Organization of the Trust and the
Portfolio......................... 12
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
How to Purchase Shares............... A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND AND THE PORTFOLIO
The Fund is a diversified series of the Trust. The Portfolio is a diversified
series of Growth Portfolio. The Fund seeks long-term capital appreciation. The
Fund invests all of its investable assets in the Portfolio, which, in turn,
invests primarily in equity securities of U.S. small cap companies.
INVESTMENT MANAGERS. The Portfolio is managed by A I M Advisors, Inc. ("AIM").
AIM and its worldwide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual
clients around the world. AIM is an indirect wholly owned subsidiary of AMVESCAP
PLC. AMVESCAP PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and retail segment of
the investment management industry in North America and Europe, and a growing
presence in Asia. AIM was organized in 1976 and, together with its subsidiaries,
currently advises approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 242
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, " The AIM Family of Funds" or the "AIM Funds").
Class A and Class B shares of the Fund may be exchanged for shares of other
funds in The AIM Family of Funds in the manner and subject to the policies and
charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund or the Portfolio will
achieve its investment objective. The Fund's net asset value will fluctuate,
reflecting fluctuations in the market value of the Portfolio's securities.
The Portfolio may engage in certain options and futures transactions to
attempt to hedge against the overall level of investment risk associated with
its present or planned investments. Such transactions involve certain risks and
transaction costs. See "Investment Program' and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 243
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.73% 0.73%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses (after reimbursements)..................... 0.67% 0.67%
---- ----
Total Fund Operating Expenses..................... 1.75% 2.40%
==== ====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
rules regarding investment companies.
(2)Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "Terms
and Conditions of Purchase of the AIM Funds - Reductions in Initial Sales
Charges."
(3)Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 1.75% and 2.40% of the average daily net
assets of the Fund's Class A and Class B shares, respectively, through May
31, 2000. "Other expenses" include custody, transfer agency, legal, audit and
other operating expenses. See "Management" herein and the Statement of
Additional Information for more information. The Board of Trustees of the
Trust believes that the aggregate per share expenses of the Fund and the
Portfolio will be approximately equal to the expenses the Fund would incur if
its assets were invested directly in the type of securities being held by the
Portfolio.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $72 $108 $145 $251
Class B shares:
Assuming a complete redemption at end of
period(2)..................................... $76 $108 $152 $260
Assuming no redemption........................... $25 $ 76 $129 $260
</TABLE>
(1)Assumes payment of maximum sales charge by the investor.
(2)Assumes deduction of the applicable contingent deferred sales charge.
(3)For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S OR THE PORTFOLIO'S
PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 244
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The tables below provide condensed financial information concerning income and
capital changes for Class A and Class B shares of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes, for the
fiscal year ended December 31, 1997, have been audited by PricewaterhouseCoopers
LLP, independent accountants, whose report thereon also is included in the
Statement of Additional Information. The unaudited financial statements and
notes, for the semi-annual period ended June 30, 1998, are also included in the
Statement of Additional Information.
AIM SMALL CAP GROWTH FUND
(FORMERLY AIM SMALL CAP EQUITY FUND AND PRIOR TO THAT GT GLOBAL AMERICA SMALL
CAP GROWTH FUND)
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------- ---------------------------------
SIX MONTHS OCT. 18, 1995 SIX MONTHS
ENDED YEAR ENDED (COMMENCEMENT ENDED YEAR ENDED
JUNE 30, DEC. 31, OF OPERATIONS) JUNE 30, DEC. 31,
1998 ------------------ THROUGH 1998 -------------------
(UNAUDITED) 1997(D) 1996(D) DEC. 31, 1995(D) (UNAUDITED) 1997(D) 1996(D)
----------- ------- ------- ---------------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year....................... $ 14.27 $12.52 $11.80 $ 11.43 $ 14.06 $12.42 $11.78
------- ------- ------- ------- ------- ------- -------
Net investment income
(loss)..................... (0.11)**** (0.18)*** (0.05)** 0.04* (0.17)**** (0.26)*** (0.14)**
Net realized and unrealized
gain (loss) on
investments................ 2.74 2.20 1.69 0.33 2.69 2.17 1.70
------- ------- ------- ------- ------- ------- -------
Net increase (decrease) in
net asset value resulting
from investment
operations................. 2.63 2.02 1.64 0.37 2.52 1.91 1.56
------- ------- ------- ------- ------- ------- -------
Distributions to shareholders:
From net realized gain on
investments -- (0.27) (0.92) -- -- (0.27) (0.92)
------- ------- ------- ------- ------- ------- -------
Total distributions.... -- (0.27) (0.92) -- -- (0.27) (0.92)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of year... $ 16.90 $14.27 $12.52 $ 11.80 $ 16.58 $14.06 $12.42
======= ======= ======= ======= ======= ======= =======
Total investment
return(a)(c)................. 18.43% 16.23% 13.81% 3.24% 17.99% 15.47% 13.14%
Ratios and supplemental data:
Net assets, end of period (in
000's)..................... $12,620 $10,896 $8,448 $ 1,931 $20,177 $21,222 $10,694
Ratio of net investment income
(loss) to average net assets:
With reimbursement by INVESCO
(NY), Inc.(b).............. (1.47)% (1.40)% (0.38)% 1.68% (2.12)% (2.05)% (1.03)%
Without reimbursement by
INVESCO (NY), Inc.(b)...... (1.93)% (2.00)% (1.47)% (20.52)% (2.58)% (2.65)% (2.12)%
Ratio of operating expenses to
average net assets:
With reimbursement by INVESCO
(NY), Inc.(b).............. 1.74% 1.92% 2.00% 2.00% 2.39% 2.57% 2.65%
Without reimbursement by
INVESCO (NY), Inc.(b)...... 2.20% 2.52% 3.09% 24.20% 2.85% 3.17% 3.74%
Ratio of interest expense to
average net assets+(b)....... 0.02% N/A N/A N/A 0.02% N/A N/A
Portfolio turnover rate(b)+.... 208% 233% 150% N/A 208% 233% 150%
Average commission rate per
share paid on portfolio
transactions+................ N/A $0.0517 $0.0489 N/A N/A $0.0517 $0.0489
<CAPTION>
CLASS B
----------------
OCT. 18, 1995
(COMMENCEMENT
OF OPERATIONS)
THROUGH
DEC. 31, 1995(D)
----------------
<S> <C>
Per Share Operating
Performance:
Net asset value, beginning of
year....................... $ 11.43
-------
Net investment income
(loss)..................... 0.02*
Net realized and unrealized
gain (loss) on
investments................ 0.33
-------
Net increase (decrease) in
net asset value resulting
from investment
operations................. 0.35
-------
Distributions to shareholders:
From net realized gain on
investments --
-------
Total distributions.... --
-------
Net asset value, end of year... $ 11.78
=======
Total investment
return(a)(c)................. 3.06%
Ratios and supplemental data:
Net assets, end of period (in
000's)..................... $ 2,024
Ratio of net investment income
(loss) to average net assets:
With reimbursement by INVESCO
(NY), Inc.(b).............. 1.03%
Without reimbursement by
INVESCO (NY), Inc.(b)...... (21.17)%
Ratio of operating expenses to
average net assets:
With reimbursement by INVESCO
(NY), Inc.(b).............. 2.65%
Without reimbursement by
INVESCO (NY), Inc.(b)...... 24.85%
Ratio of interest expense to
average net assets+(b)....... N/A
Portfolio turnover rate(b)+.... N/A
Average commission rate per
share paid on portfolio
transactions+................ N/A
</TABLE>
- ---------------
*
Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(0.47) and
$(0.49) for Class A and Class B shares, respectively, from October 18,
1995 to December 31, 1995.
**
Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(0.19) and
$(0.28) for Class A and Class B shares, respectively, for the year ended
December 31, 1996.
*** Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(0.25) and
$(0.33) for Class A and Class B shares, respectively, for the year ended
December 31, 1997.
**** Before reimbursement by INVESCO (NY), Inc. (former sub-advisor to the
Portfolio) the net investment loss per share would have been $(0.15) and
$(0.21) for Class A and Class B, respectively, for the six months ended
June 30, 1998.
+
Portfolio turnover rate, average commission rate paid on portfolio
transactions and ratio of interest expense to average net assets are
calculated on the basis of the Portfolio as a whole without distinguishing
between the classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon average shares
outstanding during the period.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
- ---------- -------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998....................... $ -- $56,260 2,177,802 $ 0.026
December 31, 1997.................................... $ -- $ 1,945 1,911,865 $0.0010
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
5
<PAGE> 245
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Fund is long term
capital appreciation. The Fund seeks its investment objective by investing all
of its investable assets in the Portfolio, which, in turn, normally invests at
least 65% of its total assets in equity securities, including common stocks,
preferred stocks, convertible debt securities and warrants of U.S. small cap
companies. The remainder of the Portfolio's assets may be invested in common
stocks, preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than the largest company in the Russell 2000 Index
and non-convertible debt securities, U.S. government securities and high quality
money market instruments, such as U.S. government obligations, high grade
commercial paper, bank certificates of deposit and bankers' acceptances, of
issuers domiciled in the United States. As of June 30, 1998, the largest company
in the Russell 2000 Index had a market capitalization of approximately $1.4
billion. The Portfolio also may invest up to 10% of its total assets in
securities of foreign issuers in the form of American Depositary Receipts
("ADRs") or other similar securities convertible into securities of foreign
issuers. There can be no assurance that the Fund or the Portfolio will achieve
its investment objective.
INVESTMENT POLICIES. The debt obligations that the Portfolio may invest in are
limited to U.S. government securities and corporate debt securities of issuers
domiciled in the United States. The Portfolio will limit its purchases of debt
securities to investment grade obligations, as defined above.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Portfolio may employ one or more of the following strategies in
order to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In selecting securities for the
Portfolio, AIM invests in a diversified portfolio of equity securities that are
considered by AIM to have strong earnings momentum or demonstrate other
potential for capital appreciation. Any income realized by the Portfolio will be
incidental and will not be an important criterion in the selection of portfolio
securities. The Portfolio will utilize to the extent practicable a fully-managed
investment policy providing for the selection of securities which meet certain
quantitative standards determined by AIM. AIM reviews carefully the earnings
history and prospects for growth of each company considered for investment by
the Portfolio. It is expected that the Portfolio, when fully invested, will
generally be comprised of companies that AIM believes are currently experiencing
a greater than anticipated increase in earnings.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in the United States if it is (a) organized under the laws of, or has
its principal office in, the United States or (b) normally derives 50% or more
of its total revenues from business in
6
<PAGE> 246
the United States, provided that, in AIM's view, the value of such issuer's
securities tends to reflect developments in the United States to a greater
extent than developments elsewhere. However, these are not absolute
requirements, and certain companies incorporated in the United States and
considered by AIM to be located in the United States may have substantial
foreign operations or subsidiaries and/or export sales exceeding in size the
assets or sales in the United States.
AIM allocates investments among fixed income securities of particular issuers
on the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. If
market interest rates decline, fixed income securities generally appreciate in
value and vice versa.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, AIM may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Portfolio may invest less than 65% of its total
assets in the types of securities covered by its primary investment policy.
Under a defensive strategy, the Portfolio may hold U.S. dollars and/or may
invest any portion of its assets in high quality domestic debt securities or
high quality money market instruments. To the extent the Portfolio adopts a
temporary defensive position, it will not be invested so as to achieve directly
its investment objective.
In addition, the Portfolio may hold U.S. dollars and may invest in domestic
debt securities or high quality money market instruments pending investment of
proceeds from new sales of Fund shares, or to meet its ordinary daily cash
needs. For a description of money market instruments, see "Temporary Defensive
Strategies" in the "Investment Objectives and Policies" section of the Statement
of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by AIM or
its affiliates ("Affiliated Funds"), that in turn are authorized to invest in
the securities of such countries. The Portfolio may invest up to 10% of its
total assets in other investment companies. As a shareholder in an investment
company, the Portfolio would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Portfolio would continue to pay its own management fees and other expenses. AIM
will waive its advisory fee to the extent that the Portfolio invests in an
Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemption of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of the Fund's shares than would be the case if the Portfolio did
not borrow.
A reverse repurchase agreement is a borrowing transaction in which the
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhance the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable and letters of credit
equal to at least the value of the borrowed securities, plus any accrued
interest or such other collateral as permitted by the Fund's investment program
and regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actually receiving or delivering the securities, as the
case may be. No income accrues on securities that have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery to the
Portfolio. If the Portfolio disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it may incur a gain or loss. At the time the
Portfolio enters into a transaction on a when-issued or forward commitment
basis, the Portfolio will segregate cash or liquid securities equal to the value
of the when-issued or forward commitment securities with its custodian and will
mark to market daily such assets. There is a risk that the securities may not be
delivered and that the Portfolio may incur a loss.
7
<PAGE> 247
OPTIONS AND FUTURES TRANSACTIONS. The Portfolio may use options on securities,
options on indices, futures contracts and options on futures contracts to
attempt to hedge against the overall level of investment risk normally
associated with its portfolio. These instruments are 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 or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk
Factors -- Options and Futures Transactions" herein and "Options, Futures and
Currency Strategies" in the Statement of Additional Information.
In addition, the Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio or that AIM intends to include in the
Portfolio's holdings. The Portfolio also may buy and sell put and call options
on stock indexes to hedge against overall fluctuations in the securities markets
or market sectors generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Portfolio may invest in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") or other
similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets. See "Investment Objectives and Policies -- Depositary
Receipts" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval. The investment policies
of the Fund are identical to the investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is
not required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective. If a percentage restriction on investment or utilization
of assets in an investment policy or restriction is adhered to at the time an
investment is made, a later change in percentage ownership of a security or kind
of securities resulting from changing market values or a similar type of event
will not be considered a violation of the Fund's or Portfolio's investment
policies or restrictions.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or shareholders of the
Fund could require the Fund to redeem its interest in the Portfolio. Any such
redemption could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. In addition, a distribution in
kind could result in a less diversified portfolio of investments for the Fund
and could adversely affect its liquidity. Should such a distribution occur, the
Fund could incur brokerage fees or other transaction costs in converting such
securities to cash. Upon redemption, the Board would consider what action might
be taken, including the investment of all the investable assets of the Fund in
another pooled investment entity having substantially the same investment
objective as the Fund or the direct retention by the Fund of its own investment
advisor to manage its assets in accordance with its investment objective,
policies and limitations discussed herein.
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment
8
<PAGE> 248
company that invests exclusively in the Portfolio. As of the date of this
Prospectus, the Fund is the only institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors,
if any, in the Portfolio. For example, as with all open-end investment
companies, if a large investor were to redeem its interest in the Portfolio, (1)
the Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns, and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. In addition, the value of debt securities held by the Portfolio
will fluctuate with changes in the perceived creditworthiness of the issuers of
such securities and with interest rates.
SMALL CAP COMPANIES. The Portfolio invests primarily in equity securities of
U.S. small cap companies. Small cap companies may be more vulnerable than larger
companies to adverse business, economic or market developments. Small cap
companies may also have more limited product lines, markets or financial
resources than companies with larger capitalizations, and may be more dependent
on a relatively small management group. In addition, small cap companies may not
be well-known to the investing public, may not have institutional ownership and
may have only cyclical, static or moderate growth prospects. Most small cap
company stocks pay low or no dividends. Securities of small cap companies are
generally less liquid and their prices more volatile than those of securities of
larger companies. The securities of some small cap companies may not be widely
traded, and the Portfolio's position in securities of such companies may be
substantial in relation to the market for such securities. Accordingly, it may
be difficult for the Portfolio to dispose of securities of these small cap
companies at prevailing market prices in order to meet redemptions.
OPTIONS AND FUTURES TRANSACTIONS. Although the Portfolio is authorized to
enter into options and futures transactions, the Portfolio might not enter into
any such transactions. Options and futures transactions involve certain risks,
which include: (1) dependence on AIM's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
or in the appropriate market sector and movements in interest rates; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, futures contracts or options thereon and movements in the price of the
security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts or options thereon are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's and the Portfolio's Boards of Trustees have overall responsibility
for the operation of the Fund and the Portfolio, respectively. The Trust's and
Portfolio's Boards of Trustees have approved all significant agreements between
the Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administrative services agreement with AIM, the agreements with
AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
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<PAGE> 249
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM as the
investment managers of the Portfolio include, but are not limited to,
determining the composition of the investment holdings of the Portfolio and
placing orders to buy, sell or hold particular securities. In addition, AIM
provides the following administrative services to the Fund and the Portfolio:
furnishing corporate officers and clerical staff; providing office space,
services and equipment; and supervising all matters relating to the Fund's and
the Portfolio's operations.
The Fund pays AIM administration fees, computed daily and paid monthly, at the
annualized rate of 0.25% of the Fund's average daily net assets. The Fund bears
its pro rata portion of the investment management and administration fees paid
by the Portfolio to AIM. The Portfolio pays AIM such fees, computed daily and
paid monthly, based on the average daily net assets of the Portfolio, at the
annualized rate of 0.475% on the first $500 million, 0.45% on the next $500
million, 0.425% on the next $500 million and 0.40% on all amounts thereafter.
The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund and
Portfolio pay all expenses not assumed by AIM, AIM Distributors or other agents.
AIM has undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the maximum annual
rate of 1.75% and 2.40% of the average daily net assets of the Fund's Class A
and Class B shares, respectively.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives.
AIM and its worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM is an indirect wholly owned subsidiary
of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of their Houston office, AIM draws
upon the expertise, personnel, data and systems of other offices in Atlanta,
Boston, Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), San
Francisco, Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto.
In managing the Portfolio, AIM employs a team approach, taking advantage of its
investment resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
- ----------- -------------------- -------------------
<S> <C> <C>
Robert M. Kippes Portfolio Manager Portfolio Manager for the Portfolio since 1998. He
Houston since 1998 has been associated with AIM and/or its
subsidiaries since he began working as an
investment professional in 1989.
Paul J. Rasplicka Portfolio Manager Portfolio Manager for the Portfolio since 1998. He
Houston since 1998 is Vice President of AIM Capital. He has been
associated with AIM and/or its subsidiaries since
1998 and has been an investment professional since
1982. From 1994 to 1998, Mr. Rasplicka was Vice
President and portfolio manager for INVESCO Trust
Company, an affiliate of AIM. He was also Vice
President of Chase Investment Counsel from 1992 to
1994.
</TABLE>
With respect to the Portfolio AIM utilizes a team approach that relies on its
bottom-up, research-intensive, process-driven stock selection capability to
build various investment portfolios. AIM's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set AIM's firmwide economic forecasts and sector and industry
allocations and portfolio management teams responsible for stock selection
decisions. While individual member(s) of AIM's investment team are assigned
primary responsibility for the day-to-day management of the Portfolio, along
with similarly managed accounts, the Portfolio is reviewed on a regular basis by
the applicable investment team to monitor compliance with applicable investment
guidelines.
In placing orders for the Portfolio's portfolio securities transactions, AIM
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, AIM may consider a broker/dealer's sale of shares of the
AIM Funds as a factor in considering through whom portfolio transactions will be
effected. Brokerage transactions for the Portfolio may be executed through
affiliates of AIM. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs that the Portfolio
will bear directly and could result in the realization of net capital gains that
would be taxable when distributed to shareholders. See "Dividends, Distributions
and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements.") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
10
<PAGE> 250
AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Company has adopted a Master
Distribution Plan applicable to Class A shares of the Fund (the "Class A Plan")
pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A shares of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
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<PAGE> 251
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST AND THE PORTFOLIO
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business
trust on May 7, 1998. On May 29, 1998, the Trust acquired the assets and assumed
the liabilities of G.T. Global Growth Series, a Massachusetts business trust.
The Fund constitutes one of the eight separate and distinct series portfolios of
the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Growth Portfolio, a Delaware business trust. Under Delaware law, the Fund and
other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However,
Growth Portfolio's Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Portfolio and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Portfolio or a trustee. The Agreement and Declaration of
Trust also provides for indemnification from the Portfolio property for all
losses and expenses of any shareholder held personally liable for the
Portfolio's obligations. Thus the risk of an investor incurring financial loss
on account of such liability is limited to circumstances in which the Portfolio
itself would be unable to meet its obligations and where the other party was
held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust, to the
Fund and to the Portfolio.
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THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
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<PAGE> 253
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
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<PAGE> 254
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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-4
<PAGE> 256
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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
A-5
<PAGE> 257
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
A-6
<PAGE> 258
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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<PAGE> 259
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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
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Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
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ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
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<PAGE> 266
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 267
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
A-16
<PAGE> 268
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 269
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
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<PAGE> 270
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
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<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
A-20
<PAGE> 272
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 273
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 274
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
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<PAGE> 275
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
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NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
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[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
SCE-PRO-1
<PAGE> 278
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM WORLDWIDE GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM WORLDWIDE GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled anywhere in the
world.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling 1-
800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 279
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 12
Organization of the Trust............ 14
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES. -- Shares are offered at net asset value plus any applicable
sales charge.
CLASS B SHARES. -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more benefi
2
<PAGE> 280
cial than Class B shares to the investor who qualifies for reduced initial sales
charges, as described below. Therefore, AIM Distributors will reject any order
for purchase of more than $250,000 for Class B shares.
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases." Class B shareholders of the Fund may redeem all or a portion of
their shares at net asset value on any business day, less a contingent deferred
sales charge for redemptions made within six years from the date such shares
were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales
charge. See "How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. The Fund may invest a significant portion of
its assets in foreign securities. Investments in foreign securities involve
risks relating to political and economic developments abroad and the differences
between the regulations to which U.S. and foreign issuers are subject.
Individual foreign economies also may differ favorably or unfavorably from the
U.S. economy. Changes in foreign currency exchange rates also may affect the
Fund's net asset value, earnings and gains and losses realized on sales of
securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 281
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.98% 0.98%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses............................................ 0.49% 0.49%
---- ----
Total Fund Operating Expenses..................... 1.82% 2.47%
==== ====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended December 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. AIM has voluntarily agreed to limit the
Fund's expenses effective January 1, 1998 (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rates
of 2.00% and 2.65% of the average daily net assets of the Fund's Class A and
Class B shares respectively through May 31, 2000.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 Years(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1)................................. $73 $110 $149 $258
Class B shares
Assuming a complete redemption at end of
period(2).................................... $77 $110 $156 $267
Assuming no redemption.......................... $25 $ 78 $133 $267
</TABLE>
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes deduction of the applicable contingent deferred sales charge.
(3) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 282
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The tables below provide condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997 have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose reports thereon
appear in the Statement of Additional Information. Information presented below
for the periods ended December 31, 1991 and prior thereto was audited by other
auditors, which served as the Fund's independent certified public accountants
for those periods.
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 --------------------------------------------------------------------------
(UNAUDITED)* 1997 1996* 1995* 1994 1993* 1992 1991
-------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A+
Per Share Operating
Performance:
Net asset value,
beginning of period... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07 $ 11.83
------- -------- -------- -------- -------- -------- -------- --------
Net investment income
(loss)................ 0.02 0.05 0.03 -- -- 0.04 0.07 0.10
Net realized and
unrealized gain (loss)
on investments........ 1.66 1.55 1.79 1.74 (1.16) 3.92 0.39 2.29
------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net asset value
resulting from
investment
operations............ 1.68 1.60 1.82 1.74 (1.16) 3.96 0.46 2.39
------- -------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income... -- (0.02) -- -- -- -- -- (0.15)
Net realized gain on
investments........... -- (4.03) (1.93) (0.45) (0.78) (0.96) (0.06) --
------- -------- -------- -------- -------- -------- -------- --------
Total
distributions...... -- (4.05) (1.93) (0.45) (0.78) (0.96) (0.06) (0.15)
------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period.................. $ 15.94 $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07
======= ======== ======== ======== ======== ======== ======== ========
Total investment
return(a)(c)....... 11.78% 10.00% 10.92% 11.23% (6.65)% 27.6% 3.3% 20.3%
Ratios and supplemental
data:
Net assets, end of
period (in 000's)..... $95,789 $103,769 $125,556 $145,982 $182,467 $193,997 $141,310 $126,868
Ratio of net investment
income (loss) to average
net assets:
With expense
reductions(b)......... 0.28% 0.32% 0.14% (0.06)% (0.01)% 0.9% 0.5% 0.8%
Without expense
reductions(b)......... 0.28% 0.23% 0.06% (0.12)% (0.04)% N/A N/A N/A
Ratio of operating
expenses to average net
assets:
With expense
reductions(b)......... 1.87% 1.73% 1.72% 1.87% 1.81% 1.9% 2.1% 2.0%
Without expense
reductions(b)......... 1.87% 1.82% 1.80% 1.93% 1.84% --%(d) --%(d) --%(d)
Portfolio turnover
rate(b)++............... 34% 92% 80% 113% 86% 92% 95% 122%
Average commission rate
per share paid on
portfolio
transactions++.......... N/A $ 0.0288 $ 0.0263 N/A N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1990 1989 1988
-------- ------- -------
<S> <C> <C> <C>
CLASS A+
Per Share Operating
Performance:
Net asset value,
beginning of period... $ 13.63 $ 10.18 $ 8.84
-------- ------- -------
Net investment income
(loss)................ 0.11 (0.01) 0.02
Net realized and
unrealized gain (loss)
on investments........ (1.82) 3.82 1.42
-------- ------- -------
Net increase (decrease)
in net asset value
resulting from
investment
operations............ (1.71) 3.81 1.44
-------- ------- -------
Distributions:
Net investment income... (0.09) -- --
Net realized gain on
investments........... -- (0.36) (0.10)
-------- ------- -------
Total
distributions...... (0.09) (0.36) (0.10)
-------- ------- -------
Net asset value, end of
period.................. $ 11.83 $ 13.63 $ 10.18
======== ======= =======
Total investment
return(a)(c)....... (12.5)% 37.6% 16.3%
Ratios and supplemental
data:
Net assets, end of
period (in 000's)..... $ 85,894 $38,263 $11,673
Ratio of net investment
income (loss) to average
net assets:
With expense
reductions(b)......... 0.7% (0.1)% 0.2%
Without expense
reductions(b)......... N/A N/A N/A
Ratio of operating
expenses to average net
assets:
With expense
reductions(b)......... 2.1% 2.0% 2.0%
Without expense
reductions(b)......... --%(d) --% --%
Portfolio turnover
rate(b)++............... 107% 91% 181%
Average commission rate
per share paid on
portfolio
transactions++.......... N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Portfolio turnover rate average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
5
<PAGE> 283
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------- DECEMBER 31,
(UNAUDITED)* 1997 1996* 1995* 1994 1993*
------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B+
Per Share Operating Performance:
Net asset value, beginning of period................ $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
------- ------- ------- ------- ------- -------
Net investment income (loss)........................ (0.03) (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain (loss) on
investments....................................... 1.58 1.49 1.75 1.73 (1.16) 2.72
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value resulting
from investment operations........................ 1.55 1.44 1.66 1.61 (1.27) 2.68
------- ------- ------- ------- ------- -------
Distributions:
Net investment income............................. -- -- -- -- -- --
Net realized gain on investments.................. -- (4.03) (1.93) (0.45) (0.78) (0.96)
------- ------- ------- ------- ------- -------
Total distributions......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------- ------- ------- ------- ------- -------
Net asset value, end of period...................... $ 15.19 $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
======= ======= ======= ======= ======= =======
Total investment return(a)(c)....................... 11.45% 9.22% 10.16% 10.52% (7.32)% 17.3%
Ratios and supplemental data:
Net assets, end of period (in 000's)................ $41,963 $45,010 $52,089 $56,095 $52,567 $20,592
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b)........................ (0.37)% (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%
Without expense reductions(b)..................... (0.37)% (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b)........................ 2.52% 2.38% 2.37% 2.52% 2.46% 2.5%
Without expense reductions(b)..................... 2.52% 2.47% 2.45% 2.58% 2.49% --%(d)
Portfolio turnover rate(b)++........................ 34% 92% 80% 113% 86% 92%
Average commission rate per share paid on portfolio
transactions++.................................... N/A $0.0288 $0.0263 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998........................ $-- $35,277 9,850,011 $ 0.004
Year ended December 31,
1997........................ $-- $21,918 9,622,077 $0.0023
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 284
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding the Fund's
performance is contained in that Fund's annual report to shareholders, which is
available upon request and without charge.
The 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 maximum front-end sales
charge at the time of purchase. Standardized total return for Class B 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.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such practices will
have the effect of increasing that Fund's total return. The performance of each
Fund will vary from time to time and past results are not necessarily
representative 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVES. The Fund seeks long-term growth of capital. It seeks
its objective by investing, under normal circumstances, at least 65% of its
total assets in equity securities of issuers domiciled in its Primary Investment
Area, as described below. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. The Fund's Primary Investment Area includes the
following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada,
Chile, Columbia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal,
Singapore, Spain, South Africa, South Korea, Sweden, Switzerland, Taiwan,
Thailand, Turkey, United Kingdom, United States and Venezuela. There can be no
assurance that the Fund will achieve its investment objectives.
INVESTMENT POLICIES. Because the development of the world's economies and
stock markets is rapidly evolving, from time to time the Board of Trustees may
add or delete countries from the Fund's Primary Investment Area.
The Fund is designed for those investors desiring to delegate equity
investment decisions, including allocation of assets among the world's different
markets, currency strategies and individual stock selection, to the
Sub-advisor's professional team of investment specialists.
Under normal circumstances, the assets of the Fund are invested in the equity
securities of issuers domiciled in at least three different countries, and 20%
to 60% of the Fund's assets normally are invested in the equity securities of
U.S. issuers.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The Fund will limit
its purchases of debt securities to investment grade obligations. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories by Moody's Investors Service, Inc. ("Moody's") or by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to
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<PAGE> 285
take advantage of these economic and political factors. The Sub-advisor intends
to invest in such markets only after balancing the potential for growth of
selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which that Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund
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<PAGE> 286
limits its loans of portfolio securities to an aggregate of 30% of the value of
its total assets, measured at the time any such loan is made. While a loan is
outstanding, the borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. government securities or certain irrevocable letters of
credit equal to at least the value of the borrowed securities, plus any accrued
interest or such other collateral as permitted by the Fund's investment program
and regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Transactions" herein and the Statement of Additional
Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depository Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
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RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests a significant portion of its assets in
foreign securities. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor will
the issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable
domestic companies. In addition, certain costs attributable to foreign
investing, such as custody charges, are higher than those attributable to
domestic investing. The Fund's interest and dividends from foreign issuers may
be subject to non-U.S. withholding taxes, thereby reducing its net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and may hold foreign currencies, it will
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of the Fund's shares, and also
may affect the value of dividends and interest earned by the Fund and gains and
losses realized by the Fund. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. The exchange rates between
the U.S. dollar and other currencies are determined by supply and demand in the
currency exchange markets, the international balance of payments, governmental
intervention, speculation and other economic and political conditions. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EEMU"). The EEMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is a
member of the EEMU may elect to participate in the EEMU and may supplement its
existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other
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protectionist measures imposed or negotiated by the countries with which they
trade. These economies also have been and may continue to be affected adversely
by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
PACIFIC REGION COUNTRIES. The Fund may invest significantly in this region.
Certain of the risks associated with international investments are heightened
for investments in Pacific region countries. For example, some of the currencies
of Pacific region countries have experienced steady devaluations relative to the
U.S. dollar, and major adjustments have been made periodically in certain such
currencies. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Pacific Fund
could lose its entire investment in Hong Kong. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.]
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
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MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the
Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of .975% on the first $500 million, .95% on the next $500 million, .925% on
the next $500 million and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-advisor sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund pays all
expenses not assumed by AIM, the Sub-advisor, AIM Distributors or other agents.
Effective January 1, 1998, AIM has undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 2.00% and 2.65% of the average daily net assets of
the Fund's Class A and Class B shares, respectively.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the Fund pursuant to an investment sub-advisory and
sub-administration agreement. Prior to May 29, 1998, the Sub-advisor was known
as Chancellor LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of the Sub-advisor,
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included the Sub-advisor and
certain other affiliates. As a result of this transaction, the Sub-advisor is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-advisor and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong-Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-adviser employs a team
approach, taking advantage of its investment resources around the world.
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The investment professionals primarily responsible for the portfolio
management of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Roger Yates London Portfolio Manager since 1996 Global Chief Investment Officer and Portfolio Manager for
the Sub-advisor and INVESCO GT Asset Management PLC
(London) ("GT Asset Management"), an affiliate of the
Sub-advisor, since October 1997. International Chief
Investment Officer and Portfolio Manager for the Sub-
advisor and GT Asset Management from September 1996 to
October 1997. Chief Investment Officer and Portfolio
Manager for Europe and the United Kingdom for the
Sub-advisor and GT Asset Management from 1994 to
September 1996. Investment Manager for Morgan Grenfell
Asset Management from 1988 to 1994.
Michael Lindsell Portfolio Manager since 1997 Head of Investment Strategy for Global Equities and
London Portfolio Manager for the Sub-advisor and GT Asset
Management since 1996. Chief Investment Officer for Japan
and Portfolio Manager for INVESCO GT Asset Management
Asia Ltd. (Hong Kong), an affiliate of the Sub-advisor,
and the Sub-advisor from 1992 to 1996.
Richard K. Collins Portfolio Manager since 1997 Senior Equity Portfolio Manager and Managing Director for
New York the Sub-advisor since April 1993. Employed by Chancellor
Capital Management, Inc., a predecessor of the
Sub-advisor, from 1982 to October 1996. Chartered
Financial Analyst and member of the Association of
Investment Management Research (AIMR) and the New York
Society of Securities Analysts.
</TABLE>
In placing orders for the Fund's portfolio transactions, the Sub-advisor seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-advisor may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-advisor. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains that would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
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 Fund 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 of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
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 Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A 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 shares of the Fund. Payments can also be directed
by
13
<PAGE> 291
AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
14
<PAGE> 292
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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<PAGE> 293
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP GROWTH FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKET DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP EQUITY FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
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Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH 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 GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
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<PAGE> 295
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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<PAGE> 296
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging from
4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND, AIM
BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <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>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession 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. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of 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
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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. See
"Contingent Deferred Sales Charge Program for Large 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
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
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CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A 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 and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
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The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) 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 gain 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 with 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.
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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.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(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 DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) 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 other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph 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.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at 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 Multiple Class 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.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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<PAGE> 303
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
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<PAGE> 305
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
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<PAGE> 306
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
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<PAGE> 307
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent 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).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
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(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
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REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
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exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
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- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. 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.
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 NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as
set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthsly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
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<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
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. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund 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.
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Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 314
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his 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
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 315
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 316
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
------------ -------------------- ------------ ------------------
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 317
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 318
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
WWG-PRO-1
<PAGE> 319
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM BASIC VALUE FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM BASIC VALUE FUND, formerly AIM
America Value Fund (the "Fund"), which is one of several series investment
portfolios comprising AIM Growth Series (the "Trust"), an open-end, series,
management investment company.
The Fund is a diversified portfolio which seeks long-term capital appreciation
by investing all of its investable assets in the Value Portfolio (the
"Portfolio"), which, in turn, invests primarily in equity securities of
companies domiciled in the United States that, at the time of purchase, have
market capitalizations of greater than $500 million and that A I M Advisors,
Inc. ("AIM") believes to be undervalued in relation to long-term earning power
or other factors.
The Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 320
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 3
Table of Fees and Expenses........... 3
Financial Highlights................. 4
Performance.......................... 5
Investment Program................... 5
Risk Factors......................... 8
Management........................... 8
Organization of the Trust and the
Portfolio......................... 10
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND AND THE PORTFOLIO
The Fund is a diversified series of the Trust. The Portfolio is a diversified
series of Growth Portfolio. The Fund seeks long-term capital appreciation. The
Fund invests all of its investable assets in the Portfolio, which, in turn,
invests primarily in equity securities of companies domiciled in the United
States that, at the time of purchase, have market capitalizations of greater
than $500 million and that AIM believes to be undervalued in relation to
long-term earning power or other factors.
INVESTMENT MANAGERS. The Portfolio is managed by AIM. AIM and its worldwide
asset management affiliates provide investment management and/or administrative
services to institutional, corporate and individual clients around the world.
AIM is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of at least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by AIM or one of the companies
formerly affiliated with the Asset Management Division of Liechtenstein Global
Trust AG, provided such accounts were invested in Advisor Class shares of any of
the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies composing or affiliated with AMVESCAP PLC.
Initial investments in Advisor Class shares must be at least $500 and
additional investments must be at least $50. The distributor of the Advisor
Class shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain funds in The AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters."
RISK FACTORS. There is no assurance that the Fund or the Portfolio will
achieve its investment objective. The Fund's net asset value will fluctuate,
reflecting fluctuations in the market value of the Portfolio's securities. The
Portfolio may engage in certain options and futures transactions to attempt to
hedge against the overall level of investment risk associated with its present
or planned investments. Such transactions involve certain risks and transaction
costs. See "Investment Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
2
<PAGE> 321
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.73%
12b-1 distribution and service fees....................... None
Other expenses (after reimbursements)..................... 0.70%
----
Total Fund Operating Expenses..................... 1.43%
====
</TABLE>
- ---------------
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund.
(2)Expenses are based on the Fund's fiscal year ended December 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses effective January
1, 1998 (exclusive of brokerage commissions, taxes, interest and
extraordinary expenses) to the annual rate of 1.40% of the average daily net
assets of the Fund's Advisor Class shares. AIM has voluntarily agreed to
continue this limitation through May 31, 2000. "Other expenses" include
custody, transfer agent, legal, audit and other operating expenses. See
"Management" herein and the Statement of Additional Information for more
information. Investors purchasing Advisor Class shares through financial
planners, trust companies, bank trust departments or registered investment
advisors, or under a "wrap fee" program, will be subject to additional fees
charged by such entities or by the sponsors of such programs. Where any
account advised by one of the companies affiliated with AMVESCAP PLC invests
in Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees. The Board of Trustees of the Trust believes that
the aggregate per share expenses of the Fund and of the Portfolio will be
approximately equal to the expenses the Fund would incur if their assets were
invested directly in the type of securities being held by the Portfolio.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $14 $45 $77 $169
</TABLE>
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S OR THE PORTFOLIO'S
PROJECTED OR ACTUAL PERFORMANCE.
3
<PAGE> 322
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
December 31, 1997 have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose reports thereon appear in the Statement of Additional
Information. The unaudited financial statements and notes, for the semi-annual
period ended June 30, 1998, are also included in the Statement of Additional
Information.
AIM BASIC VALUE FUND
(FORMERLY AIM AMERICA VALUE FUND AND PRIOR TO THAT GT GLOBAL BASIC VALUE FUND)
<TABLE>
<CAPTION>
OCTOBER 18, 1995
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED OF OPERATIONS)
JUNE 30, DECEMBER 31, THROUGH
1998 ------------------- DECEMBER 31,
ADVISOR CLASS (UNAUDITED) 1997(D) 1996(D) 1995(D)
- ------------- ----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year........................ $17.37 $14.72 $12.77 $ 11.43
------ ------- ------- --------
Net investment income (loss).............................. 0.05**** 0.15*** 0.03** 0.04*
Net realized and unrealized gain (loss) on investments.... 1.11.... 3.91 1.96 1.30
------ ------- ------- --------
Net increase (decrease) in net asset value resulting from
investment operations................................... 1.16.... 4.06 1.99 1.34
------ ------- ------- --------
Distributions to shareholders:
From net investment income................................ -- (0.07) -- --
From net realized gain on investments..................... -- (1.34) (0.04) --
------ ------- ------- --------
Total distributions................................. -- (1.41) (0.04) --
------ ------- ------- --------
Net asset value, end of year................................ $18.53 $17.37 $14.72 $ 12.77
====== ======= ======= ========
Total investment return(a)(c)....................... 6.68% 27.78% 15.58% 11.72%
====== ======= ======= ========
Ratios and supplemental data:
Net assets, end of period (in 000's)...................... $ 753 $ 439 $ 191 $ 81
Ratio of net investment income (loss) to average net assets:
With reimbursement by INVESCO (NY), Inc.(b)............... 0.63% 0.91% 0.25% 1.45%
Without reimbursement by INVESCO (NY), Inc.(b)............ 0.14% (0.07)% (3.26)% (47.09)%
Ratio of operating expenses to average net assets:
With reimbursement by INVESCO (NY), Inc.(b)............... 1.38% 1.64% 1.65% 1.65%
Without reimbursement by INVESCO (NY), Inc.(b)............ 1.87% 2.62% 5.16% 50.19%
Ratio of interest expense to average net assets(b)+......... N/A 0.03% N/A N/A
Portfolio turnover rate(b)+................................. 132% 93% 256% N/A
Average Commission rate per share paid on portfolio
transactions:+............................................ N/A $0.0278 $0.0551 N/A
</TABLE>
- ---------------
* Before reimbursement by INVESCO (NY), Inc. (former Sub-Advisor to the
Portfolio) the net investment loss per share would have been $(1.10) from
October 18, 1995 to December 31, 1995.
** Before reimbursement by INVESCO (NY), Inc. (former Sub-Advisor to the
Portfolio) the net investment loss per share would have been $(0.46) for
the year ended December 31, 1996.
*** Before reimbursement by INVESCO (NY), Inc. (former Sub-Advisor to the
Portfolio) the net investment loss per share would have been $0.01 for the
year ended December 31, 1997.
**** Before reimbursement the net investment income (loss) per share would have
been $.01 for the six months ended June 30, 1998.
+ Portfolio turnover rate from INVESCO(NY), Inc. (formerly Sub-Advisor to
the Portfolio) and average commission rate paid on portfolio transactions
and ratio of interest expense to average net assets are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon weighted average
shares outstanding during the period.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE NUMBER OF
AMOUNT OF DEBT AMOUNT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
- ---------- -------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998...................... $-- $2,167 1,593,391 $ 0.001
December 31, 1997........... $-- $ 778 930,597 $0.0008
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
4
<PAGE> 323
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. The 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, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Fund is long term
capital appreciation. The Fund seeks its investment objective by investing all
of its investable assets in the Portfolio, which, in turn, normally invests at
least 65% of its total assets in equity securities, including common stocks,
preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than $500 million and that AIM believes to be
undervalued in relation to long-term earning power or other factors. The
remainder of the Portfolio's assets may be invested in common stocks, preferred
stocks, convertible debt securities and warrants of companies domiciled in the
United States that are smaller than those defined above and non-convertible debt
securities, U.S. government securities and high quality money market
instruments, such as U.S. government obligations, high grade commercial paper,
bank certificates of deposit and bankers' acceptances, of issuers domiciled in
the United States. The Portfolio also may invest up to 10% of its total assets
in securities of foreign issuers in the form of ADRs or other similar securities
convertible into securities of foreign issuers. There can be no assurance that
the Fund or the Portfolio will achieve its investment objective.
INVESTMENT POLICIES. The debt obligations that the Portfolio may invest in are
limited to U.S. government securities and corporate debt securities of issuers
domiciled in the United States. The Portfolio will limit its purchases of debt
securities to investment grade obligations, as defined above.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Portfolio may employ one or more of the following strategies in
order to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In selecting issuers for the
Portfolio, AIM attempts to identify securities of issuers whose prospects and
growth potential, in AIM's opinion, are currently undervalued by investors. In
AIM's view, an issuer may show favorable prospects as a result of many factors,
including changes in management, shifts in supply and demand conditions in the
industry in which it operates, technological advances, new products or product
cycles, or changes in macroeconomic trends. The securities of such issuers may
be undervalued by the market due to many factors, including market decline,
tax-loss selling, poor economic conditions, limited coverage by the investment
community, investors' reluctance to overlook perceived financial, operational,
managerial or other problems affecting the issuer or the industry in which it
operates and other factors. AIM will attempt to identify those undervalued
issuers with the potential for attractive returns.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in the United States if it is (a) organized under the laws of, or has
its principal office in the United States or (b) normally derives 50% or more of
its total revenues from business in the United States, provided that, in AIM's
view, the value of such issuer's securities tends to reflect developments in the
United States to a greater extent than developments elsewhere. However, these
are not absolute requirements, and certain companies incorporated in
5
<PAGE> 324
the United States and considered by AIM to be located in the United States may
have substantial foreign operations or subsidiaries and/or export sales
exceeding in size the assets or sales in the United States.
AIM allocates investments among fixed income securities of particular issuers
on the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. If
market interest rates decline, fixed income securities generally appreciate in
value and vice versa.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, AIM may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Portfolio may invest less than 65% of its total
assets in the types of securities covered by its primary investment policy.
Under a defensive strategy, the Portfolio may hold U.S. dollars and/or may
invest any portion of its assets in high quality domestic debt securities or
high quality money market instruments. To the extent the Portfolio adopts a
temporary defensive position, it will not be invested so as to achieve directly
its investment objective.
In addition, the Portfolio may hold U.S. dollars and may invest in domestic
debt securities or high quality money market instruments pending investment of
proceeds from new sales of Fund shares, or to meet its ordinary daily cash
needs. For a description of money market instruments, see "Temporary Defensive
Strategies" in the "Investment Objectives and Policies" section of the Statement
of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by AIM or
its affiliates ("Affiliated Funds"), that in turn are authorized to invest in
the securities of such countries. The Portfolio may invest up to 10% of its
total assets in other investment companies. As a shareholder in an investment
company, the Portfolio would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Portfolio would continue to pay its own management fees and other expenses. AIM
will waive its advisory fee to the extent that the Portfolio invests in an
Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemption of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of the Fund's shares than would be the case if the Portfolio did
not borrow.
A reverse repurchase agreement is a borrowing transaction in which the
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhance the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Fund's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actu-
6
<PAGE> 325
ally receiving or delivering the securities, as the case may be. No income
accrues on securities that have been purchased pursuant to a forward commitment
or on a when-issued basis prior to delivery to the Portfolio. If the Portfolio
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Portfolio enters into a transaction on
a when-issued or forward commitment basis, the Portfolio will segregate cash or
liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Portfolio may
incur a loss.
OPTIONS AND FUTURES TRANSACTIONS. The Portfolio may use options on securities,
options on indices, futures contracts and options on futures contracts to
attempt to hedge against the overall level of investment risk normally
associated with its portfolio. These instruments are 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 or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk
Factors -- Options and Futures Strategies" herein and "Options, Futures and
Currency Strategies" in the Statement of Additional Information.
In addition, the Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio or that AIM intends to include in the
Portfolio's holdings. The Portfolio also may buy and sell put and call options
on stock indexes to hedge against overall fluctuations in the securities markets
or market sectors generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Portfolio may invest in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") or other
similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets. See "Investment Objectives and Policies -- Depositary
Receipts" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval. The investment policies
of the Fund are identical to the investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is
not required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective. If a percentage restriction on investment or utilization
of assets in an investment policy or restriction is adhered to at the time an
investment is made, a later change in percentage ownership of a security or kind
of securities resulting from changing market values or a similar type of event
will not be considered a violation of the Fund's or Portfolio's investment
policies or restrictions.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or shareholders of the
Fund could require the Fund to redeem its interest in the Portfolio. Any such
redemption could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. In addition, a distribution in
kind could result in a less diversified portfolio of investments for the Fund
and could adversely affect its liquidity. Should such a distribution occur, the
Fund could incur brokerage fees or other transaction costs in converting such
securities to cash. Upon redemption, the Board would consider what action might
be taken, including the investment of all the investable assets of the Fund in
another pooled investment entity having substantially the same investment
objective as the Fund or the direct retention by the Fund of its own investment
advisor to manage its assets in accordance with its investment objective,
policies and limitations discussed herein.
7
<PAGE> 326
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the Portfolio. As of the date of this Prospectus, the Fund is the only
institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors,
if any, in the Portfolio. For example, as with all open-end investment
companies, if a large investor were to redeem its interest in the Portfolio, (1)
the Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns, and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. In addition, the value of debt securities held by the Portfolio
will fluctuate with changes in the perceived creditworthiness of the issuers of
such securities and with interest rates.
OPTIONS AND FUTURES TRANSACTIONS. Although the Portfolio is authorized to
enter into options and futures transactions, the Portfolio might not enter into
any such transactions. Options and futures transactions involve certain risks,
which include: (1) dependence on AIM's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
or in the appropriate market sector and movements in interest rates; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, futures contracts or options thereon and movements in the price of the
security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts or options thereon are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's and the Portfolio's Boards of Trustees have overall responsibility
for the operation of the Fund and the Portfolio, respectively. The Trust's and
the Portfolio's Boards of Trustees have approved all significant agreements
between the Trust and the Portfolio on the one side and persons or companies
furnishing services to the Fund and the Portfolio on the other, including the
investment management and administration agreement with AIM, the agreements with
AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM as the
investment manager of the Portfolio include, but are not limited to, determining
the composition of the investment holdings of the Portfolio and placing orders
to buy, sell or hold particular securities. In addition, AIM provides the
following administrative services to the Fund and the Portfolio: furnishing
corporate officers and clerical staff; providing office space, services and
equipment; and supervising all matters relating to the Fund's and the
Portfolio's operations.
The Fund pays AIM administration fees, computed daily and paid monthly, at the
annualized rate of 0.25% of the Fund's average daily net assets. The Fund bears
its pro rata portion of the investment management and administration fees paid
by the Portfolio to AIM. The Portfolio pays AIM such fees, computed daily and
paid monthly, based on the average daily net assets of the Portfolio, at the
annualized rate of 0.475% on the first $500 million, 0.45% on the next $500
million, 0.425% on the next $500 million and 0.40% on all amounts thereafter.
The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund and
Portfolio pay all expenses not assumed by AIM, AIM Distributors or other agents.
AIM has
8
<PAGE> 327
undertaken to limit the Fund's expenses (exclusive of brokerage commissions,
taxes, interest and extraordinary expenses) to the maximum annual rate of 1.40%
of the average daily net assets of the Fund's Advisor Class shares.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives.
AIM and its worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM is an indirect wholly owned subsidiary
of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of its Houston office, AIM draws upon
the expertise, personnel, data and systems of other offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), San Francisco,
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Portfolio, AIM employs a team approach, taking advantage of its investment
resources around the world.
The investment professionals primarily responsible for the portfolio
management of the Portfolio are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/ OFFICE THE PORTFOLIO PAST FIVE YEARS
- ------------ -------------------- -------------------
<S> <C> <C>
Bret W. Stanley Portfolio Manager Portfolio Manager for the Portfolio since 1998. He
Houston since 1998 has been associated with AIM and/or its
subsidiaries since 1998 and has been an investment
professional since 1988. From 1994 to 1998, he was
Vice President and portfolio manager with Van
Kampen American Capital Asset Management, Inc.
From 1991 to 1994, he was Vice President,
Securities Analyst and portfolio manager with Gulf
Investment Management.
Evan G. Harrel Portfolio Manager Portfolio Manager for the Portfolio since 1998. He
Houston since 1998 has been associated with AIM and/or its
subsidiaries since 1998 and has been an investment
professional since 1983. 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. From 1987 to
1994, he was Vice President and Principal of Fayez
Sarofim & Co.
</TABLE>
With respect to the Portfolio, AIM utilizes a team approach that relies on its
bottom-up, research-intensive, process-driven stock selection capability to
build various investment portfolios. AIM's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set AIM's firmwide economic forecasts and sector and industry
allocations and portfolio management teams responsible for stock selection
decisions. While individual members of AIM's investment team are assigned
primary responsibility for the day-to-day management of the Portfolio along with
similarly managed accounts, the portfolio is reviewed on a regular basis by the
applicable investment team to monitor compliance with applicable investment
guidelines.
In placing orders for the Portfolio's portfolio securities transactions, AIM
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, AIM may consider a broker/dealer's sale of shares of the
AIM Funds as a factor in considering through whom portfolio transactions will be
effected. Brokerage transactions for the Portfolio may be executed through
affiliates of AIM. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs that the Portfolio
will bear directly and could result in the realization of net capital gains that
would be taxable when distributed to shareholders. See "Dividends, Distributions
and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
9
<PAGE> 328
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ORGANIZATION OF THE TRUST AND THE PORTFOLIO
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business
trust on May 7, 1998. On May 29, 1998, the Trust acquired the assets of and
assumed the liabilities of G.T. Global Growth Series, a Massachusetts business
trust. The Fund constitutes one of the eight separate and distinct series
portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of a fund may
vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Growth Portfolio, a Delaware business trust. Under Delaware law, the Fund and
other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However, the
Growth Portfolio's Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Portfolio and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Portfolio or a trustee. The Agreement and Declaration of
Trust also provides for indemnification from the Portfolio property for all
losses and expenses of any shareholder held personally liable for a Portfolio's
obligations. Thus the risk of an investor incurring financial loss on account of
such liability is limited to circumstances in which the Portfolio itself would
be unable to meet its obligations and where the other party was held not to be
bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust, to the
Fund and to the Portfolio.
10
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THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
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<PAGE> 330
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
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<PAGE> 331
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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<PAGE> 332
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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<PAGE> 333
Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
A-6
<PAGE> 335
as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
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<PAGE> 338
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 339
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 340
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 341
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
AVL-PRO-2
<PAGE> 342
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM EUROPE GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
P
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM EUROPE GROWTH FUND (the "Fund"),
which is one of several series investment portfolios comprising AIM Growth
Series (the "Trust"), an open-end, series, management investment company. The
Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in certain
European countries.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 343
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 9
Management........................... 10
Organization of the Trust............ 11
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-Advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of a least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by the Sub-Advisor or one of the
companies formerly affiliated with the Asset Management Division of
Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and
(e) any of the companies composing or affiliated with AMVESCAP PLC.
Pursuant to a separate prospectus, the Fund also offers Class A and Class B
shares, which represent interests in the Fund. The Class A and Class B shares
have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and
additional investments must be at least $50. The distributor of the Advisor
Class shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain Funds in The AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be rein-
2
<PAGE> 344
vested at net asset value without payment of a sales charge in the Fund's shares
or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund invests a significant portion of its assets in equity securities of
issuers in a particular country or region of the world. As a result, the Fund
may be subject to greater risks and may experience greater volatility than a
fund that is more broadly diversified geographically.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos and La Familia AIM de Fondos and Design are registered
service marks and Invest With Discipline and AIM Bank Connection are service
marks of A I M Management Group Inc.
3
<PAGE> 345
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES.
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table (1):
<TABLE>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charges (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.97%
12b-1 distribution and service fees....................... None
Other expenses............................................ 0.57%
----
Total Fund Operating Expenses..................... 1.54%
====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund.
(2) Expenses are based on the Fund's fiscal year ended December 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. AIM has voluntarily agreed to limit the
Fund's expenses effective January 1, 1998 (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate
of 1.65% of the average daily net assets of the Fund's Advisor Class through
May 31, 2000. Investors purchasing Advisor Class shares through financial
planners, trust companies, bank trust departments or registered investment
advisors, or under a "wrap fee" program, will be subject to additional fees
charged by such entities or by the sponsors of such programs. Where any
account advised by one of the companies composing or affiliated with
AMVESCAP PLC invests in Advisor Class shares of the Fund, such account shall
not be subject to duplicative advisory fees.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $16 $ 49 $ 85 $185
</TABLE>
THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL
PERFORMANCE.
4
<PAGE> 346
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes, for the
fiscal year ended December 31, 1997, have been audited by PricewaterhouseCoopers
LLP independent accountants, whose report thereon also is included the Statement
of Additional Information. The unaudited financial statements and notes, for the
semi-annual period ended June 30, 1998, are also included in the Statement of
Additional Information.
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 1, 1995
JUNE 30, TO
1998 DECEMBER 31,
ADVISOR CLASS+ (UNAUDITED)* 1997* 1996* 1995*
- -------------- -------------- ------- ------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period................. $14.41 $ 12.92 $ 10.85 $10.24
------ ------- ------- ------
Net investment income................................ 0.06 0.01 0.01 0.08
Net realized and unrealized gain (loss) on
investments and foreign currency................... 3.96 1.49 2.18 0.71
------ ------- ------- ------
Net increase (decrease) in net asset value resulting
from investment operations......................... 4.02 1.50 2.19 0.79
------ ------- ------- ------
Distributions:
Net investment income................................ -- -- -- (0.14)
Net realized gain on investments..................... -- (0.01) (0.12) --
In excess of net investment income................... -- -- -- (0.04)
In excess of net realized gain on investments........ -- -- -- --
------ ------- ------- ------
Total distributions........................... -- (0.01) (0.12) (0.18)
------ ------- ------- ------
Net asset value, end of year........................... $18.43 $ 14.41 $ 12.92 $10.85
====== ======= ======= ======
Total investment return(a).................... 27.83% 11.64% 20.21% 7.75%
Ratios and supplemental data:
Net assets, end of period (in 000's)................. $7,226 $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b)........................... 0.77% 0.06% 0.09% 0.73%
Without expense reductions(b)........................ 0.76% (0.08)% 0.03% 0.67%
Ratio of operating expenses to average net assets:
With expense reductions(b)........................... 1.38% 1.40% 1.47% 1.48%
Without expense reductions(b)........................ 1.39% 1.54% 1.53% 1.54%
Ratio of interest expense to average net assets++...... 0.28%(b) N/A N/A N/A
Portfolio turnover rate(b)++........................... 40% 107% 123% 108%
Average commission rate per share paid on portfolio
transactions++....................................... N/A $0.0533 $0.0277 N/A
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ On June 1, 1995, the Fund began offering Advisor Class
shares.
++ Portfolio turnover rate, average commission rate and ratio
of interest expense to average net assets are calculated on
the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
* The selected per share data were calculated based upon
average shares outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
N/A Not Applicable.
</TABLE>
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998...................... $-- $13,301,882 35,851,223 $ 0.371
Year ended December 31,
1997...................... $-- $ 7,281,203 38,714,809 $0.1881
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
5
<PAGE> 347
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's yield and total return. The performance
of the Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. It seeks its
objective by investing, under normal circumstances, at least 65% of its total
assets in equity securities of issuers domiciled in its Primary Investment Area,
as described below. There can be no assurance that the Fund will achieve its
investment objective. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. Countries in which the Fund may invest include Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey and the
United Kingdom (collectively, the "Primary Investment Area").
INVESTMENT POLICIES. Because the development of the world's economies and
stock markets is rapidly evolving, from time to time the Board of Trustees may
add or delete countries from the Fund's Primary Investment Area.
The Fund is a regional fund for investors interested in a more geographically
concentrated investment but still desiring to diversify across multiple markets.
The Fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of its Primary Investment Area. Such investments may
include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depositary Receipts. The Fund will limit
its purchases of debt securities to investment grade obligations. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories by Moody's Investors Service, Inc. ("Moody's") or by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to
6
<PAGE> 348
be considered are that several of the markets are so-called developing
countries, and their economies and markets are less developed and more prone to
uncertainty, instability and risk than those of the other markets in which the
Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in high
quality foreign or domestic money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash,
7
<PAGE> 349
U.S. government securities or certain irrevocable letters of credit equal to at
least the value of the borrowed securities, plus any accrued interest or such
other collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Statistics" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Company's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
8
<PAGE> 350
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect the Fund's investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EEMU"). The EEMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is a
member of the EEMU may elect to participate in the EEMU and may supplement its
existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
CONCENTRATION. The Fund invests a significant portion of its assets in a
particular region of the world. As a result the Fund may be subject to greater
risks and may experience greater volatility than a fund that is more broadly
diversified geographically.
OPTIONS, FUTURES AND CURRENCY STRATEGIES. Although the Fund is authorized to
enter into options, futures and forward currency transactions, the Fund might
not enter into any such transactions. Options, futures and foreign currency
transactions involve certain risks, which include: (1) dependence on the
Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
9
<PAGE> 351
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund including the
investment advisory and administrative services agreement with AIM, the
investment sub-advisory and sub-administration agreement between AIM and the
Sub-advisor, the agreements with AIM Distributors regarding distribution of the
Fund's shares, the custody agreement and the transfer agency agreement. The
day-to-day operations of the Fund are delegated to the officers of the Trust,
subject always to the investment objective and policies of the Fund and to the
general supervision of the Trust's Board. See "Trustees and Executive Officers"
in the Statement of Additional Information for information on the Trustees of
the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administrative fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-advisor, AIM Distributors or other agents. Effective
January 1, 1998, AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
maximum annual rate of 1.65% of the average daily net assets of the Fund's
Advisor Class shares.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Europe Fund pursuant to a master investment management
and administration agreement (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the above Fund pursuant to an investment
sub-advisory and sub-administration agreement. Prior to May 29, 1998, the
Sub-advisor was known as Chancellor LGT Asset Management, Inc. On May 29, 1998,
Liechtenstein Global Trust AG ("LGT"), the former indirect parent organization
of the Sub-advisor, consummated a purchase agreement with AMVESCAP PLC pursuant
to which AMVESCAP PLC acquired LGT's Asset Management Division, which included
the Sub-advisor and certain other affiliates. As a result of this transaction,
the Sub-advisor is now an indirect wholly owned subsidiary of AMVESCAP PLC.
Prior to the sale, the Sub-advisor and its worldwide asset management affiliates
provided investment management and/or administrative services to institutional,
corporate and individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
10
<PAGE> 352
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Nicholas J. Ford Portfolio Manager Portfolio Manager for the Sub-advisor since February
London since 1998 1998 and Portfolio Manager for INVESCO GT Asset
Management PLC (London), an affiliate of the
Sub-advisor, since 1996. Director of Equities for
Lehman Brothers Global Asset Management PLC (London)
from 1994 to 1996. Portfolio Manager and Head of
European Equities for Hill Samuel Investment Management
PLC (London) from 1990 to 1994.
</TABLE>
In placing orders for the Fund's portfolio transactions, the Sub-advisor seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-advisor may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-advisor. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains that would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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<PAGE> 353
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
A-1
<PAGE> 354
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
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and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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<PAGE> 357
Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
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as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
A-8
<PAGE> 361
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
A-9
<PAGE> 362
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 363
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 364
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 365
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
ERG-PRO-2
<PAGE> 366
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM INTERNATIONAL GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM INTERNATIONAL GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in its Primary
Investment Area (as defined herein).
This Prospectus sets forth concisely the information about the Fund prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, or by calling (800) 347-4246. The SEC
maintains a Web site at http://www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 367
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 9
Management........................... 11
Organization of the Trust............ 12
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its Subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of a least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by the Sub-advisor or one of the
companies formerly affiliated with the Asset Management Division of
Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and
(e) any of the companies affiliated with AMVESCAP PLC. Pursuant to a separate
prospectus, the Fund also offers Class A and Class B shares, which represent
interests in the Fund. The Class A and Class B shares have different
distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and
additional investments must be at least $50. The distributor of the Advisor
Class shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain funds in The AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be rein-
2
<PAGE> 368
vested at net asset value without payment of a sales charge in the Fund's shares
or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 369
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.98%
12b-1 distribution and service fees....................... None
Other expenses............................................ 0.49%
----
Total Fund Operating Expenses..................... 1.47%
====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund.
(2)Expenses are based on the Funds' fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 1.65% of the average daily net assets of the
Fund's Advisor Class shares through May 31, 2000. "Other expenses" include
custody, transfer agent, legal, audit and other operating expenses. See
"Management" herein and the Statement of Additional Information for more
information. Investors purchasing Advisor Class shares through financial
planners, trust companies, bank trust departments or registered investment
advisors, or under a "wrap fee" program, will be subject to additional fees
charged by such entities or by the sponsors of such programs. Where any
account advised by one of the companies affiliated with AMVESCAP PLC invests
in Advisor Class shares of a Fund, such account shall not be subject to
duplicative advisory fees.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $15 $47 $81 $177
</TABLE>
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 370
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes, for the
fiscal year ended December 31, 1997, have been audited by PricewaterhouseCoopers
LLP, independent accountants, whose report thereon also is included in the
Statement of Additional Information. The unaudited financial statements and
notes, for the semi-annual period ended June 30, 1998, are also included in the
Statement of Additional Information.
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED JUNE 1,
JUNE 30, DECEMBER 31, 1995 TO
1998 ------------------- DECEMBER 31,
(UNAUDITED)(C) 1997(C) 1996(C) 1995
-------------- ------- ------- ------------
<S> <C> <C> <C> <C>
ADVISOR CLASS:+
Per Share Operating Performance:
Net asset value, beginning of period...................... $ 7.72 $ 9.01 $ 9.11 $ 8.49
------ ------- ------- ------
Net investment income (loss).............................. 0.05 0.07 0.02 0.03
Net realized and unrealized gain (loss) on investments.... 0.79 0.65 0.87 1.03
------ ------- ------- ------
Net increase (decrease) in net asset value resulting from
investment operations................................... 0.84 0.72 0.89 1.06
------ ------- ------- ------
Distributions:
Net investment income..................................... -- (0.07) -- --
Net realized gain on investments and foreign currency..... -- (1.94) (0.99) (0.24)
In excess of net realized gain on investments............. -- -- -- (0.20)
------ ------- ------- ------
Total distributions................................ -- (2.01) (0.99) (0.44)
------ ------- ------- ------
Net asset value, end of period.............................. $ 8.56 $ 7.72 $ 9.01 $ 9.11
====== ======= ======= ======
Total investment return(a)......................... 10.75% 8.53% 9.79% 12.56%
Ratios and supplemental data:
Net assets, end of period (in 000's)...................... $ 252 $ 284 $ 461 $ 381
Ratio of net investment income (loss) to average net assets:
With expense reductions(b)................................ 1.24% 0.70% 0.21% 0.59%
Without expense reductions(b)............................. 1.23% 0.57% 0.10% 0.51%
Ratio of operating expenses to average net assets:
With expense reductions(b)................................ 1.55% 1.34% 1.45% 1.35%
Without expense reductions(b)............................. 1.56% 1.47% 1.56% 1.43%
Portfolio turnover rate(b)++................................ 51% 72% 74% 75%
Average commission rate per share paid on portfolio
transactions+++........................................... N/A $0.0269 $0.0267 N/A
</TABLE>
- ---------------
+ On June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
(a) Not annualized.
(b) Annualized.
(c) The selected per share data were calculated based upon average shares
outstanding during the period.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998..................... $ -- $ 36,211 25,043,954 $ 0.001
Year ended December 31, 1997....................... $ -- $283,148 26,055,589 $0.0109
Year ended December 31, 1996....................... $129,000 $131,860 32,830,494 $0.0040
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
5
<PAGE> 371
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in its Primary
Investment Area, as described below. Equity securities in which the Fund may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. The Fund's Primary Investment Area includes
the following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada,
Chile, Colombia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal,
Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey, the United Kingdom and Venezuela but not the United States.
There can be no assurance that the Fund will achieve its investment objective.
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from the Fund's Primary Investment Area.
INVESTMENT POLICIES. The Fund is intended for investors seeking to complement
their U.S. equity investments with a professionally managed non-U.S. portfolio.
The Fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of its Primary Investment Area. Such investments may
include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
Under normal circumstances, the assets of the Fund are invested in the equity
securities of issuers domiciled in at least three different countries.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of
the Fund. The Fund will limit its purchases of debt securities to investment
grade obligations. "Investment grade" debt refers to those securities rated
within one of the four highest ratings categories by Moody's Investors Service,
Inc. ("Moody's") or by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Sub-advisor
to be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's to have speculative
characteristics. See the Statement of Additional Information for a description
of Moody's and S&P ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to
6
<PAGE> 372
take advantage of these economic and political factors. The Sub-advisor intends
to invest in such markets only after balancing the potential for growth of
selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multi-national currency
units such as euros) and/or high quality debt securities or money market
instruments issued by corporations or the U.S. or a foreign government. In
addition, for temporary defensive purposes, most or all investments of the Fund
may be made in the United States and denominated in U.S. dollars. To the extent
the Fund adopts a temporary defensive position, it will not be invested so as to
achieve directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as Euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund
7
<PAGE> 373
limits its loans of portfolio securities to an aggregate of 30% of the value of
its total assets, measured at the time any such loan is made. While a loan is
outstanding, the borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. government securities or certain irrevocable letters of
credit equal to at least the value of the borrowed securities, plus any accrued
interest or such other collateral as permitted by the Fund's investment program
and regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
8
<PAGE> 374
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect the Fund's investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EEMU"). The EEMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is a
member of the EEMU may elect to participate in the EEMU and may supplement its
existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be affected adversely by economic conditions in the countries in which they
trade.
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<PAGE> 375
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
PACIFIC REGION COUNTRIES. The Fund may invest significantly in equity
securities of issuers located in Pacific region countries. Certain of the risks
associated with international investments are heightened for investments in
Pacific region countries. For example, some of the currencies of Pacific region
countries have experienced steady devaluations relative to the U.S. dollar, and
major adjustments have been made periodically in certain such currencies.
Moreover, recent currency devaluations in some Pacific region countries have
resulted in high interest rate levels and sharp reductions in economic activity
and have diminished prospects for short-term growth in corporate earnings.
Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Fund could
lose its entire investment in Hong Kong, if any. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
10
<PAGE> 376
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-advisor, AIM Distributors or other agents. Effective
January 1, 1998, AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
maximum annual rate of 1.65% of the average daily net assets of the Fund's
Advisor Class shares.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the Fund pursuant to an investment sub-advisory and
sub-administration agreement. Prior to May 29, 1998, the Sub-advisor was known
as Chancellor LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of the Sub-advisor,
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included the Sub-advisor and
certain other affiliates. As a result of this transaction, the Sub-advisor is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-advisor and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
11
<PAGE> 377
The investment professionals primarily responsible for the portfolio
management of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES BUSINESS EXPERIENCE
NAME/OFFICE FOR THE FUND PAST FIVE YEARS
----------- ---------------- -------------------
<S> <C> <C>
Roger Yates Portfolio Manager Global Chief Investment Officer for the Sub-advisor and
London since 1996 INVESCO GT Asset Management PLC (London) ("GT Asset
Management"), an affiliate of the Sub-advisor, since
October 1997. International Chief Investment Officer
for the Sub-advisor and GT Asset Management from
September 1996 to October 1997. Chief Investment
Officer and Portfolio Manager for Europe and the United
Kingdom for the Sub-advisor and GT Asset Management
from 1994 to September 1996. Investment Manager for
Morgan Grenfell Asset Management from 1988 to 1994.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities and
London since 1992 Portfolio Manager for the Sub-advisor since 1996. Chief
Investment Officer for Japan and Portfolio Manager for
INVESCO GT Asset Management Asia Ltd. (Hong Kong), an
affiliate of the Sub-advisor, and for the Sub-advisor
from 1992 to 1996. Director of Warburg Asset Management
(Tokyo) prior thereto.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of the Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of "G.T.
Global Growth Series," a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
12
<PAGE> 378
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
A-1
<PAGE> 380
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
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<PAGE> 381
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
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as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
A-9
<PAGE> 388
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 389
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 390
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 391
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
ITG-PRO-2
<PAGE> 392
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM JAPAN GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM JAPAN GROWTH FUND (the "Fund"),
which is one of several series investment portfolios comprising AIM Growth
Series (the "Trust"), an open-end, series, management investment company. The
Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in Japan.
The Fund is managed by A I M Advisors, Inc. ("AIM") and is sub-advised and
sub-administered by INVESCO (NY), Inc. (the "Sub-advisor"). AIM and the
Sub-advisor and their worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM and the Sub-advisor are both indirect
wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are
an independent investment management group that has a significant presence in
the institutional and retail segment of the investment management industry in
North America and Europe, and a growing presence in Asia.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 393
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 8
Management........................... 10
Organization of the Trust............ 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the
AIM Funds......................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in Japan.
INVESTMENT MANAGERS. The Fund is managed by AIM Advisors, Inc. ("AIM") and is
sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor"). AIM
and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of at least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by the Sub-advisor or one of the
companies formerly affiliated with the Asset Management Division of
Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and
(e) any of the companies affiliated with AMVESCAP PLC.
Pursuant to a separate prospectus, the Fund also offers Class A and Class B
shares, which represent interests in the Fund. The Class A and Class B shares
have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and
additional investments must be at least $50. The distributor of the Advisor
Class shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain funds in The AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be rein-
2
<PAGE> 394
vested at net asset value without payment of a sales charge in the Fund's shares
or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
REINVESTMENT. Dividends and other distributions may be reinvested
automatically in Advisor Class shares or in Advisor Class shares of other AIM/GT
Funds without a sales charge.
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund invests a significant portion of its assets in issuers in a
particular country. As a result, the Fund may be subject to greater risks and
may experience greater volatility than a fund that is more broadly diversified
geographically.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 395
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.98%
12b-1 distribution and service fees....................... None
Other expenses (after reimbursements)..................... 0.67%
----
Total Fund Operating Expenses..................... 1.65%
====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund.
(2)Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's expenses effective January 1, 1998 to
the annual rate of 1.65% of the average daily net assets of the Fund's
Advisor Class shares through May 31, 2000. Without reimbursements, "Other
expenses" and "Total Fund Operating Expenses" would have been 0.73% and
1.71%, respectively, for the Advisor Class shares of the Fund. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional Information
for more information. Investors purchasing Advisor Class shares through
financial planners, trust companies, bank trust departments or registered
investment advisors, or under a "wrap fee" program, will be subject to
additional fees charged by such entities or by the sponsors of such programs.
Where any account advised by one of the companies affiliated with AMVESCAP
PLC invests in Advisor Class shares of the Fund, such account shall not be
subject to duplicative advisory fees.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $17 $52 $90 $197
</TABLE>
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 396
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
December 31, 1997 have been audited by PricewaterhouseCoopers LLP, independent
accountants, and the unaudited financial statements and notes for the
semi-annual period ended April 30, 1998 whose reports thereon appear in the
Statement of Additional Information.
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 1, 1995
JUNE 30, YEAR ENDED TO
1998 -------------------- DECEMBER 31,
(UNAUDITED)* 1997* 1996* 1995*
------------ ------- ------- ------------
<S> <C> <C> <C> <C>
ADVISOR CLASS+
Per Share Operating Performance:
Net asset value, beginning of period................... $ 9.05 $ 9.81 $ 11.02 $10.50
------ ------- ------- ------
Net investment income (loss)........................... 0.01(c) (0.01) (0.01) --
Net realized and unrealized gain (loss) on
investments......................................... 0.07 (0.73) (0.77) 1.89
------ ------- ------- ------
Net increase (decrease) in net asset value resulting
from investment operations.......................... 0.08 (0.74) (0.78) 1.89
------ ------- ------- ------
Distributions:
Net realized gain on investments and foreign
currency............................................ -- (0.02) (0.43) (1.37)
------ ------- ------- ------
Net asset value, end of period........................... $ 9.13 $ 9.05 $ 9.81 $11.02
====== ======= ======= ======
Total investment return(a)........................ 0.88% (7.54)% (7.14)% 18.14%
====== ======= ======= ======
Ratios and supplemental data:
Net assets, end of period (in 000's)................... $1,921 $30,351 $ 413 $ 558
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b)............................. 0.28% (0.26)% (0.05)% (0.05)%
Without expense reductions(b).......................... 0.00% (0.33)% (0.15)% (0.20)%
Ratio of operating expenses to average net assets:
With expense reductions(b)............................. 1.62% 1.64% 1.49% 1.64%
Without expense reductions(b).......................... 1.90% 1.71% 1.59% 1.79%
Portfolio turnover rate(b)++............................. 38% 58% 31% 67%
Average commission rate per share paid on portfolio
transactions++......................................... N/A $0.0416 $0.0971 N/A
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ On June 1, 1995, the Fund began offering Advisor Class
shares.
++ Portfolio turnover rate and average commission rate are
calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* The selected per share data were calculated based upon
average shares outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Without reimbursement, the net investment income (loss) per
share would have been reduced (increased) by $0.01.
N/A Not Applicable.
</TABLE>
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE NUMBER OF AVERAGE AMOUNT
AMOUNT OF DEBT AMOUNT OF DEBT REGISTRANT'S SHARES OF DEBT
OUTSTANDING AT OUTSTANDING OUTSTANDING PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
- ---------- -------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998.................. $ -- $48,353 9,862,484 $ 0.005
1997............................................ $ -- $ -- 10,542,000 $ --
1996............................................ $2,000,000 $ 5,479 13,009,004 $0.0004
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
5
<PAGE> 397
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in Japan. Equity
securities in which the Fund may invest include common stocks, preferred stocks,
convertible debt securities and warrants to acquire such securities. There can
be no assurance that the Fund will achieve its investment objective.
INVESTMENT POLICIES. The Fund is designed for investors wishing to concentrate
their investment in the Japanese market but still desiring the professional
management, liquidity and diversification afforded by a mutual fund.
The Japan Fund may invest up to 35% of its total assets in the equity
securities of issuers domiciled outside of Japan. Such investments may include:
(a) securities of issuers in countries that are not located in Japan but are
linked by tradition, economic markets, cultural similarities or geography to
Japan; and (b) securities of issuers located elsewhere in the world that have
operations in Japan or that stand to benefit from political and economic events
in Japan.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The issuers of such
debt securities may or may not be domiciled in Japan. The Fund will limit its
purchases of debt securities to investment grade obligations. "Investment grade"
debt refers to those securities rated within one of the four highest ratings
categories by Moody's Investors Service, Inc. ("Moody's") or by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in Japan if it is (a) organized under the laws of, or has its
principal office in Japan or (b) normally derives 50% or more of its total
revenues from business in Japan, provided that, in the Sub-advisor's view, the
value of such issuer's securities tends to reflect Japan's development to a
greater extent than developments elsewhere. However, these are not absolute
requirements, and certain companies incorporated in Japan and considered by the
Sub-
6
<PAGE> 398
advisor to be located in Japan may have substantial foreign operations or
subsidiaries and/or export sales exceeding in size the assets or sales in Japan.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as Euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates
7
<PAGE> 399
and prices. The price, which generally is expressed in yield terms, is fixed at
the time the commitment is made, but delivery and payment for the securities
take place at a later date. When-issued securities and forward commitments may
be sold prior to the settlement date, but the Fund will purchase or sell
when-issued securities or enter into forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, it will segregate cash or liquid
securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Funds also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts "ADRs" or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
8
<PAGE> 400
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
CONCENTRATION. The Fund invests a significant portion of its assets in a
particular country. As a result, the Fund may be subject to greater risks and
may experience greater volatility than a fund that is more broadly diversified
geographically.
JAPAN. The Fund invests primarily in equity securities of issuers domiciled in
Japan. Accordingly, the Fund's performance will be closely tied to economic and
political conditions in Japan, and its performance is expected to be more
volatile than more geographically diversified funds. Changes in regulatory, tax
or economic policy in Japan could significantly affect the Japanese securities
markets and therefore the Fund's performance.
Japan's economic growth has declined significantly since 1990. The general
government position has deteriorated as result of weakening economic growth and
stimulative measures taken to support economic activity and to restore financial
stability. Although the decline in interest rates and fiscal stimulation
packages have helped to contain recessionary forces, uncertainties remain. Japan
is also heavily dependent upon international trade, so its economy is especially
sensitive to trade barriers and disputes.
The common stocks of many Japanese companies trade at high price-earnings
ratios, which may be attributable in part to inefficiencies associated with
Japanese corporate operations. Differences in accounting methods make it
difficult to compare the earnings of Japanese companies with those of companies
in other countries, especially the United States. In general, however, reported
net income in Japan is understated relative to U.S. accounting standards and
this is one reason why price-earnings ratios of the stocks of Japanese companies
have tended historically to be higher than those for U.S. stocks. In addition,
Japanese companies have tended to have higher growth rates than U.S. companies,
and Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.
The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are also not always
equally enforced.
In addition, Japan's banking industry is undergoing problems related to bad
loans and declining values in real estate.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
9
<PAGE> 401
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administrative services agreement with AIM, the
investment sub-advisory and sub-administration agreement between AIM and the
Sub-advisor, the agreements with AIM Distributors regarding distribution of the
Fund's shares, the custody agreement and the transfer agency agreement. The
day-to-day operations of the Fund are delegated to the officers of the Trust,
subject always to the investment objective and policies of the Fund and to the
general supervision of the Trust's Board. See "Trustees and Executive Officers"
in the Statement of Additional Information for information on the Trustees of
the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund and
Portfolio pay all expenses not assumed by AIM, the Sub-advisor, AIM Distributors
or other agents. The Fund pays all expenses not assumed by AIM, the Sub-advisor,
AIM Distributors or other agents. Effective January 1, 1998, AIM has undertaken
to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the maximum annual rate of 1.65% of the
average daily net assets of the Fund's Advisor Class shares.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administrative services agreement, dated as of May 29, 1998 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its subsidiaries,
manages or advises approximately 90 investment company portfolios encompassing a
broad range of investment objectives. The Sub-advisor, 50 California Street,
27th Floor, San Francisco, California 94111, and 1166 Avenue of the Americas,
New York, New York 10036, serves as the sub-advisor to the Fund pursuant to an
investment sub-advisory and sub-administrative agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-advisor was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-advisor, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-advisor and certain other
affiliates. As a result of this transaction, the Sub-advisor is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-advisor and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
10
<PAGE> 402
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Andrew Callender Portfolio Manager Head of Investments for Japan and Portfolio
Tokyo since 1997 Manager for the Sub- advisor and INVESCO GT Asset
Management Japan Ltd. (Tokyo), an affiliate of the
Sub-advisor since 1997. Portfolio Manager for
INVESCO GT Asset Management Japan Ltd. from 1990
to 1997.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement, dated
May 29, 1998 (the "Distribution Agreement"), with AIM Distributors, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
Advisor Class shares of the Fund. Certain Trustees and officers of the Trust are
affiliated with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
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ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Company acquired the assets of and assumed the liabilities of
"G.T. Global Growth Series", a Massachusetts business trust. The Fund
constitutes one of the eight separate and distinct series or portfolios of the
Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
11
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THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
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INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
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HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
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<PAGE> 404
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
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TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
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<PAGE> 405
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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<PAGE> 406
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SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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<PAGE> 407
Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
A-6
<PAGE> 409
as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
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<PAGE> 411
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
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<PAGE> 412
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 413
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
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<PAGE> 414
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 415
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
JPG-PRO-2
<PAGE> 416
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM MID CAP EQUITY FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM MID CAP EQUITY FUND, formerly AIM
Mid Cap Growth Fund (the "Fund"), which is one of several series investment
portfolios comprising AIM Growth Series (the "Trust"), an open-end, series,
management investment company. The Fund is a diversified portfolio which seeks
long-term growth of capital by investing primarily in equity securities of
companies domiciled in the United States that, at the time of purchase, are
within the range of market capitalizations of companies that are included in the
Russell Mid Cap(TM) Index ("U.S. mid cap companies").
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon request to the Trust at 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800) 347-4246. The
SEC maintains a Web site at http://www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 417
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 3
Table of Fees and Expenses........... 3
Financial Highlights................. 4
Performance.......................... 5
Investment Program................... 5
Risk Factors......................... 7
Management........................... 8
Organization of the Trust............ 9
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of U.S.
mid cap companies.
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM"). AIM
and its worldwide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual
clients around the world. AIM is an indirect wholly owned subsidiary of AMVESCAP
PLC. AMVESCAP PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and retail segment of
the investment management industry in North America and Europe, and a growing
presence in Asia. AIM was organized in 1976 and, together with its subsidiaries,
currently advises approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of a least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by AIM or one of the companies
formerly affiliated with the Asset Management Division of Liechtenstein Global
Trust AG, provided such accounts were invested in Advisor Class shares of any of
the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies composing or affiliated with AMVESCAP PLC. Pursuant to a separate
prospectus, the Fund also offers Class A and Class B shares, which represent
interests in the Fund. The Class A and Class B shares have different
distribution arrangements. Initial investments in Advisor Class shares must be
at least $500 and additional investments must be at least $50. The distributor
of the Advisor Class shares is A I M Distributors, Inc. ("AIM Distributors"),
P.O. Box 4739, Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain Funds in the AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. The Fund may engage in certain foreign
currency, options and futures transactions to attempt to hedge against the
overall level of investment or currency risk associated with its present or
planned investments. Such transactions involve certain risks and transaction
costs. See "Investment Programs" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
2
<PAGE> 418
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering None
price).................................................
Sales charges on reinvested distributions to None
shareholders...........................................
Maximum deferred sales charges (as a % of net asset value None
at time of purchase or sale, whichever is less)........
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.72%
12b-1 distribution and service fees....................... None
Other expenses (after reimbursements)..................... 0.41%
----
Total Fund Operating Expenses..................... 1.13%
====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund.
(2)Expenses are based on the Fund's fiscal year ended December 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional Information
for more information. Effective January 1, 1998, AIM has voluntarily agreed
to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the annual rate of 1.40% of the
average daily net assets of the Fund's Advisory Class shares, respectively,
through May 31, 2000. Investors purchasing Advisor Class shares through
financial planners, trust companies, bank trust departments or registered
investment advisors, or under a "wrap fee" program, will be subject to
additional fees charged by such entities or by the sponsors of such programs.
Where any account advised by one of the companies composing or affiliated
with AMVESCAP PLC invests in Advisor Class shares of the Fund, such account
shall not be subject to duplicative advisory fees.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly
or indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $12 $36 $63 $138
</TABLE>
THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN
IS NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL
PERFORMANCE.
3
<PAGE> 419
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
December 31, 1997, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose reports thereon appear in the Statement of Additional
Information. Information presented below for the periods ended December 1, 1991
and prior thereto was audited by other auditors, which served as the Fund's
independent certified public accountants for those periods. The unaudited
financial statements and notes, for the semi-annual period ended June 30, 1998,
are also included in the Statement of Additional Information.
AIM MID CAP EQUITY FUND
(FORMERLY AIM MID CAP GROWTH FUND AND PRIOR TO THAT GT GLOBAL AMERICA MID CAP
GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED JUNE 1, 1995
ENDED DECEMBER 31, TO
JUNE 30, 1998 ----------------- DECEMBER 31,
(UNAUDITED)* 1997 1996 1995
------------- ------- ------- ------------
<S> <C> <C> <C> <C>
ADVISOR CLASS+
Per Share Operating Performance:
Net asset value, beginning of year........................ $21.10 $ 20.76 $ 19.05 $20.61
------ ------- ------- ------
Net investment income (loss).............................. (0.10) (0.15) 0.09 0.21
Net realized and unrealized gain (loss) on investments.... 2.64 3.05 2.91 1.09
------ ------- ------- ------
Net increase (decrease) in net asset value resulting from
investment operations................................... 2.54 2.90 3.00 1.30
------ ------- ------- ------
Distributions:
Net investment income..................................... -- -- -- (0.28)
Net realized gain on investments.......................... -- (2.56) (1.29) (2.58)
------ ------- ------- ------
Total distributions................................ -- (2.56) (1.29) (2.86)
------ ------- ------- ------
Net asset value, end of year................................ $23.64 $ 21.10 $ 20.76 $19.05
====== ======= ======= ======
Total investment return(a)(c)...................... 12.04% 14.54% 15.72% 6.01%
====== ======= ======= ======
Ratios and supplemental data:
Net assets, end of period (in 000's)........................ $1,052 $ 1,140 $ 1,986 $1,394
Ratio of net investment income (loss) to average net assets:
With expense reductions(b)................................ (0.85)% (0.55)% 0.47% 1.59%
Without expense reductions(b)............................. (0.86)% (0.66)% 0.42% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b)................................ 1.24% 1.02% 1.01% 1.11%
Without expense reductions(b)............................. 1.25% 1.13% 1.06% N/A
Portfolio turnover rate(b)++................................ 171% 190% 253% 71%
Average commission rate per share paid on portfolio
transactions(b)++......................................... N/A $0.0574 $0.0536 N/A
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ On June 1, 1995, the Fund began offering Advisor Class
shares.
++ Portfolio turnover rate and average commission rate are
calculated on the basis of
the Fund as a whole without distinguishing between the
classes of shares issued.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charge.
N/A Not Applicable.
* The selected per share data were calculated based upon
average shares outstanding during the period.
</TABLE>
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998.......... $6,652,000 $3,118,762 22,924,919 $ 0.136
Year ended December 31, 1997............ $ -- $1,961,956 27,020,126 $0.0726
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
4
<PAGE> 420
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Mid Cap Fund is long
term growth of capital. There can be no assurance that the Fund will achieve its
investment objective.
INVESTMENT POLICIES. The Fund seeks its investment objective by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of U.S. mid cap companies. Equity securities in which the Fund may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. The Fund may also invest up to 35% of its
total assets in the equity securities of (a) issuers domiciled in the United
States that, at the time of purchase, have market capitalizations outside the
range of market capitalizations of companies that are included in the Russell
Mid Cap Index; and (b) issuers domiciled outside the United States, including
(i) issuers linked by tradition, economic markets, cultural similarities or
geography to the United States; and (ii) issuers located elsewhere in the world
that have operations in the United States or that stand to benefit from
political or economic events in the United States. In addition, the Fund may
invest up to 35% of its total assets in investment grade debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Euro bonds and Depositary Receipts. The issuers of
such debt securities may or may not be domiciled in the United States. As of
June 30, 1998, market capitalization of companies comprising the Russell Mid Cap
Index ranged from approximately $1.4 to $10.3 billion.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objective and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In selecting securities for the
Mid Cap Fund, AIM invests in equity securities judged by AIM to be undervalued
relative to its 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 market generally.
The primary emphasis of AIM's search for undervalued equity securities is in
four categories: (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 which 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.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in the United States if it is (a) organized under the laws of, or has
its principal office in, the United States or any state thereof or (b) normally
derives 50% or more of its total revenues from business in the U.S., provided
that, in AIM's view, the value of such issuer's securities tends to reflect the
U.S. development to a greater extent than developments elsewhere. However, these
are not absolute requirements, and certain companies incorporated in the U.S.
and considered by AIM to be located in that country may have substantial foreign
operations or subsidiaries and/or export sales exceeding in size the assets or
sales in the U.S.
5
<PAGE> 421
AIM allocates investments among fixed income securities of particular issuers
on the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. If
market interest rates decline, fixed income securities generally appreciate in
value and vice versa.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, AIM may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Fund may invest less than 65% of its total
assets in the types of securities covered by its primary investment policy.
Under a defensive strategy, the Fund may invest up to 100% of its total assets
in cash (U.S. dollars, foreign currencies or multinational currency units)
and/or high quality debt securities or money market instruments issued by
corporations or the U.S. or a foreign government. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in high
quality foreign or domestic money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by AIM or
its affiliates ("Affiliated Funds"), that in turn are authorized to invest in
the securities of such countries. The Fund may invest up to 10% of its total
assets in other investment companies. As a shareholder in an investment company,
the Fund would bear its ratable share of that investment company's expenses,
including its advisory and administration fees. At the same time, the Fund would
continue to pay its own management fees and other expenses. AIM will waive its
advisory fee to the extent that the Fund invests in an Affiliated Fund.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Currency Strategies" herein and the Statement of Additional Information.
6
<PAGE> 422
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that AIM intends to include in the Fund's
portfolio. The Fund also may buy and sell put and call options on stock indexes
to hedge against overall fluctuations in the securities markets or market
sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Program -- Depositary Receipts" in the Statement of
Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and with interest
rates.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
AIM's ability to predict movements in the prices of individual securities,
fluctuations in the general securities markets or in the appropriate market
sector and movements in interest rates and currency markets; (2) imperfect
correlation, or even no correlation, between movements in the price of options,
forward contracts, futures contracts or options thereon and movements in the
price of the currency or security hedged or used for cover; (3) the fact that
skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
7
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MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the agreements
with AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund are delegated to the officers of the Trust, subject always to the
investment objective and policies of the Fund and to the general supervision of
the Trust's Board, See "Trustees and Executive Officers" in the Statement of
Additional Information for information on the Trustees of the Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM as the
investment manager of the Fund include, but are not limited to, determining the
composition of the portfolio of the Fund and placing orders to buy, sell or hold
particular securities. In addition, AIM provides the following administrative
services to the Fund: furnishing corporate officers and clerical staff;
providing office space, services and equipment; and supervising all matters
relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.725% on the first $500 million, 0.70% on the next $500 million, 0.675%
on the next $500 million, and 0.65% on amounts thereafter. The investment
management and administration fees paid by the Fund are higher than those paid
by most mutual funds. The Fund pays all expenses not assumed by AIM, AIM
Distributors or other agents. AIM has undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.40% of the average daily net assets of the
Fund's Advisor Class shares.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment advisory
agreement (the "Advisory Agreement"). AIM was organized in 1976 and, together
with its subsidiaries, manages or advises approximately 90 investment company
portfolios encompassing a broad range of investment objectives.
AIM and its worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM is an indirect wholly owned subsidiary
of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of its Houston office, AIM draws upon
the expertise, personnel, data and systems of other offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), San Francisco,
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Fund, AIM employs a team approach, taking advantage of its investment
resources around the world.
The investment professional primarily responsible for the portfolio management
of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/ OFFICE THE FUND PAST FIVE YEARS
------------ -------------------- -------------------
<S> <C> <C>
Joel E. Dobberpuhl Portfolio Manager Portfolio Manager for the Fund since 1998. He is
Houston since 1998 Vice President of AIM Capital. He has been
associated with AIM and/or its subsidiaries since
1990 and has been an investment professional since
1989.
Paul J. Rasplicka Portfolio Manager Portfolio Manager for the Fund since 1998. He is
Houston since 1998 Vice President of AIM Capital. He has been
associated with AIM and/or its subsidiaries since
1998 and has been an investment professional since
1982. From 1994 to 1998, Mr. Rasplicka was Vice
President and portfolio manager for INVESCO Trust
Company, an affiliate of AIM. He was also Vice
President of Chase Investment Counsel from 1992 to
1994.
</TABLE>
With respect to the Fund, AIM utilizes a team approach that relies on its
bottom-up, research-intensive, process-driven stock selection capability to
build the various investment portfolios. AIM's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set AIM's firmwide economic forecasts and sector and industry
allocations and portfolio management teams responsible for stock selection
decisions. While individual members of AIM's investment team are assigned
primary responsibility for the day-to-day management of the Fund, along with
similarly managed accounts, it is reviewed on a regular basis by the applicable
investment team to monitor compliance with applicable investment guidelines.
In placing orders for the Fund's portfolio transactions, AIM seeks to obtain
the best net results. Consistent with its obligation to obtain the best net
results, AIM may consider a broker/dealer's sale of shares of the AIM Funds as a
factor in considering through whom portfolio transactions will be effected.
Brokerage transactions for the Fund may be executed through affiliates of AIM.
High portfolio turnover (over 100%) involves correspondingly greater brokerage
commissions and other transaction costs that the Fund will bear directly and
could result in the realization of net capital gains that would be taxable when
distributed to shareholders. See "Dividends, Distributions and Tax Matters."
8
<PAGE> 424
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish other funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares of
beneficial interest. Shares of each Fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
9
<PAGE> 425
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
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<PAGE> 426
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
A-2
<PAGE> 427
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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<PAGE> 428
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
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HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
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as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
A-9
<PAGE> 434
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 435
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 436
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 437
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
MCG-PRO-2
<PAGE> 438
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM NEW PACIFIC GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
P
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM NEW PACIFIC GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in its Primary
Investment Area (as defined herein).
This Prospectus sets forth concisely the information about the Fund prospective
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, dated September 8,
1998, has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated herein by reference. The Statement of Additional Information is
available without charge upon written request to the Trust at 11 Greenway Plaza,
Suite 100, Houston, Texas 77046-1173, or by calling (800) 347-4246. The SEC
maintains a Web site at http://www.sec.gov that contains the Statement of
Additional Information, material incorporated by reference, and other
information regarding the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 439
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 9
Management........................... 11
Organization of the Trust............ 12
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of a least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by the Sub-advisor or one of the
companies formerly affiliated with the Asset Management Division of
Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and
(e) any of the companies affiliated with AMVESCAP PLC. Pursuant to a separate
prospectus, the Fund also offers Class A and Class B shares, which represent
interests in the Fund. The Class A and Class B shares have different
distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and
additional investments must be at least $50. The distributor of the Advisor
Class shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain funds in The AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters."
2
<PAGE> 440
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund invests a significant portion of its assets in issuers in a
particular region of the world. As a result, the Fund may be subject to greater
risks and may experience greater volatility than a fund that is more broadly
diversified geographically.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 441
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charges (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.97%
12b-1 distribution and service fees....................... None
Other expenses............................................ 0.61%
----
Total Fund Operating Expenses..................... 1.58%
====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund.
(2) Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM
has voluntarily agreed to limit the Fund's expenses effective January 1,
1998 (exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 1.65% of the average daily net assets of the
Fund's Advisor Class shares through May 31, 2000. "Other expenses" include
custody, transfer agent, legal, audit and other operating expenses. See
"Management" herein and the Statement of Additional Information for more
information. Investors purchasing Advisor Class shares through financial
planners, trust companies, bank trust departments or registered investment
advisors, or under a "wrap fee" program, will be subject to additional fees
charged by such entities or by the sponsors of such programs. Where any
account advised by one of the companies affiliated with AMVESCAP PLC invests
in Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................ $16 $50 $87 $189
</TABLE>
THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL
PERFORMANCE.
4
<PAGE> 442
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for Advisor Class shares of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for
December 31, 1997 have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose reports thereon appear in the Statement of Additional
Information. The unaudited financial statements and notes, for the semi-annual
period ended June 30, 1998, are also included in Statement of Additional
Information.
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 1, 1995 TO
1998 ------------------ DECEMBER 31,
(UNAUDITED)(C) 1997(C) 1996(C) 1995(c)
-------------- ------- ------- ---------------
<S> <C> <C> <C> <C>
ADVISOR CLASS+
Per Share Operating Performance:
Net asset value, beginning of period...................... $ 6.45 $13.16 $12.45 $12.89
------- ------- ------- ------
Net investment income (loss).............................. 0.04** 0.08 0.07 0.09
Net realized and unrealized gain (loss) on investments.... (1.47) (5.89) 2.45 0.05
------- ------- ------- ------
Net increase (decrease) in net asset value resulting from
investment operations................................... (1.43) (5.81) 2.52 0.14
------- ------- ------- ------
Distributions:
Net investment income..................................... -- (0.08) -- (0.15)
Net realized gain on investments and foreign currency..... -- (0.82) (1.81) (0.43)
In excess of net investment income........................ -- -- -- --
In excess of net realized gain on investments
------- ------- ------- ------
Total distributions................................ -- (0.90) (1.81) (0.58)
------- ------- ------- ------
Net asset value, end of period.............................. $ 5.02 $ 6.45 $13.16 $12.45
======= ======= ======= ======
Total investment return(a)......................... (22.17)% (44.26)% 20.56% 1.07%
Ratio and supplemental data:
Net assets, end of period (in 000's)...................... $ 744 $1,488 $1,575 $ 935
Ratio of net investment income (loss) to average net assets:
With expense reductions(b)................................ 1.56% 0.76% 0.52% 1.26%
Without expense reductions(b)............................. 1.10% 0.49% 0.39% 1.21%
Ratio of operating expenses to average net assets:
With expense reductions(b)................................ 1.57% 1.31% 1.51% 1.54%
Without expense reductions(b)............................. 2.03% 1.58% 1.64% 1.59%
Ratio of interest expense to average net assets++........... 0.09% N/A N/A N/A
Portfolio turnover rate(b)++................................ 92% 80% 93% 63%
Average commission rate per share paid on portfolio
transactions++............................................ N/A $0.0066 $0.0032 N/A
</TABLE>
- ---------------
+ On June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover rate, average commission rate and ratio of interest
expense to average net assets are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
** Includes reimbursement of Fund operating expenses per share of $0.01.
(a)
Not annualized.
(b)
Annualized for periods less than one year.
(c)
The selected per share data were calculated based upon average shares
outstanding during the period.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30, 1998............ $ -- $1,080,208 30,379,121 $ 0.036
Year ended December 31, 1997.............. $ -- $3,020,567 33,807,469 $0.0893
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
5
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PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. The 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, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
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INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in its Primary
Investment Area, as described below. Equity securities in which these Funds may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. The Fund's Primary Investment Areas include
the following countries: Australia, Hong Kong, India, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand.
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from the Fund's Primary Investment Area. There can be no assurance that the Fund
will achieve its investment objective.
INVESTMENT POLICIES. The Fund is a regional fund for investors interested in a
more geographically concentrated investment but still desiring to diversify
across multiple markets.
The Fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of its Primary Investment Area. Such investments may
include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depositary Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of
the Fund. The Fund will limit its purchases of debt securities to investment
grade obligations. "Investment grade" debt refers to those securities rated
within one of the four highest ratings categories by Moody's Investors Service,
Inc. ("Moody's") or by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Sub-advisor
to be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's to have speculative
characteristics. See the Statement of Additional Information for a description
of Moody's and S&P ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to
6
<PAGE> 444
be considered are that several of the markets are so-called developing
countries, and their economies and markets are less developed and more prone to
uncertainty, instability and risk than those of the other markets in which the
Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as Euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S. govern-
7
<PAGE> 445
ment securities or certain irrevocable letters of credit equal to at least the
value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contracts" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of ADRs or other similar securities convertible into
securities of foreign issuers. These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a United States bank or trust
company evidencing ownership of the underlying securities. Generally, ADRs in
registered form are designed for use in U.S. securities markets. See "Investment
Objectives and Policies -- Depositary Receipts" in the Statement of Additional
Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
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<PAGE> 446
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RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be affected adversely by economic conditions in the countries in which they
trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
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<PAGE> 447
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
CONCENTRATION. The Fund invests a significant portion of its assets in a
particular region of the world. As a result, the Fund may be subject to greater
risks and may experience greater volatility than a fund that is more broadly
diversified geographically.
PACIFIC REGION COUNTRIES. The Fund invests primarily in equity securities of
issuers located in Pacific region countries other than Japan. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain such
currencies. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Fund could
lose its entire investment in Hong Kong, if any. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund or Portfolio to maintain
"cover" or to set aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
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MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 mil-
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lion and 0.90% on amounts thereafter. Out of the aggregate fees payable by the
Fund, AIM pays the Sub-advisor sub-advisory and sub-administration fees equal to
40% of the aggregate fees AIM receives from the Fund. The investment management
and administration fees paid by the Fund are higher than those paid by most
mutual funds. The Fund pays all expenses not assumed by AIM, the Sub-advisor,
AIM Distributors or other agents. Effective January 1, 1998, AIM has undertaken
to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the maximum annual rate of 1.65% of the
average daily net assets of the Fund's Advisor Class shares.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the Fund pursuant to an investment sub-advisory and
sub-administration agreement. Prior to May 29, 1998, the Sub-advisor was known
as Chancellor LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of the Sub-advisor,
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included the Sub-advisor and
certain other affiliates. As a result of this transaction, the Sub-advisor is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-advisor and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Funds, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
The investment professionals primarily responsible for the portfolio
management of the Fund is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------- -------------------- -------------------
<S> <C> <C>
Anna Tong Portfolio Manager Portfolio Manager for the Sub-advisor since June 1998 and
Hong Kong since 1998 a Managing Director and Chief Investment Officer for
INVESCO Asia Ltd. (Hong Kong) ("INVESCO Asia") since April
1997. Managing Director for INVESCO International (FE)
Ltd. (Hong Kong) and a Director of INVESCO Investment
Management (HK) Ltd. (Hong Kong) since March 1985. INVESCO
Asia, INVESCO International (FE) Ltd. and INVESCO
Investment Management (HK) Ltd. are affiliates of the
Sub-advisor.
Sammy Lau Portfolio Manager Portfolio Manager for the Sub-advisor since June 1998 and
Hong Kong since 1998 a Director of INVESCO Asia since January 1996. Associate
Director of INVESCO Asia from December 1994 to January
1996. Associate at J.P. Morgan (Hong Kong) from November
1993 to November 1994.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of the Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
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<PAGE> 449
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
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ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of "G.T.
Global Growth Series," a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust. From time
to time the Trust may establish additional funds, each corresponding to a
distinct investment portfolio and a distinct series of the Trust's shares of
beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
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<PAGE> 451
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
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<PAGE> 452
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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<PAGE> 453
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SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
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EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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<PAGE> 454
Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
A-5
<PAGE> 455
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
A-6
<PAGE> 456
as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
A-7
<PAGE> 457
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
A-8
<PAGE> 458
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
A-9
<PAGE> 459
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 460
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 461
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 462
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of Funds
- --Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
NPG-PRO-2
<PAGE> 463
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM SMALL CAP GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM SMALL CAP GROWTH FUND, formerly
AIM Small Cap Equity Fund which is one of several series investment portfolios
comprising AIM Growth Series (the "Trust"), an open-end, series, management
investment company.
The Fund is a diversified portfolio which seeks long-term capital appreciation
by investing all of its investable assets in the Small Cap Portfolio (the
"Portfolio"), which, in turn, invests primarily in equity securities of
companies domiciled in the United States that, at the time of purchase, have a
market capitalization less than that of the largest company in the Russell
2000--Registered Trademark-- Index ("U.S. Small Cap Companies").
The Portfolio's investment objective is identical to that of the Fund. The
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 464
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 9
Management........................... 9
Organization of the Trust and the
Portfolio......................... 11
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND AND THE PORTFOLIO
The Fund is a diversified series of the Trust. The Portfolio is a diversified
series of Growth Portfolio. The Fund seeks long-term capital appreciation. The
Fund invests all of its investable assets in the Portfolio, which, in turn,
invests primarily in equity securities of U.S. small cap companies.
INVESTMENT MANAGERS. The Portfolio is managed by A I M Advisors, Inc. ("AIM").
AIM and its worldwide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual
clients around the world. AIM is an indirect wholly owned subsidiary of AMVESCAP
PLC. AMVESCAP PLC and its subsidiaries are an independent investment management
group that has a significant presence in the institutional and retail segment of
the investment management industry in North America and Europe, and a growing
presence in Asia. AIM was organized in 1976 and, together with its subsidiaries,
currently advises approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of a least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by the AIM or one of the companies
formerly affiliated with the Asset Management Division of Liechtenstein Global
Trust AG, provided such accounts were invested in Advisor Class shares of any of
the funds in The AIM Family of Funds on May 29, 1998; and (e) any of the
companies affiliated with AMVESCAP PLC. Pursuant to a separate prospectus, the
Fund also offers Class A and Class B shares, which represent interests in the
Fund. The Class A and Class B shares have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and additional
investments must be at least $50. The distributor of the Advisor Class shares is
A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, TX
77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, " The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain funds in The AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters."
RISK FACTORS. There is no assurance that the Fund or the Portfolio will
achieve its investment objective. The Fund's net asset value will fluctuate,
reflecting fluctuations in the market value of the Portfolio's securities. The
Portfolio may engage in certain options and futures transactions to attempt to
hedge against the overall level of investment risk associated with its present
or planned investments. Such transactions involve certain risks and transaction
costs. See "Investment Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
2
<PAGE> 465
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.73%
12b-1 distribution and service fees....................... None
Other expenses (after reimbursements)..................... 0.67%
----
Total Fund Operating Expenses..................... 1.40%
====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund.
(2)Expenses are based on the Fund's fiscal year ended December 31, 1997 restated
to reflect AIM's undertaking to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
annual rate of 1.40% of the average daily net assets of the Fund's Advisor
Class shares. AIM has voluntarily agreed to continue this limitation through
May 31, 2000. "Other expenses" include custody, transfer agent, legal, audit
and other operating expenses. See "Management" herein and the Statement of
Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisors, or under a "wrap fee" program,
will be subject to additional fees charged by such entities or by the
sponsors of such programs. Where any account advised by one of the companies
affiliated with AMVESCAP PLC invests in Advisor Class shares of the Fund,
such account shall not be subject to duplicative advisory fees. The Board of
Trustees of the Trust believes that the aggregate per share expenses of the
Fund and of the Portfolio will be approximately equal to the expenses the
Fund would incur if its assets were invested directly in the type of
securities being held by the Portfolio.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $14 $45 $77 $169
</TABLE>
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S AND THE PORTFOLIO'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S OR THE PORTFOLIO'S
PROJECTED OR ACTUAL PERFORMANCE.
3
<PAGE> 466
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. Information presented below for the periods
ended December 31, 1991 and prior thereto was audited by other auditors, which
served as the Fund's independent certified public accountants for those periods.
The financial statements and notes for December 31, 1997 have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose reports thereon
appear in the Statement of Additional Information. The unaudited financial
statements and notes, for the semi-annual period ended June 30, 1998, are also
included in the Statement of Additional Information.
AIM SMALL CAP GROWTH FUND
(FORMERLY AIM SMALL CAP EQUITY FUND AND PRIOR TO THAT GT GLOBAL AMERICA SMALL
CAP GROWTH FUND)
<TABLE>
<CAPTION>
OCTOBER 18, 1995
SIX MONTHS (COMMENCEMENT
ENDED OF OPERATIONS)
JUNE 30, YEAR ENDED DECEMBER 31, THROUGH
1998 ------------------------ DECEMBER 31,
(UNAUDITED) 1997(D) 1996(D) 1995(D)
----------- --------- --------- ----------------
<S> <C> <C> <C> <C>
ADVISOR CLASS
Per Share Operating Performance:
Net asset value, beginning of year................... $ 14.39 $ 12.58 $ 11.81 $ 11.43
------- ------- ------- -------
Net investment income (loss)......................... (0.08)**** (0.14)*** --** 0.05*
Net realized and unrealized gain (loss) on
investments........................................ 2.74 2.22 1.69 0.33
------- ------- ------- -------
Net increase (decrease) in net asset value resulting
from investment operations......................... 2.66 2.08 1.69 0.38
------- ------- ------- -------
Distributions to shareholders:
From net realized gain on investments................ -- (0.27) (0.92) --
------- ------- ------- -------
Total distributions........................... -- (0.27) (0.92) --
------- ------- ------- -------
Net asset value, end of year........................... $ 17.05 $ 14.39 $ 12.58 $ 11.81
======= ======= ======= =======
Total investment return(a)(c)................. 18.49% 16.63% 14.22% 3.32%
Ratios and supplemental data:
Net assets, end of period (in 000's)................. $ 2,458 $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to average net
assets:
With reimbursement by INVESCO (NY), Inc.(b).......... (1.12)% (1.05)% (0.03)% 2.03%
Without reimbursement by INVESCO (NY), Inc.(b)....... (1.58)% (1.65)% (1.12)% (20.17)%
Ratio of operating expenses to average net assets:
With reimbursement by INVESCO (NY), Inc.(b).......... 1.39% 1.57% 1.65% 1.65%
Without reimbursement by INVESCO (NY), Inc.(b)....... 1.85% 2.17% 2.74% 23.85%
Ratio of interest expense to average net assets+(b).... 0.02% N/A N/A N/A
Portfolio turnover rate(b)+............................ 208% 233% 150% N/A
Average commission rate per share paid on portfolio
transactions+........................................ N/A $0.0517 $0.0489 N/A
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Before reimbursement by INVESCO (NY), Inc. (former
Sub-Advisor to the Portfolio) the net investment loss per
share would have been $(0.46) from October 18, 1995 to
December 31, 1995.
** Before reimbursement by INVESCO (NY), Inc. (former
Sub-Advisor to the Portfolio) the net investment loss per
share would have been $(0.14) for the year ended December
31, 1996.
*** Before reimbursement by INVESCO (NY), Inc. (former
Sub-Advisor to the Portfolio) the net investment loss per
share would have been $(0.21) for the year ended December
31, 1997.
**** Before reimbursement by INVESCO (NY), Inc. (former
Sub-Advisor to the Portfolio) the net investment loss per
share would have been $(0.12) for the six months ended June
30, 1998.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) The selected per share data were calculated based upon
average shares outstanding during the period.
+ Portfolio turnover rate, average commission rate paid on
portfolio transactions and ratio of interest expense to
average net assets are calculated on the basis of the Small
Cap Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
</TABLE>
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998..................... $-- $56,260 2,177,802 $ 0.026
Year ended December 31,
1997..................... $-- $ 1,945 1,911,865 $0.0010
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
4
<PAGE> 467
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The investment objective of the Fund is long term
capital appreciation. The Fund seeks its investment objective by investing all
of its investable assets in the Portfolio, which, in turn, normally invests at
least 65% of its total assets in equity securities, including common stocks,
preferred stocks, convertible debt securities and warrants of U.S. small cap
companies. The remainder of the Portfolio's assets may be invested in common
stocks, preferred stocks, convertible debt securities and warrants of companies
domiciled in the United States that, at the time of purchase, have market
capitalizations of greater than the largest company in the Russell 2000 Index
and non-convertible debt securities, U.S. government securities and high quality
money market instruments, such as U.S. government obligations, high grade
commercial paper, bank certificates of deposit and bankers' acceptances, of
issuers domiciled in the United States. As of June 30, 1998, the largest company
in the Russell 2000 Index had a market capitalization of approximately $1.4
billion. The Portfolio also may invest up to 10% of its total assets in
securities of foreign issuers in the form of American Depositary Receipts
("ADRs") or other similar securities convertible into securities of foreign
issuers. There can be no assurance that the Fund or the Portfolio will achieve
its investment objective.
INVESTMENT POLICIES. The debt obligations that the Portfolio may invest in are
limited to U.S. government securities and corporate debt securities of issuers
domiciled in the United States. The Portfolio will limit its purchases of debt
securities to investment grade obligations, as defined above.
For purposes of this Prospectus, market capitalization means the total market
value of a company's outstanding common stock. There is no necessary correlation
between market capitalization and the financial attributes (such as level of
assets, revenues or income) often used to measure a company's size.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In selecting securities for the
Portfolio, AIM invests in a diversified portfolio of equity securities that are
considered by AIM to have strong earnings momentum or demonstrate other
potential for capital appreciation. Any income realized by the Portfolio will be
incidental and will not be an important criterion in the selection of portfolio
securities. The Portfolio will utilize to the extent practicable a fully-managed
investment policy providing for the selection of securities which meet certain
quantitative standards determined by AIM. AIM reviews carefully the earnings
history and prospects for growth of each company considered for investment by
the Portfolio. It is expected that the Portfolio, when fully invested, will
generally be comprised of companies that AIM believes are currently experiencing
a greater than anticipated increase in earnings.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in the United States if it is (a) organized under the laws of, or has
its principal office in the United States or (b) normally derives 50% or more of
its total revenues from business in the United States, provided that, in AIM's
view, the value of such issuer's securities tends to reflect the United States
development to a greater extent than developments elsewhere. However, these are
not absolute requirements, and certain companies incorporated in
5
<PAGE> 468
the United States and considered by AIM to be located in that country may have
substantial foreign operations or subsidiaries and/or export sales exceeding in
size the assets or sales in the United States.
AIM allocates investments among fixed income securities of particular issuers
on the basis of its views as to the best values then currently available in the
marketplace. Such values are a function of yield, maturity, issue classification
and quality characteristics, coupled with expectations regarding the economy,
movements in the general level and term of interest rates, currency values,
political developments, and variations in the supply of funds available for
investment in the world bond market relative to the demands placed upon it. If
market interest rates decline, fixed income securities generally appreciate in
value and vice versa. Fixed income securities denominated in currencies other
than the U.S. dollar or in multinational currency units (such as Euros) are
evaluated on the strength of the particular currency against the U.S. dollar as
well as on the current and expected levels of interest rates in the country or
countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, AIM may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. During such time the Portfolio may invest less than 65% of its total
assets in the types of securities covered by its primary investment policy.
Under a defensive strategy, the Portfolio may hold U.S. dollars and/or may
invest any portion of its assets in high quality domestic debt securities or
high quality money market instruments. To the extent the Portfolio adopts a
temporary defensive position, it will not be invested so as to achieve directly
its investment objective.
In addition, the Portfolio may hold U.S. dollars and may invest in domestic
debt securities or high quality money market instruments pending investment of
proceeds from new sales of Fund shares, or to meet its ordinary daily cash
needs. For a description of money market instruments, see "Temporary Defensive
Strategies" in the "Investment Objectives and Policies" section of the Statement
of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by AIM or
its affiliates ("Affiliated Funds"), that in turn are authorized to invest in
the securities of such countries. The Portfolio may invest up to 10% of its
total assets in other investment companies. As a shareholder in an investment
company, the Portfolio would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Portfolio would continue to pay its own management fees and other expenses. AIM
will waive its advisory fee to the extent that the Portfolio invests in an
Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). AIM believes that privatizations may
offer opportunities for significant capital appreciation and intends to invest
in privatizations in appropriate circumstances. In certain foreign countries,
the ability of foreign entities to participate in privatizations may be limited
by local law, or the terms on which the Portfolio may be permitted to
participate may be less advantageous than those for local investors. There can
be no assurance that foreign governments will continue to sell companies
currently owned or controlled by them or that privatization programs will be
successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Portfolio
may borrow from banks or may borrow through reverse repurchase agreements and
"roll" transactions in connection with meeting requests for the redemption of
the Fund's shares. The Portfolio also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Portfolio may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Portfolio's borrowings exceed 5% of
its total assets. Any borrowing by the Portfolio may cause greater fluctuation
in the value of the Fund's shares than would be the case if the Portfolio did
not borrow.
A reverse repurchase agreement is a borrowing transaction in which the
Portfolio transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Portfolio's sale of securities together with
its commitment (for which the Portfolio may receive a fee) to purchase similar,
but not identical, securities at a future date.
SECURITIES LENDING. The Portfolio may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Portfolio to retain ownership of the securities loaned and, at the same
time, enhance the Fund's total return. The Portfolio limits its loans of
portfolio securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made. While a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral consisting of
cash, U.S. government securities or certain irrevocable letters of credit equal
to at least the value of the borrowed securities, plus any accrued interest or
such other collateral as permitted by the Fund's investment program and
regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Portfolio may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Portfolio will
purchase or sell when-issued securities or enter into forward commitments only
with the intention of actu-
6
<PAGE> 469
ally receiving or delivering the securities, as the case may be. No income
accrues on securities that have been purchased pursuant to a forward commitment
or on a when-issued basis prior to delivery to the Portfolio. If the Portfolio
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Portfolio enters into a transaction on
a when-issued or forward commitment basis, the Portfolio will segregate cash or
liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Portfolio may
incur a loss.
OPTIONS AND FUTURES TRANSACTIONS. The Portfolio may use options on securities,
options on indices, futures contracts and options on futures contracts to
attempt to hedge against the overall level of investment risk normally
associated with its portfolio. These instruments are 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 or an index of securities). The Portfolio may enter into such
instruments up to the full value of its portfolio assets. See "Risk
Factors -- Options and Futures Transactions" herein and "Options, Futures and
Currency Strategies" in the Statement of Additional Information.
In addition, the Portfolio may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio or that AIM intends to include in the
Portfolio's holdings. The Portfolio also may buy and sell put and call options
on stock indexes to hedge against overall fluctuations in the securities markets
or market sectors generally or in a specific market sector.
Further, the Portfolio may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Portfolio's holdings. The Portfolio also may purchase stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. The Portfolio may
use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Portfolio may invest in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") or other
similar securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are receipts typically issued
by a United States bank or trust company evidencing ownership of the underlying
securities. Generally, ADRs in registered form are designed for use in U.S.
securities markets. See "Investment Objectives and Policies -- Depositary
Receipts" in the Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval. The investment policies
of the Fund are identical to the investment policies of the Portfolio.
The approval of the Fund and of other investors in the Portfolio, if any, is
not required to change the investment objective, policies or limitations of the
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of the Fund thirty days prior to any changes in the Portfolio's
investment objective. If a percentage restriction on investment or utilization
of assets in an investment policy or restriction is adhered to at the time an
investment is made, a later change in percentage ownership of a security or kind
of securities resulting from changing market values or a similar type of event
will not be considered a violation of the Fund's or Portfolio's investment
policies or restrictions.
OTHER INFORMATION REGARDING THE PORTFOLIO. As previously described, the Fund,
unlike mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Because the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Fund may redeem its investment in the Portfolio at any time, if the Board
of Trustees of the Trust determines that it is in the best interests of the Fund
and its shareholders to do so. A change in the Portfolio's investment objective,
policies or limitations that is not approved by the Board or shareholders of the
Fund could require the Fund to redeem its interest in the Portfolio. Any such
redemption could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) by the Portfolio. In addition, a distribution in
kind could result in a less diversified portfolio of investments for the Fund
and could adversely affect its liquidity. Should such a distribution occur, the
Fund could incur brokerage fees or other transaction costs in converting such
securities to cash. Upon redemption, the Board would consider what action might
be taken, including the investment of all the investable assets of the Fund in
another pooled investment entity having substantially the same investment
objective as the Fund or the direct retention by the Fund of its own investment
advisor to manage its assets in accordance with its investment objective,
policies and limitations discussed herein.
7
<PAGE> 470
In addition to selling an interest therein to the Fund, the Portfolio may sell
interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in the Portfolio will pay a
proportionate share of the Portfolio's expenses and will invest in the Portfolio
on the same terms and conditions. However, if another investment company invests
any or all of its assets in the Portfolio, it would not be required to sell its
shares at the same public offering price as the Fund and may charge different
sales commissions. Therefore, investors in the Fund may experience different
returns than investors in another investment company that invests exclusively in
the Portfolio. As of the date of this Prospectus, the Fund is the only
institutional investor in the Portfolio.
The Fund may be materially affected by the actions of other large investors,
if any, in the Portfolio. For example, as with all open-end investment
companies, if a large investor were to redeem its interest in the Portfolio, (1)
the Portfolio's remaining investors could experience higher pro rata operating
expenses, thereby producing lower returns, and (2) the Portfolio's security
holdings may become less diverse, resulting in increased risk. Institutional
investors in the Portfolio that have a greater pro rata ownership interest in
the Portfolio than the Fund could have effective voting control over the
operation of the Portfolio.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund or the Portfolio will achieve its
investment objective. The Fund's net asset value will fluctuate, reflecting
fluctuations in the market value of the Portfolio's securities. Equity
securities, particularly common stocks, generally represent the most junior
position in an issuer's capital structure and entitle holders to an interest in
the assets of an issuer, if any, remaining after all more senior claims have
been satisfied. In addition, the value of debt securities held by the Portfolio
will fluctuate with changes in the perceived creditworthiness of the issuers of
such securities and with interest rates.
SMALL CAP COMPANIES. The Portfolio invests primarily in equity securities of
U.S. small cap companies. Small cap companies may be more vulnerable than larger
companies to adverse business, economic or market developments. Small cap
companies may also have more limited product lines, markets or financial
resources than companies with larger capitalizations, and may be more dependent
on a relatively small management group. In addition, small cap companies may not
be well-known to the investing public, may not have institutional ownership and
may have only cyclical, static or moderate growth prospects. Most small cap
company stocks pay low or no dividends. Securities of small cap companies are
generally less liquid and their prices more volatile than those of securities of
larger companies. The securities of some small cap companies may not be widely
traded, and the Portfolio's position in securities of such companies may be
substantial in relation to the market for such securities. Accordingly, it may
be difficult for the Portfolio to dispose of securities of these small cap
companies at prevailing market prices in order to meet redemptions.
OPTIONS AND FUTURES TRANSACTIONS. Although the Portfolio is authorized to
enter into options and futures transactions, the Portfolio might not enter into
any such transactions. Options and futures transactions involve certain risks,
which include: (1) dependence on AIM's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
or in the appropriate market sector and movements in interest rates; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, futures contracts or options thereon and movements in the price of the
security hedged or used for cover; (3) the fact that skills and techniques
needed to trade options, futures contracts or options thereon are different from
those needed to select the securities in which the Portfolio invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; and (6) the possible
inability of the Portfolio to purchase or sell a portfolio security at a time
when it would otherwise be favorable for it to do so, or the possible need for
the Portfolio to sell a security at a disadvantageous time, due to the need for
the Portfolio to maintain "cover" or to set aside securities in connection with
hedging transactions.
ILLIQUID SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's and the Portfolio's Boards of Trustees have overall responsibility
for the operation of the Fund and the Portfolio, respectively. The Trust's and
Portfolio's Boards of Trustees have approved all significant agreements between
the Trust and the Portfolio on the one side and persons or companies furnishing
services to the Fund and the Portfolio on the other, including the investment
management and administrative services agreement with AIM, the agreements with
AIM Distributors regarding distribution of the Fund's shares, the custody
agreement and the transfer agency agreement. The day-to-day operations of the
Fund and the Portfolio are delegated to the officers of the Trust and the
Portfolio, subject always to the investment objective and policies of the Fund
and the Portfolio and to the general supervision of the Boards. See "Trustees
and Executive Officers" in the Statement of Additional Information for
information on the Trust's and the Portfolio's Trustees.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM as the
investment manager of the Portfolio include, but are not limited to, determining
the composition of the investment holdings of the Portfolio and placing orders
to buy, sell or hold
8
<PAGE> 471
particular securities. In addition, AIM provides the following administrative
services to the Fund and the Portfolio: furnishing corporate officers and
clerical staff; providing office space, services and equipment; and supervising
all matters relating to the Fund's and the Portfolio's operations.
The Fund pays AIM administration fees, computed daily and paid monthly, at the
annualized rate of 0.25% of the Fund's average daily net assets. The Fund bears
its pro rata portion of the investment management and administration fees paid
by the Portfolio to AIM. The Portfolio pays AIM such fees, computed daily and
paid monthly, based on the average daily net assets of the Portfolio, at the
annualized rate of 0.475% on the first $500 million, 0.45% on the next $500
million, 0.425% on the next $500 million and 0.40% on all amounts thereafter.
The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund and
Portfolio pay all expenses not assumed by AIM, AIM Distributors or other agents.
AIM has undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the maximum annual
rate of 1.40% of the average daily net assets of the Fund's Advisor Class
shares.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Portfolio pursuant to a master investment management
and administration agreement (the "Advisory Agreement"). AIM was organized in
1976 and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives.
AIM and its worldwide asset management affiliates provide investment
management and/or administrative services to institutional, corporate and
individual clients around the world. AIM is an indirect wholly owned subsidiary
of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent investment
management group that has a significant presence in the institutional and retail
segment of the investment management industry in North America and Europe, and a
growing presence in Asia.
In addition to the investment resources of its Houston office, AIM draws upon
the expertise, personnel, data and systems of other offices in Atlanta, Boston,
Dallas, Denver, Louisville, Miami, New York, Portland (Oregon), San Francisco,
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and Toronto. In managing
the Portfolio, AIM employs a team approach, taking advantage of its investment
resources around the world.
The investment professional primarily responsible for the portfolio management
of the Portfolio is as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE PORTFOLIO PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Robert M. Kippes Portfolio Manager Portfolio Manager for the Portfolio since 1998. He
Houston since 1998 has been associated with AIM and/or its
subsidiaries since he began working as an
investment professional in 1989.
Paul J. Rasplicka Portfolio Manager Portfolio Manager for the Portfolio since 1998. He
Houston since 1998 is Vice President of AIM Capital. He has been
associated with AIM and/or its subsidiaries since
1998 and has been an investment professional since
1982. From 1994 to 1998, Mr. Rasplicka was Vice
President and portfolio manager for INVESCO Trust
Company, an affiliate of AIM. He was also Vice
President of Chase Investment Counsel from 1992 to
1994.
</TABLE>
With respect to the Portfolio utilizes a team approach that relies on its
bottom-up, research-intensive, process-driven stock selection capability to
build various investment portfolios. AIM's disciplined process combines the
inputs of analysts performing fundamental and quantitative research, various
committees that set AIM's firmwide economic forecasts and sector and industry
allocations and portfolio management teams responsible for stock selection
decisions. While individual member(s) of AIM's investment team are assigned
primary responsibility for the day-to-day management of the Portfolio along with
similarly managed accounts, the Portfolio is reviewed on a regular basis by the
applicable investment team to monitor compliance with applicable investment
guidelines.
In placing orders for the Portfolio's portfolio securities transactions AIM
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results AIM may consider a broker/dealer's sale of shares of the
AIM Funds as a factor in considering through whom portfolio transactions will be
effected. Brokerage transactions for the Portfolio may be executed through
affiliates of AIM. High portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions and other transaction costs that the Portfolio
will bear directly and could result in the realization of net capital gains that
would be taxable when distributed to shareholders. See "Dividends, Distributions
and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
9
<PAGE> 472
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST AND THE PORTFOLIO
ORGANIZATION OF THE TRUST. The Trust was organized as a Delaware business
trust on May 7, 1998. On May 29, 1998, the Trust acquired the assets of and
assumed the liabilities of G.T. Global Growth Series, a Massachusetts business
trust. The Fund constitutes one of the eight separate and distinct series
portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
ORGANIZATION OF THE PORTFOLIO. The Portfolio is organized as a subtrust of
Growth Portfolio, a Delaware business trust. Under Delaware law, the Fund and
other entities investing in the Portfolio enjoy the same limitations of
liability extended to shareholders of private, for-profit corporations. There is
a remote possibility, however, that under certain circumstances an investor in
the Portfolio may be held liable for the Portfolio's obligations. However,
Growth Portfolio's Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Portfolio and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Portfolio or a trustee. The Agreement and Declaration of
Trust also provides for indemnification from the Portfolio property for all
losses and expenses of any shareholder held personally liable for the
Portfolio's obligations. Thus the risk of an investor incurring financial loss
on account of such liability is limited to circumstances in which the Portfolio
itself would be unable to meet its obligations and where the other party was
held not to be bound by the disclaimer.
Whenever the Fund is requested to vote on any proposal of the Portfolio, the
Fund will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by its shareholders. Shares for which no voting instructions are
received will be voted in the same proportion as the shares for which voting
instructions are received.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800, acts as counsel to the Trust, to the
Fund and to the Portfolio.
10
<PAGE> 473
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
A-1
<PAGE> 474
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
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and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
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SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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<PAGE> 477
Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
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<PAGE> 479
as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
A-8
<PAGE> 481
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
A-9
<PAGE> 482
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 483
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 484
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 485
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers L.L.P.
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
SCE-PRO-2
<PAGE> 486
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
ADVISOR CLASS OF
AIM WORLDWIDE GROWTH FUND:
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM WORLDWIDE GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled anywhere in the
world.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and, is incorporated herein by reference. The Statement of
Additional Information is available without charge upon written request to the
Trust at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 487
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 6
Investment Program................... 6
Risk Factors......................... 9
Management........................... 11
Organization of the Trust............ 12
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-4
Exchange Privilege................... A-4
How to Redeem Shares................. A-5
Determination of Net Asset Value..... A-7
Dividends, Distributions and Tax
Matters........................... A-8
General Information.................. A-10
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Advisor Class shares are offered through this Prospectus to
(a) trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations which have at least 1,000 employees; (b)
any account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment advisor has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least 0.50%
on the assets in the account; (c) any account with assets of a least $10,000 if
(i) such account is established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least 0.50% on the
assets in the account; (d) accounts advised by the Sub-advisor or one of the
companies formerly affiliated with the Asset Management Division of
Liechtenstein Global Trust AG, provided such accounts were invested in Advisor
Class shares of any of the funds in The AIM Family of Funds on May 29, 1998; and
(e) any of the companies composing or affiliated with AMVESCAP PLC.
Pursuant to a separate prospectus, the Fund also offers Class A and Class B
shares, which represent interests in the Fund. The Class A and Class B shares
have different distribution arrangements.
Initial investments in Advisor Class shares must be at least $500 and
additional investments must be at least $50. The distributor of the Advisor
Class shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares."
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds").
Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
certain funds in the AIM Family of Funds in the manner and subject to the
policies and charges set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Advisor Class shareholders of the Fund may redeem all or a
portion of their shares at net asset value on any business day. See "How to
Redeem Shares."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be rein-
2
<PAGE> 488
vested at net asset value without payment of a sales charge in the Fund's shares
or may be invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund may invest a significant portion of its assets in foreign securities.
Investments in foreign securities involve risks relating to political and
economic developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign economies also
may differ favorably or unfavorably from the U.S. economy. Changes in foreign
currency exchange rates also may affect the Fund's net asset value, earnings and
gains and losses realized on sales of securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 489
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Advisor Class shares of the Fund are reflected in the following table(1):
<TABLE>
<S> <C>
Shareholder Transaction Costs:
Maximum sales charge on purchases (as a % of offering
price)................................................. None
Sales charges on reinvested distributions to
shareholders........................................... None
Maximum deferred sales charges (as a % of net asset value
at time of purchase or sale, whichever is less)........ None
Redemption charges........................................ None
Exchange fees............................................. None
Annual Fund Operating Expenses(2): (as a % of average net
assets)
Investment management and administration fees............. 0.98%
12b-1 distribution and service fees....................... None
Other expenses (after reimbursements)..................... 0.49%
----
Total Fund Operating Expenses..................... 1.47%
====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund.
(2) Expenses are based on the Fund's fiscal year ended December 31, 1997. "Other
expenses" include custody, transfer agent, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. Investors purchasing Advisor Class shares
through financial planners, trust companies, bank trust departments or
registered investment advisors, or under a "wrap fee" program, will be
subject to additional fees charged by such entities or by the sponsors of
such programs. Where any account advised by one of the companies composing
or affiliated with AMVESCAP PLC invests in Advisor Class shares of the Fund,
such account shall not be subject to duplicative advisory fees. AIM has
voluntarily agreed to limit the Fund's expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 1.65% of the average daily net assets of the
Fund's Advisor Class shares through May 31, 2000.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Advisor Class shares................................. $15 $47 $81 $177
</TABLE>
THE "HYPOTHETICAL EXAMPLE" SET FORTH ABOVE IS NOT A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND
INDIRECT EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE
ASSUMPTION IN THE HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY
REGULATIONS OF THE SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS
NOT A PREDICTION OF AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL
PERFORMANCE.
4
<PAGE> 490
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The tables below provide condensed financial information concerning income and
capital changes for one Advisor Class share of the Fund. This information is
supplemented by the financial statements and accompanying notes appearing in the
Statement of Additional Information. The financial statements and notes for the
fiscal year ended December 31, 1997, have been audited by PricewaterhouseCoopers
LLP, independent accountants, whose reports thereon appear in the Statement of
Additional Information. The unaudited financial statements and notes, for the
semi-annual period ended June 30, 1998, are also included in Statement of
Additional Information.
AIM WORLDWIDE GROWTH FUND
(FORMERLY THE GT GLOBAL WORLDWIDE GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1995 TO
1998 ------------------------ DECEMBER 31,
(UNAUDITED)* 1997 1996* 1995
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
ADVISOR CLASS+
Per Share Operating Performance:
Net asset value, beginning of period................... $14.38 $ 16.81 $ 16.86 $ 15.26
------ ------- ------- -------
Net investment income (loss)........................... 0.05 0.12 0.09 0.03
Net realized and unrealized gain (loss) on
investments......................................... 1.68 1.57 1.79 2.02
------ ------- ------- -------
Net increase (decrease) in net asset value resulting
from investment operations.......................... 1.73 1.69 1.88 2.05
------ ------- ------- -------
Distributions:
Net investment income.................................. -- (0.09) -- --
Net realized gain on investments....................... -- (4.03) (1.93) (0.45)
------ ------- ------- -------
Total distributions............................ -- (4.12) (1.93) (0.45)
------ ------- ------- -------
Net asset value, end of period........................... $16.11 $ 14.38 $ 16.81 $ 16.86
====== ======= ======= =======
Total investment return........................ 11.96%(a) 10.43% 11.31% 13.46%(a)
====== ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in 000's)................... $1,174 $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to average net
assets:
With expense reductions (b) ........................... 0.63% 0.67% 0.49% 0.29%
Without expense reductions(b).......................... 0.63% 0.58% 0.41% 0.23%
Ratio of operating expenses to average net assets:
With expense reductions(b)............................. 1.52% 1.38% 1.37% 1.52%
Without expense reductions(b).......................... 1.52% 1.47% 1.45% 1.58%
Portfolio turnover rate++................................ 34% 92% 80% 113%
Average commission rate per share paid on portfolio
transactions++......................................... N/A $0.0288 $0.0263 N/A
</TABLE>
- ---------------
+
On June 1, 1995, the Fund began offering Advisor Class shares.
++
Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a)
Not annualized.
(b)
Annualized for periods less than one year.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
AVERAGE AMOUNT NUMBER OF
AMOUNT OF DEBT OF DEBT REGISTRANT'S SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998.......................... $ -- $35,277 9,850,011 $ 0.004
Year ended December 31, 1997.... $ -- $21,918 9,622,077 $0.0023
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
5
<PAGE> 491
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the 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. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return.
The 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, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The 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 as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVES. The Fund seeks long-term growth of capital. It seeks
its objective by investing, under normal circumstances, at least 65% of its
total assets in equity securities of issuers domiciled in its Primary Investment
Area, as defined below. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. The Fund's Primary Investment Area includes the
following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada,
Chile, Columbia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal,
Singapore, Spain, South Africa, South Korea, Sweden, Switzerland, Taiwan,
Thailand, Turkey, United Kingdom, United States and Venezuela. There can be no
assurance that the Fund will achieve its investment objectives.
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from the Fund's Primary Investment Area.
INVESTMENT POLICIES. The Fund is designed for those investors desiring to
delegate equity investment decisions, including allocation of assets among the
world's different markets, currency strategies and individual stock selection,
to the Sub-advisor's professional team of investment specialists.
The Fund is intended for investors seeking to complement their U.S. equity
investments with a professionally managed non-U.S. portfolio. The Fund may
invest up to 35% of its total assets in the equity securities of issuers
domiciled outside of its Primary Investment Area. Such investments may include:
(a) securities of issuers in countries that are not located in the Primary
Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
Under normal circumstances, the assets of the Fund are invested in the equity
securities of issuers domiciled in at least three different countries, and 20%
to 60% of the Fund's assets normally are invested in the equity securities of
U.S. issuers.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The Fund will limit
its purchases of debt securities to investment grade obligations. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories by Moody's Investors Service, Inc. ("Moody's") or by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
6
<PAGE> 492
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest in high
quality foreign or domestic money market instruments. For a description of money
market instruments, see "Temporary Defensive Strategies" in the "Investment
Objectives and Policies" section of the Statement of Additional Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
7
<PAGE> 493
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which that Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency 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 risk normally associated with the
Fund's portfolio. These instruments are 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). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Currency Strategies" herein and the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless spe-
8
<PAGE> 494
cifically noted, the Fund's investment policies described in this Prospectus and
in the Statement of Additional Information are not fundamental policies and may
be changed by vote of the Company's Board of Trustees, without shareholder
approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests a significant portion of its assets in
foreign securities. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor will
the issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable
domestic companies. In addition, certain costs attributable to foreign
investing, such as custody charges, are higher than those attributable to
domestic investing. The Fund's interest and dividends from foreign issuers may
be subject to non-U.S. withholding taxes, thereby reducing its net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and may hold foreign currencies, it will
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of the Fund's shares, and also
may affect the value of dividends and interest earned by the Fund and gains and
losses realized by the Fund. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. The exchange rates between
the U.S. dollar and other currencies are determined by supply and demand in the
currency exchange markets, the international balance of payments, governmental
intervention, speculation and other economic and political conditions. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EEMU"). The EEMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is a
member of the EEMU may elect to participate in the EEMU and may supplement its
existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; how outstanding
financial contracts will be treated after January 1, 1999; the establishment of
exchange rates for existing currencies and the euro; and the creation of
suitable clearing and settlement systems for the euro. These and other factors
could cause market disruptions before or after the introduction of the euro and
could adversely affect the value of securities held by the Fund.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
9
<PAGE> 495
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be affected adversely by economic conditions in the countries in which they
trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Company's Board of Trustees.
PACIFIC REGION COUNTRIES. The Fund may invest significantly in this region.
Certain of the risks associated with international investments are heightened
for investments in Pacific region countries. For example, some of the currencies
of Pacific region countries have experienced steady devaluations relative to the
U.S. dollar, and major adjustments have been made periodically in certain such
currencies. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Pacific Fund
could lose its entire investment in Hong Kong. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
10
<PAGE> 496
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the
Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administrative fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-advisor, AIM Distributors or other agents. Effective
January 1, 1998, AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
maximum annual rate of 1.65% of the average daily net assets of the Fund's
Advisor Class shares.
The Sub-advisor also serves as the Fund's pricing and accounting agent. For
these services the Sub-advisor receives a fee consisting of 0.03% of the first
$5 billion of assets, and 0.02% of the assets in excess of $5 billion, of the
AIM Funds that are sub-advised by the Sub-advisor (other than AIM Eastern Europe
Fund). Each of these funds, including the Fund, pays an amount based upon its
relative net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the Fund pursuant to an investment sub-advisory and
sub-administration agreement. Prior to May 29, 1998, the Sub-advisor was known
as Chancellor LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of the Sub-advisor,
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included the Sub-advisor and
certain other affiliates. As a result of this transaction, the Sub-advisor is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-advisor and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
11
<PAGE> 497
The investment professionals primarily responsible for the portfolio
management of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
- ----------- ---------------------- -------------------
<S> <C> <C>
Roger Yates Portfolio Manager Global Chief Investment Officer and Portfolio
London since 1996 Manager for the Sub- advisor and INVESCO GT Asset
Management PLC (London) ("GT Asset Management"),
an affiliate of the Sub-advisor, since October
1997. International Chief Investment Officer and
Portfolio Manager for the Sub-advisor and GT Asset
Management from September 1996 to October 1997.
Chief Investment Officer and Portfolio Manager for
Europe and the United Kingdom for the Sub-advisor
and GT Asset Management from 1994 to September
1996. Investment Manager for Morgan Grenfell Asset
Management from 1988 to 1994.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities
London since 1997 and Portfolio Manager for the Sub-advisor and GT
Asset Management since 1996. Chief Investment
Officer for Japan and Portfolio Manager for
INVESCO GT Asset Management Asia Ltd. (Hong Kong),
an affiliate of the Sub-advisor, and the
Sub-advisor from 1992 to 1996. Director of Warburg
Asset Management (Tokyo) prior thereto.
Richard K. Collins Portfolio Manager Senior Equity Portfolio Manager and Managing
New York since 1997 Director for the Sub-advisor since April 1993.
Employed by Chancellor Capital Management, Inc., a
predecessor of the Sub-advisor from 1982 to
October 1996. Chartered Financial Analyst and
member of the Association of Investment Management
Research (AIMR) and the New York Society of
Securities Analysts.
</TABLE>
In placing orders for the Fund's portfolio transactions, the Sub-advisor seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-advisor may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-advisor. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains that would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement"), with AIM Distributors, a registered broker-dealer and
a wholly owned subsidiary of AIM, to act as the distributor of the Advisor Class
shares of the Fund. Certain Trustees and officers of the Trust are affiliated
with AIM Distributors.
The Distribution Agreement provides AIM Distributors with the exclusive right
to distribute Advisor Class shares of the Fund directly and through institutions
with whom AIM Distributors has entered into selected dealer agreements.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series portfolios of the Company.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
12
<PAGE> 498
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
13
<PAGE> 499
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Register Mark--
FOR ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of approximately 50 mutual funds, several of
which offer Advisor Class shares. Only Advisor Class shares are offered through
this Prospectus. Advisor Class shares are available from the following funds
(collectively, the "Advisor Class Funds"):
<TABLE>
<S> <C>
AIM BASIC VALUE FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM DEVELOPING MARKETS FUND AIM GLOBAL RESOURCES FUND
AIM DOLLAR FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM EMERGING MARKETS FUND AIM GLOBAL TRENDS FUND
AIM EMERGING MARKETS DEBT FUND AIM INTERNATIONAL GROWTH FUND
AIM EUROPE GROWTH FUND AIM JAPAN GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AIM LATIN AMERICAN GROWTH FUND
AND SERVICES FUND AIM MID CAP EQUITY FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM NEW PACIFIC GROWTH FUND
AIM GLOBAL GOVERNMENT INCOME FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL HEALTH CARE FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. ADVISOR
CLASS SHARES OF A FUND MAY BE EXCHANGED ONLY FOR ADVISOR CLASS SHARES OF ANOTHER
FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND
OTHER THAN THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a
front-end or contingent deferred sales charge or Rule 12b-1 fees.
HOW TO OPEN AN ACCOUNT. Advisor Class shares are available through Financial
Advisers (as defined herein) who have entered into agreements with A I M
Distributors, Inc. ("AIM Distributors"). In order to purchase Advisor Class
shares of any Advisor Class Fund, the Financial Adviser, on behalf of the
investor, must submit a fully completed new Account Application form directly to
A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"). The Transfer Agent
will not accept new Account Application forms submitted directly by investors.
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 be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment for
Advisor Class shares is $500.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
A-1
<PAGE> 500
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Advisor Class shares of any Advisor Class Funds not named on the cover of this
Prospectus, as well as Class A, Class B and Class C shares of other funds
distributed by AIM Distributors ("AIM Funds"), are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his Financial Adviser should call AFS' Client Services
Department at (800) 959-4246 prior to sending a wire to receive a reference
number for the wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
Shareholder Name, Shareholder Account Number
OBI: (70 character limit)
</TABLE>
It is recommended that investors in wrap fee accounts and advisory accounts
place orders through their Financial Advisers.
HOW TO PURCHASE ADDITIONAL SHARES. Additional Advisor Class shares may be
purchased directly through AIM Distributors or through any Financial Adviser who
has entered into an agreement with AIM Distributors. The minimum investment for
additional purchases of Advisor Class shares is $50.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional Advisor Class shares by
electronic funds transfer, please contact the Client Services Department of AFS
for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
In addition to the Advisor Class Funds, the AIM Funds consist of the following
funds: AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR
LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND,
AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE
CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM SELECT GROWTH FUND,
AIM SMALL CAP OPPORTUNITIES FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM
LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM
TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND), with the Advisor Class
Funds, the "Multiple Class Funds." For information on purchasing any of the AIM
Funds and to receive a prospectus, please call (800) 347-4246. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
Advisor Class shares are offered through this Prospectus to (a) trustees or
other fiduciaries purchasing shares for employee benefit plans that are
sponsored by organizations that have at least 1,000 employees; (b) any account
with assets of at least $10,000 if (i) a financial planner, trust company, bank
trust department or registered investment adviser has investment discretion over
the account and (ii) the account holder pays such person as compensation for its
advice and other services an annual fee of at least .50% of the assets in the
account; (c) any account with assets of at least $10,000 if (i) the account is
established under a "wrap fee" program and (ii) the account holder pays the
sponsor of such program an annual fee of at least .50% of the assets in the
account; (d) accounts advised by INVESCO (NY), Inc. or one of the companies
formerly affiliated with Liechtenstein Global Trust AG, provided such accounts
were invested in Advisor Class shares on May 29, 1998; (e) any of the companies
affiliated with AMVESCAP PLC; and (f) AIM GLOBAL TRENDS FUND (certain Advisor
Class Funds only).
Financial planners, trust companies, bank trust departments and registered
investment advisers referenced in clause (b) above, and sponsors of "wrap fee'
programs referenced in clause (c) above are collectively referred to as
"Financial Advisers." Financial Advisers and other fiduciaries may be required
to provide information satisfactory to AIM Distributors concerning their
eligibility to purchase Advisor Class shares. Investors in wrap fee programs and
advisory accounts may only purchase Advisor Class shares through Financial
Advisers who have entered into agreements with AIM Distributors. Investors may
be charged a fee by their agents or brokers for effecting transactions in
Advisor Class shares.
AIM Distributors may, from time to time, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives
A-2
<PAGE> 501
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
0.25% of the public offering price of the shares sold. Any such bonus or
incentive programs will not change the price paid by investors for the purchase
of the applicable AIM Fund's shares or the amount that any particular AIM Fund
will receive as proceeds from such sales. Dealers may not use sales of the AIM
Funds' shares to qualify for any incentives to the extent that such incentives
may be prohibited by the laws of any state.
TIMING OF PURCHASE ORDERS. Orders for the purchase of Advisor Class shares
received prior to the close of regular trading on the New York Stock Exchange
("NYSE"), which is generally 4:00 p.m. Eastern Time (and which is hereinafter
referred to as "NYSE Close"), on any business day of an AIM Fund will be
confirmed at the price next determined. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of the AIM Fund.
Certain financial institutions (or their designees) may be authorized to accept
purchase orders on behalf of the AIM Funds. Orders received by authorized
institutions (or their designees) before NYSE Close will be deemed to have been
received by an AIM Fund on such day and will be effected that day, provided that
such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders. It is the responsibility of the dealer/financial
institution to ensure that all orders are transmitted on a timely basis to the
Transfer Agent. Any loss resulting from the dealer/financial institution's
failure to submit an order within the prescribed time frame will be borne by
that dealer/financial institution. Please see "How to Purchase Shares -- Initial
and Subsequent Purchases by Wire" for information on obtaining a reference
number for wire orders, which will facilitate the handling of such orders and
ensure prompt credit to an investor's account. A "business day" of an AIM Fund
is any day on which the NYSE is open for business. It is expected that the NYSE
will be closed during the next twelve months on Saturdays and Sundays and on the
days on which New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO AIM DOLLAR FUND. Because AIM DOLLAR FUND uses
the amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of that fund will remain constant at $1.00 per share.
However, there is no assurance that AIM DOLLAR FUND can maintain a $1.00 net
asset value per share. AIM DOLLAR FUND generally will not issue share
certificates but will record investor holdings in noncertificate form and
regularly advise the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
A-3
<PAGE> 502
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each Advisor Class Fund provides the special plans
described below for the convenience of its Advisor Class shareholders. Once
established, there is no obligation to continue to invest through a plan, and a
shareholder may terminate a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Advisor Class shareholders may elect to
have all dividends and distributions declared by an Advisor Class Fund paid in
cash or invested at net asset value either in Advisor Class shares of the same
Advisor Class Fund or invested in shares of another Advisor Class Fund. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" for a
description of payment dates for these options. In order to qualify to have
dividends and distributions of one Advisor Class Fund invested in shares of
another Advisor Class Fund, the following conditions must be satisfied: (a) the
shareholder must have an account balance in the dividend paying fund of at least
$5,000; (b) the account must be held in the name of the shareholder (i.e., the
account may not be held in nominee name); and (c) the shareholder must have
requested and completed an authorization relating to the reinvestment of
dividends into another Advisor Class Fund. An authorization may be given on the
account application or on an authorization form available from AIM Distributors.
An Advisor Class Fund will waive the $5,000 minimum account value requirement if
the shareholder has an account in the fund selected to receive the dividends and
distributions with a value of at least $500.
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance to $5,000 to
establish and maintain an allocation across a range of Advisor Class Funds. The
Program automatically rebalances holdings of Advisor Class Funds to the
established allocation on a periodic basis. Under the Program, a shareholder may
predesignate, on a percentage basis, how the total value of his or her holdings
in a minimum of two, and a maximum of ten, Advisor Class Funds ("Personal
Portfolio") is to be rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more Advisor Class Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other Advisor Class Funds in the
shareholder's Personal Portfolio. See "Exchange Privilege." If shares of the
Advisor Class Fund(s) in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of Advisor Class
Fund(s) that have appreciated most during the period being exchanged for shares
of Advisor Class Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR FEDERAL INCOME TAX PURPOSES. See "Dividends, Distributions and Tax
Matters -- Dividends and Distributions." Participation in the Program does not
assure that a shareholder will profit from purchases under the Program nor does
it prevent or lessen losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Advisor Class Fund would be 2%
or less. In predesignating percentages, shareholders must use whole percentages
and totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an Advisor Class Fund's
shares. The AIM Funds and AIM Distributors reserve the right to modify, suspend,
or terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Advisor
Class Funds or what allocation percentages are assigned to the Program, unless
canceled or changed in writing and received by the Transfer Agent in good order
at least five business days prior to the rebalancing date. Certain
dealers/financial institutions may charge a fee for establishing accounts
relating to the Program. Investors should contact their dealers/financial
institutions or AIM Distributors for more information.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Advisor Class shareholders of the Advisor
Class Funds may participate in an exchange privilege as described below. AIM
Distributors acts as distributor for the Advisor Class Funds which represent a
range of different investment objectives and policies.
Advisor Class shares of any Advisor Class Fund may be exchanged only for
Advisor Class shares of any other Advisor Class Fund.
Investors in wrap fee programs and advisory accounts interested in making an
exchange should contact their Financial Advisers to request the prospectus of an
Advisor Class Fund being considered. Other investors should contact AIM
Distributors for the appropriate prospectus.
An exchange is permitted only in the following circumstances: (a) the dollar
amount of the exchange must be at least equal to the minimum investment
applicable to the shares of the Advisor Class Fund acquired through such
exchange; (b) the shares of the Advisor
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Class Fund acquired through exchange must be qualified for sale in the state in
which the shareholder resides; (c) the exchange must be made between accounts
having identical registrations and addresses; (d) the full amount of the
purchase price for the shares being exchanged must have already been received by
the fund; (e) the account from which shares have been exchanged must be coded as
having a certified taxpayer identification number on file or, in the
alternative, an appropriate IRS Form W-8 (certificate of foreign status) or Form
W-9 (certifying exempt status) must have been received by the fund; (f) newly
acquired shares (through either an initial or subsequent investment) are held in
an account for at least ten business days, and all other shares are held in an
account for at least one day, prior to the exchange; and (g) certificates
representing shares must be returned before shares can be exchanged. There is no
fee for exchanges among the Advisor Class Funds.
THE CURRENT PROSPECTUS OF EACH OF THE ADVISOR CLASS FUNDS AND CURRENT
INFORMATION CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE
THROUGH AIM DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE
AGREEMENT WITH AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD
REVIEW THE PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH
EXCHANGE. EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE
INCOME TAX PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any Advisor Class Fund to be exchanged are redeemed at their net
asset value as determined at NYSE Close on the day that an exchange request in
proper form (described below) is received. Exchange requests received after NYSE
Close will result in the redemption of shares at their net asset value at NYSE
Close on the next business day. Normally, Advisor Class shares of an Advisor
Class Fund to be acquired by exchange are purchased at their net asset value
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 an Advisor Class Fund would be materially disadvantaged by an
immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into an Advisor Class Fund that declares daily dividends ("Dividends,
Distributions and Tax Matters -- Dividends and Distributions," below), and the
release of the exchange proceeds is delayed for the foregoing five-day period,
such shareholder will not begin to accrue dividends until the sixth business day
after the exchange. Advisor Class shares purchased by check may not be exchanged
until it is determined that the check has cleared, which may take up to ten
business days from the date that the check is received. See "Terms and
Conditions of Purchase of the AIM Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their Advisor Class shares by mail
should send a written request to AFS. The request should contain the account
registration and account number, the dollar amount or number of Advisor Class
shares to be exchanged, and the names of the Advisor Class Funds from which and
into which the exchange is to be made. The request should comply with all of the
requirements for redemption by mail. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. A shareholder may give exchange information to his Financial
Adviser. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the Advisor Class Funds. AIM Distributors reserves the right to impose
conditions on dealers or investment advisors who make telephone exchanges of
shares of the Advisor Class 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 Financial Adviser, shareholder or dealer who has
satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
Financial Adviser, shareholder or dealer is unable to reach AFS by telephone, he
may also request exchanges by telegraph or use overnight courier services to
expedite exchanges by mail, which will be effective on the business day received
by the Transfer Agent as long as such request is received prior to NYSE Close.
The Transfer Agent and AIM Distributors will not be liable for any loss, expense
or cost arising out of any telephone exchange request that they reasonably
believe to be genuine, but may in certain cases be liable for losses due to
unauthorized or fraudulent transactions if they do not follow reasonable
procedures for verification of telephone transactions. Such reasonable
procedures may include recordings of telephone transactions (maintained for six
months), requests for confirmation of the shareholder's Social Security Number
and current address, and mailings of confirmations promptly after the
transaction.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. No
redemption fee is imposed when Advisor Class shares are redeemed or repurchased;
however, dealers/financial institutions may charge service fees for handling
repurchase transactions.
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REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
TIMING AND PRICING OF REDEMPTION ORDERS. Advisor Class shares of the Advisor
Class Funds are redeemed at their net asset value next computed after a request
for redemption in proper form (including signature guarantees and other required
documentation for written redemptions) is received by the Transfer Agent or
certain financial institutions (or their designees) who are authorized to accept
redemption orders on behalf of the AIM Funds, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. Orders for the redemption of Advisor Class shares received on any
business day of an AIM Fund will be confirmed at the price determined as of the
close of that day. Orders received after NYSE Close will be confirmed at the
price determined on the next business day of an AIM Fund. It is the
responsibility of the dealer/financial institution to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer/financial
institution's failure to submit a request for redemption within the prescribed
time frame will be borne by that dealer/financial institution. Telephone
redemption requests must be made by NYSE Close on any business day of an AIM
Fund and will be confirmed at the price determined as of the close of that day.
No AIM Fund will accept requests which specify a particular date for redemption
or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions, and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such
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<PAGE> 505
as certain domestic banks, credit unions, securities dealers, or securities
exchanges. The Transfer Agent will also accept signatures with either: (1) a
signature guaranteed with a medallion stamp of the STAMP Program, or (2) a
signature guaranteed with a medallion stamp of the NYSE Medallion Signature
Program, provided that in either event, the amount of the transaction involved
does not exceed the surety coverage amount indicated on the medallion. For
information regarding whether a particular institution or organization qualifies
as an "eligible guarantor institution," an investor should contact the Client
Services Department of AFS.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each Advisor Class Fund is
determined as of 4:00 p.m. Eastern Time on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an Advisor Class
Fund's share will be determined as of the close of the NYSE on such day. For
purposes of defining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE. The
net asset value per share is calculated by subtracting a class' liabilities from
its assets and dividing the result by the total number of class shares
outstanding. The determination of net asset value per share is made in
accordance with generally accepted accounting principles. Among other items,
liabilities include accrued expenses and dividends payable, and total assets
include portfolio securities valued at their market value, as well as income
accrued but not yet received. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the supervision of the fund's officers and in accordance with methods
which are specifically authorized by its governing Board of Directors or
Trustees. Short-term obligations with maturities of 60 days or less, and the
securities held by the AIM DOLLAR FUND, are valued at amortized cost as
reflecting fair value.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM 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 the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 Directors or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
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- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
- ---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM BASIC VALUE FUND............... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND........ declared and paid annually annually annually
AIM DOLLAR FUND.................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND.......... declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND..... declared and paid monthly annually annually
AIM EUROPE GROWTH FUND............. declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND.................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES
FUND............................. declared and paid annually annually annually
AIM GLOBAL GOVERNMENT INCOME
FUND............................. declared and paid monthly annually annually
AIM GLOBAL GROWTH & INCOME FUND.... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND........ declared and paid annually annually annually
AIM GLOBAL INFRASTRUCTURE FUND..... declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND.......... declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS
FUND............................. declared and paid annually annually annually
AIM GLOBAL TRENDS FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND...... declared and paid annually annually annually
AIM JAPAN GROWTH FUND.............. declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND..... declared and paid annually annually annually
AIM MID CAP EQUITY FUND............ declared and paid annually annually annually
AIM NEW PACIFIC GROWTH FUND........ declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND.......... declared and paid monthly annually annually
AIM WORLDWIDE GROWTH FUND.......... declared and paid annually annually annually
</TABLE>
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. Each Advisor Class Fund
may make additional distributions, if necessary, to avoid a non-deductible 4%
federal excise tax on certain undistributed income and capital gain (the "Excise
Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to Advisor Class shares of an Advisor
Class Fund are reinvested in additional Advisor Class shares of that fund,
absent an election by a shareholder to receive cash or to have such dividends
and distributions reinvested in Advisor Class shares of another Advisor Class
Fund, to the extent permitted. For funds that do not declare a dividend daily,
such dividends and distributions will be reinvested at the net asset value per
share determined on the ex-dividend date. For funds that declare a dividend
daily, such dividends and distributions will be reinvested at the net asset
value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or only the
dividend portion thereof, in cash, or to invest such dividends and distributions
in Advisor Class shares of another Advisor Class Fund. Investors who have not
previously selected such a reinvestment option on the account application form
may contact the Transfer Agent at any time to obtain a form to authorize such
reinvestments in another Advisor Class Fund.
Dividends on Advisor Class shares of an Advisor Class Fund are expected to be
higher than dividends on shares of other classes of that fund because of the
service and distribution fees paid by those other classes of shares. Dividends
on all shares may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by 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, as
discussed below.
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TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares. With respect to tax-exempt shareholders,
dividends and distributions from the AIM Funds are not subject to federal income
taxation to the extent permitted under the applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM Developing
Markets Fund, AIM Dollar Fund, AIM Emerging Markets Fund, AIM Europe Growth
Fund, AIM Global Government Income Fund, AIM Global High Income Fund, AIM Global
Trends Fund, AIM International Growth Fund, AIM Japan Growth Fund, AIM Latin
American Growth Fund, AIM New Pacific Growth Fund and AIM Strategic Income Fund
will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS DEBT FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM MID CAP
EQUITY FUND, AIM SMALL CAP GROWTH FUND AND AIM STRATEGIC INCOME FUND -- SPECIAL
TAX INFORMATION. Certain states exempt from income taxes dividends paid by
mutual funds attributable to interest on U.S. Treasury and certain other U.S.
government obligations. Investors should consult with their own tax advisors
concerning the availability of such exemption.
A-9
<PAGE> 508
AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL
SERVICES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL
TELECOMMUNICATIONS FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND,
AIM LATIN AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is
eligible to do so, each of these funds may elect to pass through to its
shareholders credits for foreign taxes paid. If a fund makes such an election, a
shareholder who receives a distribution (1) will be required to include in gross
income his proportionate share of foreign taxes allocable to the distribution
and (2) may claim a credit or deduction for such share for his taxable year in
which the distribution is received, subject to the general limitations imposed
on the allowance of foreign tax credits and deductions. Shareholders should also
note that certain gains or losses attributable to fluctuations in exchange rates
or foreign currency forward contracts may increase or decrease the amount of
income of the fund available for distribution to shareholders and should note
that if, for any fund, such losses exceed other income during a taxable year,
the fund would not be able to pay ordinary income dividends for that year.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the Advisor Class Funds. Chase Bank of Texas,
N.A., P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for
retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each Advisor Class Fund's transfer agent and
dividend payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-10
<PAGE> 509
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 510
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 511
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
WWG-PRO-2
<PAGE> 512
STATEMENT OF
ADDITIONAL INFORMATION
CLASS A AND CLASS B SHARES OF
AIM WORLDWIDE GROWTH FUND
AIM INTERNATIONAL GROWTH FUND
AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND
AIM MID CAP EQUITY FUND
AIM JAPAN GROWTH FUND
(SERIES PORTFOLIOS OF
AIM GROWTH SERIES)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 77047-1173
(713) 626-1919
---------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON TX 77210-4739
OR BY CALLING (800) 347-4246.
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 8, 1998
RELATING TO THE AIM WORLDWIDE GROWTH FUND PROSPECTUS, THE AIM INTERNATIONAL
GROWTH FUND
PROSPECTUS, THE AIM NEW PACIFIC GROWTH FUND PROSPECTUS, THE AIM EUROPE GROWTH
FUND PROSPECTUS,
THE AIM MID CAP EQUITY FUND PROSPECTUS AND THE AIM JAPAN GROWTH FUND PROSPECTUS
EACH DATED SEPTEMBER 8, 1998
<PAGE> 513
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION................................................ 4
GENERAL INFORMATION ABOUT THE FUNDS......................... 4
The Trust and Its Shares.................................. 4
INVESTMENT OBJECTIVES AND POLICIES.......................... 5
Selection of Investments.................................. 5
Investment in Other Investment Companies.................. 5
Samurai and Yankee Bonds.................................. 5
Depositary Receipts....................................... 5
Warrants or Rights........................................ 6
Lending of Portfolio Securities........................... 6
Commercial Bank Obligations............................... 6
Repurchase Agreements..................................... 7
Borrowing, Reverse Repurchase Agreements and "Roll"
Transactions........................................... 7
Temporary Defensive Strategies............................ 8
OPTIONS, FUTURES AND CURRENCY STRATEGIES.................... 8
Special Risks of Options, Futures and Currency
Strategies............................................. 8
Writing Call Options...................................... 8
Writing Put Options....................................... 9
Purchasing Put Options.................................... 10
Purchasing Call Options................................... 10
Index Options............................................. 11
Interest Rate, Currency and Stock Index Futures
Contracts.............................................. 12
Options on Futures Contracts.............................. 14
Limitations on Use of Futures, Options on Futures and
Certain Options on Currencies.......................... 14
Forward Contracts......................................... 14
Foreign Currency Strategies -- Special Considerations..... 15
Cover..................................................... 16
RISK FACTORS................................................ 16
Illiquid Securities....................................... 16
Foreign Securities........................................ 17
Debt Securities........................................... 21
INVESTMENT LIMITATIONS...................................... 21
EXECUTION OF PORTFOLIO TRANSACTIONS......................... 23
Portfolio Trading and Turnover............................ 24
MANAGEMENT.................................................. 25
Trustees and Executive Officers........................... 25
Investment Management and Administration Services......... 27
Expenses of the Funds..................................... 27
THE DISTRIBUTION PLANS...................................... 28
The Class A Plan.......................................... 28
The Class B Plan.......................................... 28
Both Plans................................................ 28
THE DISTRIBUTOR............................................. 31
NET ASSET VALUE DETERMINATION............................... 32
</TABLE>
2
<PAGE> 514
<TABLE>
<CAPTION>
PAGE
<S> <C>
HOW TO PURCHASE AND REDEEM SHARES........................... 32
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE............. 34
PROGRAMS AND SERVICES FOR SHAREHOLDERS...................... 34
DIVIDEND ORDER.............................................. 34
TAXES....................................................... 34
General................................................... 34
Foreign Taxes............................................. 35
Passive Foreign Investment Companies...................... 35
Non-U.S. Shareholders..................................... 36
Options, Futures and Foreign Currency Transactions........ 36
MISCELLANEOUS INFORMATION................................... 36
Custodian................................................. 37
Transfer Agency and Accounting Agency Services............ 37
Independent Accountants................................... 37
Shareholder Liability..................................... 37
Names..................................................... 37
Control Persons and Principal Holders of Securities....... 38
INVESTMENT RESULTS.......................................... 40
Total Return Quotations................................... 40
Performance Information................................... 45
APPENDIX.................................................... 47
Description of Bond Ratings............................... 47
Description of Commercial Paper Ratings................... 48
Absence of Ratings........................................ 48
FINANCIAL STATEMENTS........................................ FS
</TABLE>
3
<PAGE> 515
INTRODUCTION
This Statement of Additional Information relates to the Class A and Class B
shares of AIM Worldwide Growth Fund ("Worldwide Fund"), AIM International Growth
Fund ("International Fund"), AIM New Pacific Growth Fund ("Pacific Fund"), AIM
Europe Growth Fund ("Europe Fund"), AIM Mid Cap Equity Fund formerly, AIM Mid
Cap Growth Fund ("Mid Cap Fund") and AIM Japan Growth Fund ("Japan Fund")
(individually, a "Fund," and collectively, the "Funds"). Each Fund is a
diversified series of AIM Growth Series (the "Trust"), a registered open-end
management investment company.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-advisor") serves as the
investment sub-advisor of and sub-administrator for Worldwide Fund,
International Fund, Pacific Fund, Europe Fund and Japan Fund.
The Trust is a series mutual fund. The rules and regulations of the Securities
and Exchange Commission (the "SEC") require all mutual funds to furnish
prospective investors certain information concerning the activities of the fund
being considered for investment. This information for Worldwide Fund is included
in a Prospectus dated September 8, 1998, for International Fund is included in a
separate Prospectus dated September 8, 1998, for Pacific Fund is included in a
separate Prospectus dated September 8, 1998, for Europe Fund is included in a
separate Prospectus dated September 8, 1998, for Mid Cap Fund is included in a
separate Prospectus dated September 8, 1998, and for Japan Fund is included in a
separate Prospectus dated September 8, 1998. Additional copies of the
Prospectuses and 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, TX 77210-4739
or by calling (800) 347-4246. Investors must receive a Prospectus before they
invest.
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 Prospectus; and, in order to avoid repetition, reference will be
made to sections of the Prospectus. Additionally, the Prospectus and this
Statement of Additional Information omit certain information contained in the
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items omitted from the Prospectus and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Global Growth Series, which
was organized as a Massachusetts business trust on February 19, 1985. The Trust
was reorganized on May 29, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of the following portfolios; each of the six Funds, AIM
Small Cap Growth Fund formerly know as AIM Small Cap Equity Fund, and AIM Basic
Value Fund formerly known as AIM America Value Fund. Each of these funds has
three separate classes: Class A, Class B and Advisor Class shares. All
historical financial and other information contained in this Statement of
Additional Information for periods prior to May 29, 1998, is that of the series
of G.T. Global Growth Series.
This Statement of Additional Information relates solely to the Class A and B
shares of the Funds.
The term "majority of the outstanding shares" of the Trust, of a particular
Fund or of a particular class of a Fund means, respectively, the vote of the
lesser of (a) 67% or more of the shares of the Trust, such Fund or such class
present at a meeting of the Trust's shareholders, if the holders of more than
50% of the outstanding shares of the Trust, such Fund or such class are present
or represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, such Fund or such class.
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees with respect to the class of such Fund and, upon liquidation of the
Fund, to participate proportionately in the net assets of the Fund allocable to
such class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion
and exchange rights as set forth in the Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
Shareholders of the Funds do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Funds voting
together for election of trustees may elect all of the members of the Board of
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
4
<PAGE> 516
INVESTMENT OBJECTIVES AND POLICIES
SELECTION OF INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Funds, AIM and/or the Sub-advisor
ordinarily consider the following factors: prospects for relative economic
growth between the different countries in which each Fund may invest; expected
levels of inflation; government policies influencing business conditions; the
outlook for currency relationships; and the range of the individual investment
opportunities available to international investors.
In analyzing companies for investment by each Fund, AIM and/or the Sub-advisor
ordinarily look for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by a
Fund or the Funds in the aggregate. In addition, in some instances only special
classes of securities may be purchased by foreigners and the market prices,
liquidity and rights with respect to those securities may vary from shares owned
by nationals.
At this time, AIM and/or the Sub-advisor are not aware of the existence of any
investment or exchange control regulations that might substantially impair the
operations of the Funds as described in the Prospectus and this Statement of
Additional Information. Although restrictions may in the future make it
undesirable to invest in certain countries, AIM and/or the Sub-advisor do not
believe that any current repatriation restrictions would affect its decisions to
invest in the countries eligible for investment by any Fund. It should be noted,
however, that this situation could change at any time.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Fund presently may be made
only by acquiring shares of other investment companies (including investment
vehicles or companies advised by AIM and/or the Sub-advisor or their affiliates
("Affiliated Funds")) with local governmental approval to invest in those
countries. At such time as direct investment in these countries is allowed, the
Funds anticipate investing directly in these markets. The Funds may also invest
in the securities of closed-end investment companies within the limits of the
Investment Company Act of 1940, as amended (the "1940 Act"). These limitations
currently provide that, in part, each Fund may purchase shares of a closed-end
investment company unless: (a) such a purchase would cause a Fund to own more
than 3% of the total outstanding voting stock of the investment company or (b)
such a purchase would cause a Fund to have more than 5% of its assets invested
in the investment company or more than 10% of its assets invested in an
aggregate of all such investment companies. Investment in investment companies
may involve the payment of substantial premiums above the value of such
companies' portfolio securities. The Funds do not intend to invest in such
vehicles or funds unless AIM and/or the Sub-advisor determine that the potential
benefits of such investments justify the payment of any applicable premiums. The
return on such securities will be reduced by operating expenses of such
companies including payments to the investment managers of those investment
companies. With respect to investments in Affiliated Funds, AIM and/or the
Sub-advisor waive their advisory fee to the extent that such fees are based on
assets of a Fund invested in Affiliated Funds.
SAMURAI AND YANKEE BONDS
The International Fund, the Japan Fund, the Pacific Fund and the Worldwide
Fund may invest in yen-denominated bonds sold in Japan by non-Japanese issuers
("Samurai bonds"), and the Worldwide Fund and the Mid Cap Fund may invest in
dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee
bonds"). As compared with bonds issued in their countries of domicile, such bond
issues normally carry a higher interest rate but are less actively traded. It is
the policy of each Fund to invest in Samurai or Yankee bond issues only after
taking into account considerations of quality and liquidity, as well as yield.
These bonds are issued by governments that are members of the Organization for
Economic Cooperation and Development or have AAA ratings. None of the Funds has
invested in Samurai or Yankee bonds since 1982.
DEPOSITARY RECEIPTS
Each Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global
Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs") or other
securities convertible into securities of eligible European or Far Eastern
issuers. These securities may not necessarily
5
<PAGE> 517
be denominated in the same currency as the securities for which they may be
exchanged. ADRs and ADSs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust
companies and evidence ownership of either foreign or domestic securities. GDRs
are similar to EDRs and are designed for use in several international financial
markets. Generally, ADRs and ADSs in registered form are designed for use in
United States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of a Fund's investment policies, its
investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in the
equity securities representing securities of foreign issuers into which they may
be converted.
ADR facilities may be established as either "unsponsored" or "sponsored."
While ADRs issued under these two types of facilities are in some respects
similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants. A
depository may establish an unsponsored facility without participation by (or
even necessarily the acquiescence of) the issuer of the deposited securities,
although typically the depository requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facilities. The depository usually charges
fees upon the deposit and withdrawal of the deposited securities, the conversion
of dividends into U.S. dollars, the disposition of non-cash distributions and
the performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Funds may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to subscribe for other securities or
commodities. Warrants do not carry with them the right to dividends or voting
rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the issuer. As a
result, warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Fund may make secured
loans of its portfolio securities amounting to not more than 30% of its total
assets. Securities loans are made to broker/dealers or institutional investors
pursuant to agreements requiring that the loans continuously be secured by
collateral at least equal at all times to the value of the securities lent, plus
any accrued interest, "marked to market" on a daily basis. The Funds may pay
reasonable administrative and custodial fees in connection with the loans of
their securities. While the securities loans are outstanding, the Funds will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. Each Fund will have a right to call each
loan at any time and obtain the securities within the stated settlement period.
The Funds will not have the right to vote equity securities while they are being
lent, but may call in a loan in anticipation of any important vote. Loans only
will be made to firms deemed by AIM and/or the Sub-advisor to be of good
standing and will not be made unless, in the judgment of AIM and/or the
Sub-advisor, the consideration to be earned from such loans would justify the
risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of
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foreign banks may subject the Funds to investment risks that are different in
some respects from those of investments in obligations of domestic issuers.
Although a Fund typically will acquire obligations issued and supported by the
credit of U.S. or foreign banks having total assets at the time of purchase of
$1 billion or more, this $1 billion figure is not an investment policy or
restriction of any Fund. For the purposes of calculation with respect to the $1
billion figure, the assets of a bank will be deemed to include the assets of its
U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Funds intend to enter into
repurchase agreements only with banks and dealers believed by AIM and/or the
Sub-advisor to present minimal credit risks in accordance with guidelines
approved by the Trust's Board of Trustees (the "Board"). AIM and/or the
Sub-advisor reviews and monitors the creditworthiness of such institutions under
the Board's general supervision.
A Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, each Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. A Fund will not enter into a repurchase agreement with a maturity of
more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's borrowings will not exceed 33 1/3% of its total assets, i.e., each
Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by a Fund may cause greater fluctuation in the value
of its shares than would be the case if the Fund did not borrow.
Each Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. Each Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by
the Trust's Board of Trustees. If a Fund employs leverage in the future, it
would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in a Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings, a
Fund's earnings or net asset value will increase faster than otherwise would be
the case; conversely, if such income and gains fail to exceed such costs, a
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Each Fund also may engage in "roll"
borrowing transactions which involve its sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. A Fund will segregate with a custodian, liquid
assets in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
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TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Funds may invest include the following:
government securities; high grade commercial paper; bank certificates of
deposit; bankers' acceptances; and repurchase agreements related to any of the
foregoing. High grade commercial paper refers to commercial paper rated P-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"), at the time of investment
or, if unrated, deemed by the Sub-advisor to be of comparable quality.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon AIM
and/or the Sub-advisor's ability to predict movements of the overall
securities and currency markets, which requires different skills than
predicting changes in the prices of individual securities. While AIM and/or
the Sub-advisor are experienced in the use of these instruments, there can
be no assurance that any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used
in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(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. For example, if a Fund
entered into a short hedge because AIM and/or the Sub-advisor projected a
decline in the price of a security in the Fund's portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Fund could suffer
a loss. In either such case, the Fund would have been in a better position
had it not hedged at all.
(4) 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 (i.e.,
instruments other than purchased options). If the 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. The Fund's ability to close out a
position in an instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a market,
the ability and willingness of the other party to the transaction ("contra
party") to enter into a transaction closing out the position. Therefore,
there is no assurance that any position can be closed out at a time and
price that is favorable to the Fund.
WRITING CALL OPTIONS
A Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of AIM and/or the Sub-advisor, are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency 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 the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of
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the call option, or such earlier time at which the writer effects a closing
purchase transaction by purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will
be purchased solely on the basis of investment considerations consistent with
each Fund's investment objectives. 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 or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, a Fund has no
control over when it may be required to sell the underlying securities 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, the Fund
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 or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment and
the length of the option period. In determining whether a particular call option
should be written, AIM and/or the Sub-advisor will consider the reasonableness
of the anticipated premium and the likelihood that a liquid secondary market
will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date or both.
The Funds will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Fund may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering such security or currency from its portfolio. In such
cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Funds may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund generally would write put options in circumstances where AIM and/or the
Sub-advisor wishes to purchase the underlying security or currency for the
Fund's portfolio at a price lower than the current market price of the security
or currency. In such event, the 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. Since the Fund also would receive interest on debt
securities or currencies maintained to cover the exercise price of the option,
this technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price, less
the premium received.
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Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund will be obligated
to purchase the security or currency at greater than its market value.
PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As
the holder of a put option, a Fund would have the right to sell the underlying
security 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 option, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. The premium paid for the put option and any
transaction costs would reduce any profit otherwise available for distribution
when the security or currency eventually is sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As
the holder of a call option, a Fund would have the right to purchase the
underlying security 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 option, exercise such option
or permit such option to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable a Fund to acquire the security or currency
at the exercise price of the call option plus the premium paid. At times, the
net cost of acquiring the security or currency in this manner may be less than
the cost of acquiring the security or currency directly. This technique also may
be useful to the Funds in purchasing a large block of securities that would be
more difficult to acquire by direct market purchases. As long as it holds such a
call option, rather than the underlying security or currency itself, a Fund is
partially protected from any unexpected decline in the market price of the
underlying security 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 Fund also may purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
its current return. For example, where a Fund has written a call option on an
underlying security or currency having a current market value below the price at
which it purchased the security or currency, an increase in the market price
could result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Fund's total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in
using Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the option. A call option
gives a Fund as purchaser the right (but not the obligation) to purchase a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the option. A Fund might
purchase a currency put option, for example, to protect itself against a decline
in the dollar value of a currency in which it holds or anticipates holding
securities. If the currency's value should decline against the dollar, the
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loss in currency value should be offset, in whole or in part, by an increase in
the value of the put. If the value of the currency instead should rise against
the dollar, any gain to the Fund would be reduced by the premium it had paid for
the put option. A currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value against the dollar
of a currency in which the Fund anticipates purchasing securities.
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 AIM and/or the Sub-advisor
believe 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.
The staff of the SEC considers purchased OTC options 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
the Fund. The assets used as cover for OTC options written by a 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.
A Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. A Fund intends to purchase
or write only those exchange-listed options for which there appears to be a
liquid secondary market. However, there can be no assurance that such a market
will exist at any particular time. Closing transactions can be made for OTC
options only by negotiating directly with the contra party or by a transaction
in the secondary market if any such market exists. Although a Fund will enter
into OTC options only with contra parties that are expected to be capable of
entering into closing transactions with the Fund, 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 contra party, the
Fund might be unable to close out an OTC option position at any time prior to
its expiration.
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. When a Fund writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Fund an amount of cash if the closing level of the index upon which the call
is based is greater than the exercise price of the call. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When a Fund
buys a call on an index, it pays a premium and has the same rights as to such
calls as are indicated above. When a Fund buys a put on an index, it pays a
premium and has the right, prior to the expiration date, to require the seller
of the put, upon the Fund's exercise of the put, to deliver to the Fund an
amount of cash if the closing level of the index upon which the put is based is
less than the exercise price of the put, which amount of cash is determined by
the multiplier, as described above for calls. When a Fund writes a put on an
index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier, if the closing level is less than the exercise price.
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, a 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 vary from the
value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options.
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When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the Fund, as the call writer, will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a Fund purchases an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
A Fund may enter into interest rate, currency or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates, currency exchange rates or stock price levels in order
to establish more definitely the effective return on securities or currencies
held or intended to be acquired by the Fund. The Funds' hedging may include
sales of Futures as an offset against the effect of expected increases in
interest rates, or decreases in currency exchange rates and stock prices, and
purchases of Futures as an offset against the effect of expected declines in
interest rates, or increases in currency exchange rates or stock prices.
The Funds only will enter into Futures Contracts that are traded 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 by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could
be used to reduce the Funds' exposure to interest rate and currency exchange
rate fluctuations, the Funds may be able to hedge its exposure more effectively
and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract 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 at which the Futures Contract is originally struck; 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 Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment
for financial instruments or currencies, Futures Contracts usually are closed
out before the delivery date. Closing out an open Futures Contract sale or
purchase is effected by entering into an offsetting Futures Contract purchase or
sale, respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Funds will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one Futures Contract of September Deutschemarks on an
exchange may be fulfilled at any time before delivery under the Futures Contract
is required (i.e., on a specified date in September, the "delivery month") by
the purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures
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Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Funds' Futures transactions will be entered into for hedging purposes
only; that is, Futures Contracts will be sold to protect against a decline in
the price of securities or currencies that a Fund owns, or Futures Contracts
will be purchased to protect a 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 Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to ensure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
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 the 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 Contract more or less valuable, a process
known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest and currency rates, which in turn are affected by fiscal and monetary
policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in
Futures Contract and option on Futures Contract prices during a single trading
day. The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices occasionally have moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
If a Fund were unable to liquidate a Futures or option on 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.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price
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distortions. In addition, activities of large traders in both the Futures and
securities markets involving arbitrage, "program trading" and other investment
strategies might result in temporary price distortions.
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,
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 is
exercised on the last trading day 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 level of the securities, currencies
or index upon which the Futures Contract is based on the expiration date.
Purchasers of options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
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 liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, i.e.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Trust's Board
of Trustees without a shareholder vote. This limitation does not limit the
percentage of a Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, generally 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 may
either 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.
A Fund engages in forward currency transactions in anticipation of or to
protect itself against fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, a Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, a Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
Forward Contract generally has no deposit requirement, and no commissions are
charged at any stage for trades. Each Fund will enter into such Forward
Contracts with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Trust's Board of Trustees.
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Each Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the overall investments of the Fund. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing a Fund
to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the maturity date, the same amount of
the currency that it is obligated to deliver. Similarly, a Fund may close out a
Forward Contract requiring it to purchase a specified currency by entering into
a second contract, if its contra party agrees, entitling it to sell the same
amount of the same currency on the maturity date of the first contract. The Fund
would realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange rate or
rates between the currencies involved moved between the execution dates of the
first contract and the offsetting contract.
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 usually are 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 Contracts 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.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket or
currencies, the values of which AIM and/or the Sub-advisor believe will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward
Contracts and options on foreign currencies depends on the value of the
underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of Futures Contracts, Forward
Contracts or options, a Fund could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirements that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the
interbank market and thus might not reflect odd-lot transactions where rates
might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
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Settlement of Futures Contracts, Forward Contracts and options involving
foreign currencies might be required to take place within the country issuing
the underlying currency. Thus, a Fund might be required to accept or make
delivery of the underlying foreign currency in accordance with any U.S. or
foreign regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other
than options purchased by a Fund) expose the 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, receivables and
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.
Assets used as cover or held in a segregated account 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.
RISK FACTORS
ILLIQUID SECURITIES
A Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if a Fund cannot reasonably expect within
seven days to sell the securities for approximately the amount at which the Fund
values such securities. See "Investment Limitations." The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities such as securities eligible for
trading on U.S. securities exchanges or in the OTC markets. Moreover, restricted
securities, which may be illiquid for purposes of this limitation, often sell,
if at all, at a price lower than similar securities that are not subject to
restrictions on resale.
Illiquid securities include those that are subject to restrictions contained
in the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Trust's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Trust's Board has delegated the function of making
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day-to-day determinations of liquidity to AIM and/or the Sub-advisor in
accordance with procedures approved by the Board. AIM and/or the Sub-advisor
take into account a number of factors in reaching liquidity decisions,
including: (i) the frequency of trading in the security; (ii) the number of
dealers who make quotes for the security; (iii) the number of dealers who have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is effected
(e.g., the time needed to sell the security, how offers are solicited, and the
mechanics of transfer.) AIM and/or the Sub-advisor monitors the liquidity of
securities in each Fund's portfolio and periodically reports such determinations
to the Trust's Board of Trustees. If the liquidity percentage restriction of a
Fund is satisfied at the time of investment, a later increase in the percentage
of illiquid securities held by the Fund resulting from a change in market value
or assets will not constitute a violation of that restriction. If as a result of
a change in market value or assets, the percentage of illiquid securities held
by the Fund increases above the applicable limit, AIM and/or the Sub-advisor
will take appropriate steps to bring the aggregate amount of illiquid assets
back within the prescribed limitations as soon as reasonably practicable, taking
into account the effect of any disposition on the Fund.
FOREIGN SECURITIES
Political, Social and Economic Risks. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
Religious, Political and Ethnic Instability. Certain countries in which a Fund
may invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
a Fund invests and adversely affect the value of its assets.
Foreign Investment Restrictions. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
Non-Uniform Corporate Disclosure Standards and Governmental
Regulation. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the foreign securities held by a Fund
(other than the Mid Cap Fund) will not be registered with the SEC or regulators
of any foreign country, nor will the issuers thereof be subject to the SEC's
reporting requirements. Thus, there will be less available information
concerning most foreign issuers of securities held by a Fund than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, AIM and/or the Sub-advisor will take appropriate steps to evaluate the
proposed investment, which may include on-site inspection of the issuer,
interviews with its management and consultations with accountants, bankers and
other specialists. There is substantially less publicly available information
about foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not
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subject to the same degree of regulation as are U.S. issuers with respect to
such matters as restrictions on market manipulation, insider trading rules,
shareholder proxy requirements and timely disclosure of information.
Currency Fluctuations. Because each Fund, other than the Mid Cap Fund, under
normal circumstances will invest a substantial portion of its total assets in
the securities of foreign issuers that are denominated in foreign currencies,
the strength or weakness of the U.S. dollar against such foreign currencies will
account for a significant part of the Fund's investment performance. A decline
in the value of any particular currency against the U.S. dollar will cause a
decline in the U.S. dollar value of a Fund's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the Fund's net asset value and any net investment income and capital gains
derived from such securities to be distributed in U.S. dollars to shareholders
of the Fund. Moreover, if the value of the foreign currencies in which a Fund
receives its income declines relative to the U.S. dollar between the receipt of
the income and the making of Fund distributions, it may be required to liquidate
securities in order to make distributions if it has insufficient cash in U.S.
dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is
determined by several factors, including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the relative
movement of interest rates and the pace of business activity in the other
countries and the United States, and other economic and financial conditions
affecting the world economy.
Although each Fund values its assets daily in terms of U.S. dollars, they do
not intend to convert their holdings of foreign currencies into U.S. dollars on
a daily basis. Each Fund will do so, from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should a Fund desire to sell that
currency to the dealer.
Adverse Market Characteristics. Securities of many foreign issuers may be less
liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities exchange transactions usually are subject to
fixed commissions, which generally are higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund due
to subsequent declines in value of the portfolio security or, if a Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. AIM and/or the Sub-advisor will consider such difficulties
when determining the allocation of each Fund's assets, although AIM and/or the
Sub-advisor do not believe that such difficulties will have a material adverse
effect on the Funds' portfolio trading activities.
The Funds may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Funds' investments and (iii) obtaining and enforcing judgments
against such custodians.
Withholding Taxes. A Fund's net investment income from foreign issuers may be
subject to non-U.S. withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
where those taxes may be recaptured. See "Taxes."
Concentration. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
Special Considerations Affecting Western European Countries. The countries
that are members of the European Economic Community ("Common Market")
(Australia, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom)
eliminated certain import tariffs and quotas and other trade barriers with
respect to one another over the past several years. AIM and/or the Sub-advisor
believe that this deregulation should improve the prospects for economic growth
in many Western European countries. Among other things, the deregulation could
enable companies domiciled in one country to avail themselves of lower labor
costs existing in other countries. In addition, this deregulation could benefit
companies domiciled in one country by opening additional markets for their goods
and services in other countries. Since, however, it is not clear what the exact
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form or effect of these Common Market reforms will be on business in Western
Europe, it is impossible to predict the long-term impact of the implementation
of these programs on the securities owned by a Fund.
Special Considerations Affecting Russia and Eastern European
Countries. Investing in Russia and Eastern European countries involves a high
degree of risk and special considerations not typically associated with
investing in the U.S. securities markets and should be considered highly
speculative. Such risks include: (1) delays in settling portfolio transactions
and risk of loss arising out of the system of share registration and custody;
(2) the risk that it may be impossible or more difficult than in other countries
to obtain and/or enforce a judgment; (3) pervasiveness of corruption and crime
in the economic system; (4) currency exchange rate volatility and the lack of
available currency hedging instruments; (5) higher rates of inflation (including
the risk of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends and on a Fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and may
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt that may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
Special Considerations Affecting Pacific Region Countries. Many Pacific region
countries may be subject to a greater degree of social, political and economic
instability than is the case in the United States. Such instability may result
from, among other things, the following: (i) authoritarian governments or
military involvement in political and economic decision making, and changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; (iii)
internal insurgencies; (iv) hostile relations with neighboring countries; and
(v) ethnic, religious and racial disaffection. Such social, political and
economic instability could significantly disrupt the principal financial markets
in which a Fund invests and adversely affect the value of a Fund's assets. In
addition, there may be the possibility of asset expropriations or future
confiscatory levels of taxation affecting the Funds.
In China, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea
and Thailand, government regulation or a company's charter may limit the maximum
foreign aggregate ownership of equity in the company. South Korea generally
prohibits foreign investment in won-denominated debt securities, and Sri Lanka
prohibits foreign investment in government debt securities. South Korea
prohibits foreign investment in specified telecommunications companies, and the
Philippines prohibits foreign investment in mass media companies and companies
providing certain professional services. In the Philippines, a Fund may
generally invest in "B" shares of Philippine issuers engaged in partly
nationalized business activities, the market prices, liquidity and rights of
which may vary from shares owned by nationals. Similarly, in China, a Fund may
only invest in "B" shares of securities traded on The Shanghai Securities
Exchange and The Shenzhen Stock Exchange, currently the two officially
recognized securities exchanges in China. "B" shares traded on The Shanghai
Securities Exchange are settled in U.S. dollars, and those traded on The
Shenzhen Stock Exchange are generally settled in Hong Kong dollars.
If, because of restrictions on repatriation or conversion of funds, a Fund
were unable to timely distribute substantially all of its net investment income
and net capital gains, the Fund could be subject to federal income and excise
taxes that would not otherwise be incurred and could cease to qualify for the
favorable tax treatment afforded to regulated investment companies ("RICs")
under the Internal Revenue Code of 1986, as amended (the "Code"). In such case,
it would become subject to federal income tax on all of its income and net
gains.
Several Pacific region countries have or in the past have had hostile
relationships with neighboring nations or have experienced internal insurgency.
Thailand has experienced border conflicts with Laos and Cambodia, and India is
engaged in border disputes with several of its neighbors, including China and
Pakistan. An uneasy truce exists between North Korea and South Korea, and the
recurrence of hostilities remains possible. Reunification of North Korea and
South Korea could have a detrimental effect on the economy of South Korea. Also,
China continues to claim sovereignty over Taiwan and recently has conducted
military maneuvers near Taiwan.
The economies of most Pacific region countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of
19
<PAGE> 531
protectionist trade legislation, reduction of foreign investment in the local
economies and general declines in the international securities markets could
have a significant adverse effect upon the securities markets of Pacific region
countries. In addition, the economies of some of the Asia Pacific region
countries, Australia and Indonesia, for example, are vulnerable to weakness in
world prices for their commodity exports, including crude oil.
Few of the Pacific region countries have Western-style or fully democratic
governments. Some governments in the region are authoritarian in nature and
influenced by security forces. For example, during the course of the last 25
years, governments in the region have been installed or removed as a result of
military coups, while others have periodically demonstrated repressive police
state characteristics. In several Pacific region countries, the leadership
ability of the government has suffered as a result of recent corruption
scandals. Disparities of wealth, among other factors, have also led to social
unrest in some of the Asia Pacific region countries, accompanied, in certain
cases, by violence and labor unrest. Ethnic, religious and racial disaffection,
as evidenced in India, Pakistan, and Sri Lanka, for example, have created
social, economic and political problems. Such problems also have occurred in
other regions.
Starting in mid-1997, some Pacific region countries began to experience
currency devaluations that resulted in high interest rate levels and sharp
reductions in economic activity. While the currency crisis diminished prospects
for short-term corporate earnings growth, AIM and/or the Sub-advisor believe
that high interest rate levels may force governments and corporations to
restructure the financial sector in a manner that may facilitate a return to
high levels of long-term economic activity.
China assumed sovereignty over Hong Kong in July 1997. Although China has
committed by treaty to preserve the economic and social freedoms enjoyed in Hong
Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty has increased sensitivity in Hong Kong
to political developments and statements by public figures in China. Business
confidence in Hong Kong, therefore, can be significantly affected by such
developments and statements, which in turn can affect markets and business
performance.
In addition, there is continuing risk that the Hong Kong dollar will be
devalued and a risk of possible loss of investor confidence in the Hong Kong
markets and dollar. However, factors exist that are likely to mitigate this
risk. First, China has stated its intention to implement a "one country, two
systems" policy, which would preserve monetary sovereignty and leave control in
the hands of the Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule and,
therefore, it is anticipated that, if international investors lose confidence in
Hong Kong dollar assets, the HKMA would take steps to support the currency,
though the taking of such steps cannot be assured. Third, Hong Kong's and
China's sizable combined foreign exchange reserve may be used to support the
value of the Hong Kong dollar, provided that China does not appropriate such
reserves for other uses, which is not anticipated but cannot be assured.
Finally, China would be likely to experience significant adverse political and
economic consequences if confidence in the Hong Kong dollar and the territory
assets were to be endangered.
Special Considerations Affecting Latin American Countries. Most Latin American
countries have experienced substantial, and in some periods extremely high,
rates of inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have very negative effects on the economies
and securities markets of certain Latin American countries. Certain Latin
American countries are also among the largest debtors to commercial banks and
foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are
maintained at artificial levels to the U.S. dollar rather than at levels
determined by the market. This type of system can lead to sudden and large
adjustments in the currency which, in turn, can have a disruptive and negative
effect on foreign investors. For example, in late 1994, the value of the Mexican
peso lost more than one-third of its value relative to the U.S. dollar.
Special Considerations Affecting Emerging Markets. Investing in the securities
of companies in emerging markets may entail special risks relating to potential
political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility into U.S. dollars and on
20
<PAGE> 532
repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation by any country, a Fund could lose its
entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging markets there may be
share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
DEBT SECURITIES
Each Fund is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, AIM and/or the Sub-advisor review and
monitor the creditworthiness of each issuer and issue and analyzes interest rate
trends and specific developments that may affect individual issuers, in addition
to relying on ratings assigned by S&P, Moody's or another nationally recognized
statistical rating organization ("NRSRO") as indicators of quality. Debt
securities rated Baa by Moody's or BBB by S&P are investment grade, although
Moody's considers securities rated Baa to have speculative characteristics.
Changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity for such securities to make principal and interest payments
than is the case for higher grade debt securities. Each Fund is also permitted
to purchase debt securities that are not rated by S&P, Moody's or another NRSRO,
but that AIM and/or the Sub-advisor determine to be of comparable quality to
that of rated securities in which the Fund may invest. Such securities are
included in the computation of any percentage limitations applicable to the
comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a Fund
has acquired the security. AIM and/or the Sub-advisor will consider such an
event in determining whether a Fund should continue to hold the security but is
not required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Appendix" herein.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations as fundamental
policies that may not be changed without approval by the affirmative vote of a
majority of the outstanding shares of the Fund. No Fund may:
(1) Purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation,
and except that the Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(3) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes;
21
<PAGE> 533
(4) Make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
limitation, the acquisition of bonds, debentures, other debt securities or
instruments, or participations or other interests therein and investments
in government obligations, commercial paper, certificates of deposit,
bankers' acceptances or similar instruments will not be considered the
making of a loan;
(5) Purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of that
issuer or the Fund would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Fund's total
assets may be invested without regard to this limitation, and except that
this limitation does not apply to securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities or to securities issued
by other investment companies;
(6) Engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities; or
(7) Purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of issuers
having their principal business activities in the same industry, except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
Notwithstanding any other investment policy of the Fund, the Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the concentration policy contained in limitation (7) above,
each Fund intends to comply with the SEC staff position that securities issued
or guaranteed as to principal and interest by any single foreign government or
any supranational organization are considered to be securities of issuers in the
same industry.
The following investment limitations of each Fund are not fundamental policies
and may be changed by vote of the Trust's Board of Trustees without shareholder
approval. Each Fund may not:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Fund's total assets;
(3) Enter into a futures contract, an option on a futures contract or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of
these positions (excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Fund's portfolio, after taking
into account unrealized profits and unrealized losses on any contracts the
Fund has entered into;
(4) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(5) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's investment policies or restrictions. A Fund
may exchange securities, exercise conversion or subscription rights, warrants,
or other rights to purchase common stock or other equity securities and may
hold, except to the extent limited by the 1940 Act, any such securities so
acquired without regard to the Fund's investment policies and restrictions. The
original cost of the securities so acquired will be included in any subsequent
determination of a Fund's compliance with the investment percentage limitations
referred to above and in the Prospectus.
Investors should refer to each Fund's prospectus for further information with
respect to that particular Fund's investment objective, which may not be changed
without the approval of its shareholders, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
22
<PAGE> 534
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by the Trust's Board of Trustees, AIM and/or
the Sub-advisor are responsible for the execution of the Funds' portfolio
transactions and the selection of brokers/dealers who execute such transactions
on behalf of the Funds. In executing transactions, AIM and/or the Sub-advisor
seek the best net results for each Fund, taking into account such factors as the
price (including the applicable brokerage commission or dealer spread), size of
the order, difficulty of execution and operational facilities of the firm
involved. Although AIM and/or the Sub-advisor generally seek reasonably
competitive commission rates and spreads, payment of the lowest commission or
spread is not necessarily consistent with the best net results. While the Funds
may engage in soft dollar arrangements for research services, as described
below, the Funds have no obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Consistent with the interests of the Funds, AIM and/or the Sub-advisor may
select brokers to execute the Funds' portfolio transactions on the basis of the
research services they provide to AIM and/or the Sub-advisor for its use in
managing the Funds and its other advisory accounts. Such services may include
furnishing analysis, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such broker are in addition to,
and not in lieu of, the services required to be performed by AIM and/or the
Sub-advisor under the applicable investment management and administration
contract. A commission paid to such broker may be higher than that which another
qualified broker would have charged for effecting the same transaction, provided
that AIM and/or the Sub-advisor determine in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of AIM and/or the Sub-advisor to the Funds and its other clients
and that the total commissions paid by each Fund will be reasonable in relation
to the benefits received by the Funds over the long term. Research services may
also be received from dealers who execute Fund transactions in OTC markets.
The Sub-advisor may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Fund toward payment of its expenses, such as
transfer agent and custodian fees.
Investment decisions for each Fund and for other investment accounts managed
by AIM and/or the Sub-advisor are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts, including one or more Funds. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Fund is concerned, in
other cases AIM and/or the Sub-advisor believe that coordination and the ability
to participate in volume transactions will be beneficial to the Funds.
Under a policy adopted by the Trust's Board of Trustees, and subject to the
policy of obtaining the best net results, AIM and/or the Sub-advisor may
consider a broker/dealer's sale of the shares of the Funds and the other funds
for which AIM or the Sub-adviser serves as investment manager and/or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other funds.
Each Fund contemplates purchasing most foreign equity securities in OTC
markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Fund in the form of ADRs, ADSs,
EDRs, GDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs, GDRs and CDRs may be listed on stock exchanges, or traded in the OTC
markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments in
which the Funds may invest are generally traded in the OTC markets.
Each Fund contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are affiliated with AIM or the Sub-advisor. The Trust's Board of Trustees
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to
23
<PAGE> 535
such affiliates are reasonable and fair in the context of the market in which
they are operating. Any such transactions will be effected and related
compensation paid only in accordance with applicable SEC regulations.
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
another AIM Fund 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.
For the fiscal year ended December 31, 1995, the Europe Fund paid to GT Bank
in Liechtenstein AG and GT Bank in Liechtenstein (Zurich), each of which was an
"affiliated" broker as defined in the 1940 Act, aggregate brokerage commissions
of $9,529 and $16,250, respectively, for transactions involving purchases and
sales of portfolio securities.
For the fiscal year ended December 31, 1995, the International Fund paid to GT
Bank in Liechtenstein AG aggregate brokerage commissions of $1,475 for
transactions involving purchases and sales of portfolio securities which
represented 0.08% of the total brokerage commissions paid by the International
Fund and less than 0.01% of the aggregate dollar amount of transactions
involving payment of commissions by the International Fund. For the fiscal year
ended December 31, 1996, the International Fund paid to GT Bank in Liechtenstein
(Deutschland) Gmbh and GT Bank in Liechtenstein AG aggregate brokerage
commissions of $6,284 and $8,378, respectively, for transactions involving
purchases and sales of portfolio securities which represented 0.09% and 0.50%,
respectively, of the total brokerage commissions paid by the International Fund,
and 0.08% and 0.94%, respectively, of the aggregate dollar amount of
transactions involving payment of commissions by the International Fund. For the
fiscal year ended December 31, 1996, the Worldwide Fund paid to GT Bank in
Liechtenstein (Deutschland) Gmbh aggregate brokerage commissions of $361.87 for
transactions involving purchases and sales of portfolio securities which
represented less than 0.01% of the total brokerage commissions paid by the
Worldwide Fund, and less than 0.01% of the aggregate dollar amount of
transactions involving payment of commissions by the Worldwide Fund.
For the fiscal year ended December 31, 1997, no payments were made to
affiliated brokers.
Aggregate brokerage commissions paid by the Funds for their three most recent
fiscal years were:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
Mid Cap Fund...................................... $2,193,539 $2,760,768 $ 878,569
Europe Fund....................................... $2,217,385 $2,711,139 $3,877,784
International Fund................................ $ 874,443 $1,496,178 $1,889,228
Japan Fund........................................ $ 218,841 $ 253,623 $ 440,117
Pacific Fund...................................... $2,767,789 $5,151,533 $3,310,887
Worldwide Fund.................................... $ 578,365 $ 792,165 $1,007,167
</TABLE>
PORTFOLIO TRADING AND TURNOVER
Although the Funds generally do not intend to trade for short-term profits,
the securities held by a Fund will be sold whenever AIM and/or the Sub-advisor
believe it is appropriate to do so, without regard to the length of time a
particular security may have been held. Portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by each Fund's
average month-end portfolio sales, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when AIM and/or the
Sub-advisor deem portfolio changes appropriate. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs that a Fund will bear directly and may result in the realization of net
capital gains that are taxable when distributed to the Fund's shareholders. The
portfolio turnover rates for the fiscal years ended December 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
FUND 1997 1996
- ---- ---- ----
<S> <C> <C>
Mid Cap Fund................................................ 190% 253%
Europe Fund................................................. 107% 123%
International Fund.......................................... 72% 74%
Japan Fund.................................................. 58% 31%
Pacific Fund................................................ 80% 93%
Worldwide Fund.............................................. 92% 80%
</TABLE>
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<PAGE> 536
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless otherwise
indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (51) Trustee, Chairman of the Board Director, President and Chief Executive
and President Officer, A I M Management Group, Inc.;
Director and 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,
AMVESCAP, PLC.
- ------------------------------------------------------------------------------------------------------
C. DEREK ANDERSON (57) Trustee President, Plantagenet Capital
220 Sansome Street Management, LLC (an investment
Suite 400 partnership); Chief Executive Officer,
San Francisco, CA 94104 Plantagenet Holdings, Ltd. (an
investment banking firm); Director,
Anderson Capital Management, Inc. since
1988; Director, PremiumWear, Inc.
(formerly Munsingwear, Inc.) (a casual
apparel company); Director, "R" Homes,
Inc. and various other companies; and
Trustee, each of the other investment
companies registered under the 1940 Act
that is sub-advised or sub-administered
by the Sub-advisor.
- ------------------------------------------------------------------------------------------------------
FRANK S. BAYLEY (59) Trustee Partner law firm of Baker & McKenzie;
Two Embarcadero Center Director and Chairman, C.D. Stimson
Suite 2400 Company (a private investment company);
San Francisco, CA 94111 and Trustee, each of the other
investment companies registered under
the 1940 Act that is sub-advised or
sub-administered by the Sub-advisor.
- ------------------------------------------------------------------------------------------------------
ARTHUR C. PATTERSON (54) Trustee Managing Partner, Accel Partners (a
428 University Avenue venture capital firm); Director, Viasoft
Palo Alto, CA 94301 and PageMart, Inc. (both public software
companies), and several other privately
held software and communications
companies; and Trustee, each of the
other investment companies registered
under the 1940 Act that is sub-advised
or sub-administered by the Sub-advisor.
- ------------------------------------------------------------------------------------------------------
RUTH H. QUIGLEY (63) Trustee Private investor; President, Quigley
1055 California Street Friedlander & Co., Inc. (a financial
San Francisco, CA 94108 advisory services firm) from 1984 to
1986; and Trustee, each of the other
investment companies registered under
the 1940 Act that is sub-advised or
sub-administered by the Sub-advisor.
- ------------------------------------------------------------------------------------------------------
JOHN J. ARTHUR (53) Director, Senior Vice President and
Vice President Treasurer, A I M Advisors, Inc.; Vice
President and Treasurer, A I M
Management Group Inc., A I M Capital
Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc. and Fund
Management Company.
- ------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
* A trustee who is an "interested person" of the Trust and A I M Advisors, Inc. as defined in the
1940 Act.
</TABLE>
25
<PAGE> 537
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
KENNETH W. CHANCEY (53) Vice President and Principal Senior Vice President -- Mutual Fund
50 California Street Accounting Officer Accounting, the Sub-advisor since 1997;
San Francisco, CA 94111 Vice President -- Mutual Fund
Accounting, the Sub-advisor from 1992 to
1997.
- ------------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance
Officer, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company.
- ------------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Vice President Director and President, A I M Capital
Management, Inc.; Director and Senior
Vice President, A I M Management Group
Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- ------------------------------------------------------------------------------------------------------
HELGE K. LEE (52) Vice President and Secretary Chief Legal and Compliance
50 California Street Officer -- North America, the
San Francisco, CA 94111 Sub-advisor since October 1997;
Secretary and Chief Legal and Compliance
Officer, INVESCO (NY) Asset Management,
Inc., INVESCO (NY), Inc., GT Global
Investor Services, Inc. and G.T.
Insurance since August 1997; Secretary
and Chief Legal and Compliance Officer,
GT Global from August 1997 to April
1998; Executive Vice President of the
Asset Management Division of
Liechtenstein Global Trust AG, from
October 1996 to May 1998; Senior Vice
President, General Counsel and Secretary
of INVESCO (NY) Asset Management, Inc.,
INVESCO (NY), Inc., GT Global, GT Global
Investor Services, Inc. and G.T.
Insurance from May 1994 to October 1996;
and Senior Vice President, General
Counsel and Secretary of
Strong/Corneliuson Management, Inc. and
Secretary of each of the Strong Funds
from October 1991 to May 1994.
- ------------------------------------------------------------------------------------------------------
CAROL F. RELIHAN+ (43) Vice President Director, Senior Vice President, General
Counsel and Secretary, A I M Advisors,
Inc.; Vice President, General Counsel
and Secretary, A I M Management Group
Inc.; Director, Vice President and
General Counsel, Fund Management
Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and
Vice President, A I M Capital
Management, Inc. and A I M Distributors,
Inc.
- ------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President and Assistant Vice President and Fund Controller,
Treasurer A I M Advisors, Inc.; and Assistant Vice
President and Assistant Treasurer, Fund
Management Company.
- ------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
+ Mr. Arthur and Ms. Relihan are married to each other.
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and the
Funds and recommending firms to serve as independent auditors of the Trust. All
of the Trust's Trustees also serve as directors or trustees of some or all of
the other investment companies managed, administered or advised by AIM. All of
the Trust's executive officers hold similar offices with some or all of the
other investment companies managed, administered or advised by AIM. Each Trustee
who is not a director, officer or employee of AIM and/or the Sub-advisor or
26
<PAGE> 538
any affiliated company is paid aggregate fees of $5,000 a year plus $300 per
Fund for each meeting of the Board attended by the Trustee, and reimbursed
travel and other expenses incurred in connection with attendance at such
meetings. Other Trustees and Officers receive no compensation or expense
reimbursements from the Trust. For the fiscal year ended December 31, 1997, the
Trust paid Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
directors, officers or employees of AIM and/or the Sub-advisor or any affiliated
company, total compensation of $19,276, $20,044, $16,350 and $18,203,
respectively, for their services as Trustees. For the year ended December 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
directors, officers or employees of AIM and/or the Sub-advisor or any other
affiliated company, received total compensation of $103,654, $106,556, $89,700
and $98,038, respectively, from the investment companies managed or administered
by AIM and sub-advised or sub-administered by the Sub-advisor for which he or
she serves as a Trustee. Fees and expenses disbursed to the Trustees contained
no accrued or payable pension or retirement benefits. As of May 7, 1998, the
Officers and Trustees and their families as a group owned in the aggregate
beneficially or of record less than 1% of the outstanding shares of any Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM serves as the investment manager and administrator to each Fund under an
investment management and administration contract ("Management Contract")
between the Trust and AIM. The Sub-advisor serves as the sub-adviser and
sub-administrator to each of Worldwide Fund, International Fund, Pacific Fund,
Europe Fund and Japan Fund under a sub-advisory and sub-administration Contract
between AIM and the Sub-adviser ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). As investment managers and
administrators, AIM and/or the Sub-advisor make all investment decisions for
each Fund and administer each Fund's affairs. Among other things, AIM and/or the
Sub-advisor furnish the services and pay the compensation and travel expenses of
persons who perform the executive, administrative, clerical and bookkeeping
functions of the Trust and the Funds and provide suitable office space and
necessary small office equipment and utilities.
The Management Contracts may be renewed for additional one-year terms with
respect to each Fund, provided that any such renewal has been specifically
approved at least annually by: (i) the Board of Trustees or the vote of a
majority of the Fund's outstanding voting securities (as defined in the 1940
Act), and (ii) a majority of Trustees who are not parties to the Management
Contracts or "interested persons" of any such party (as defined in the 1940
Act), cast in person at a meeting called for the specific purpose of voting on
such approval. With respect to any Fund, either the Trust or each of AIM or the
Sub-advisor may terminate the Management Contracts without penalty upon sixty
days' written notice to the other party. The Management Contracts terminate
automatically in the event of their assignment (as defined in the 1940 Act).
The amounts of investment management and administration fees paid by each Fund
to the Sub-advisor during the Funds' three most recent fiscal years were as
follows:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
---- ---------- ---------- ----------
<S> <C> <C> <C>
Mid Cap Fund...................................... $3,999,732 $4,982,969 $4,425,913
Europe Fund....................................... $5,228,246 $5,416,280 $6,161,265
International Fund................................ $2,309,873 $3,034,522 $4,027,923
Japan Fund........................................ $1,017,788 $1,367,702 $1,167,576
Pacific Fund...................................... $3,736,264 $5,260,774 $5,176,333
Worldwide Fund.................................... $1,619,691 $1,885,798 $2,050,983
</TABLE>
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by AIM, the Sub-advisor, AIM
Distributors and other agents. These expenses include, in addition to the
advisory, distribution, transfer agency, pricing and accounting agency and
brokerage fees discussed above, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. Certain of these expenses, such as custodial fees and
brokerage fees, generally are higher for non-U.S. securities. The allocation of
general Trust expenses, and expenses shared by the Funds with one another, are
made on a basis deemed fair and equitable, which may be based on the relative
net assets of the Funds or the nature of the services performed and relative
applicability to each Fund. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, that are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as expenses.
The ratio of each Fund's expenses to its relative net assets can be expected to
be higher than the expense ratios of funds investing solely in domestic
securities,
27
<PAGE> 539
since the cost of maintaining the custody of foreign securities and the rate of
investment management fees paid by each Fund generally are higher than the
comparable expenses of such other funds.
THE DISTRIBUTION PLANS
THE CLASS A PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act relating to the Class A shares of the Funds (the "Class A Plan").
The Class A Plan provides that the Class A shares pay 0.35% 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
Class A shares. Of such amounts, each Fund pays a service fee of 0.25% of the
average daily net assets attributable to Class A shares to selected dealers and
other institutions which furnish continuing personal shareholder services to
their customers who purchase and own Class A shares. Activities appropriate for
financing under the Class A 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 Plan.
THE CLASS B PLAN
The Trust has also adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to Class B shares of the Funds (the "Class B Plan",
and collectively with the Class A 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. Amounts paid in accordance with the Class B Plan may be
used to finance any activity primarily intended to result in the sale of Class B
shares, including but not limited to printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
BOTH PLANS
Pursuant to an incentive program, AIM Distributors may enter into agreements
("Shareholder Service Agreements") with investment dealers selected from time to
time by AIM Distributors for the provision of distribution assistance in
connection with the sale of the 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
the 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 the Funds; performing
sub-accounting; establishing and maintaining shareholder accounts and records;
processing customer purchase and redemption transactions; providing periodic
statements showing a shareholder's account balance and the integration of such
statements with those of other transactions and balances in the shareholder's
other accounts serviced by the bank; forwarding applicable prospectuses, proxy
statements, reports and notices to bank clients who hold Fund shares; and such
other administrative services as the Funds 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.
28
<PAGE> 540
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.
Under a Shareholder Service Agreement, each Fund agrees to pay periodically
fees to selected dealers and other institutions who render the foregoing
services to their customers. The fees payable under a Shareholder Service
Agreement generally will be calculated at the end of each payment period for
each business day of the 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 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.
Prior to June 1, 1998, the Trust had adopted a different Rule 12b-1 plan, that
operated as a "reimbursement-type" plan (the "Prior Plan"). The information
provided below relates to payments made under the Prior Plan, which provided for
payments to GT Global Inc., the distributor of the Funds at the time the Prior
Plan was in effect.
For the fiscal year ended December 31, 1997, each Fund paid the following
amounts under the Prior Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
-----------------
CLASS A CLASS B CLASS A CLASS B
---------- ---------- ------- -------
<S> <C> <C> <C> <C>
Worldwide Fund....................................... $ 400,318 $ 496,417 0.35% 1.00%
International Fund................................... $ 607,400 $ 625,899 0.35% 1.00%
Pacific Fund......................................... $ 942,945 $1,119,211 0.35% 1.00%
Europe Fund.......................................... $1,554,410 $ 910,363 0.35% 1.00%
Mid Cap Fund......................................... $ 958,593 $2,781,908 0.35% 1.00%
Japan Fund........................................... $ 212,419 $ 317,148 0.35% 1.00%
</TABLE>
Actual fees by category paid by each Fund with regard to the Class A shares
during the year ended December 31, 1997 follows:
<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL PACIFIC EUROPE MID CAP JAPAN
FUND FUND FUND FUND FUND FUND
--------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Compensation to Underwriters
to partially offset other
marketing expenses........ $114,377 $173,543 $269,413 $ 444,117 $273,884 $ 60,691
Compensation to Dealers
including finder's fees... $285,941 $433,857 $673,532 $1,110,293 $684,709 $151,728
</TABLE>
29
<PAGE> 541
Actual fees by category paid by each Fund with regard to the Class B Shares
during the year ended December 31, 1997 as follows:
<TABLE>
<CAPTION>
WORLDWIDE INTERNATIONAL PACIFIC EUROPE MID CAP JAPAN
FUND FUND FUND FUND FUND FUND
--------- ------------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Compensation to Underwriters
to partially offset
upfront dealer commissions
and other marketing
costs..................... $372,313 $469,424 $839,408 $632,772 $2,086,431 $237,861
Compensation to Dealers...... $124,104 $156,475 $279,803 $227,591 $ 695,431 $ 79,287
</TABLE>
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.
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
directors 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 ("Qualified 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 each Fund and their
respective shareholders.
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.
Unless terminated earlier in accordance with their terms, the Plans continue
in effect until May 29, 1999 and each year thereafter, as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified
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 Qualified
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 Qualified Trustees is committed to the discretion of the
Qualified Trustees. In the event the Class A Plan is amended in a manner which
the Board of Trustees determines would materially increase the charges paid
under the Class A Plan, the Class B shares of the Funds will no longer convert
into Class A shares of the same Fund unless the Class B shares, voting
separately, approve such amendment. If the Class B shareholders do not approve
such amendment, the Board of Trustees will (i) create a new class of shares of
the 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 Plan, on the one hand, and the
Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM
Distributors or to dealers or financial institutions of up to 0.35% of average
daily net assets of the Class A shares of each Fund, as compared to 1.00% of
such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the
Class B shares to continue to make payments to AIM Distributors following
termination of the Class B shares Distribution Agreement with respect to Class B
shares sold by or attributable to the distribution
30
<PAGE> 542
efforts of AIM Distributors and its predecessor, GT Global, Inc. unless there
has been a complete termination of the Class B Plan (as defined in such Plan)
and (iii) the Class B Plan expressly authorizes AIM Distributors to assign,
transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of the
Fund's shares is set forth in the Prospectus under the headings "How to Purchase
Shares" and "Terms and Conditions of Purchase of the AIM Funds." Master
Distribution Agreements with AIM Distributors relating to the Class A and Class
B shares of the Funds were approved by the Board of Trustees on May 7, 1998.
Both such Master Distribution Agreements are hereinafter collectively referred
to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing 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 Fund), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Fund's shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
AIM Distributors expects to pay sales commissions from its own resources to
dealers and institutions who sell Class B 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 will
require a number of years to recoup from Class B Plan payments the sales
commissions paid to dealers and institutions in connection with sales of Class B
shares. In the future, if multiple distributors serve 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.
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 and its predecessor; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all payments by the Fund of asset based distribution fees
and service fees to AIM Distributors. Termination of the Class B Plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
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 GT Global,
Inc., the Trust's distributor prior to June 1, 1998, for the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
SALES AMOUNT
CHARGES RETAINED
-------- --------
1997
----
<S> <C> <C>
Worldwide Fund.............................................. $ 43,631 $ 8,456
International Fund.......................................... $ 50,120 $11,166
Pacific Fund................................................ $145,896 $21,605
Europe Fund................................................. $ 70,428 $ 4,461
Mid Cap Fund................................................ $170,104 $38,700
Japan Fund.................................................. $ 62,977 $23,200
</TABLE>
31
<PAGE> 543
The following chart reflects the contingent deferred sales charges paid by
Class A and Class B shareholders for the fiscal year ended December 31, 1997,
1996 and 1995 for Class A and Class B shares:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Worldwide Fund.................................... $ 275,669 $261,030 $260,049
International Fund................................ $ 358,415 $365,535 $329,959
Pacific Fund...................................... $ 936,835 $665,740 $758,951
Europe Fund....................................... $ 516,795 $382,130 $510,319
Mid Cap Fund...................................... $2,340,777 $1,941,095 $925,863
Japan Fund........................................ $ 284,394 $349,093 $213,714
</TABLE>
NET ASSET VALUE DETERMINATION
The net asset value per share of each Fund is normally determined daily as of
the close of trading of the New York Stock Exchange ("NYSE") (generally 4:00
p.m. Eastern time) on each business day of the Fund. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of a Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of each 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 each 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 mean between the closing bid and
asked prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean between the closing bid and asked
prices on that day. Debt securities 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, 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 or amortized cost. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.
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 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 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 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 of the Fund.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares 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 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),
32
<PAGE> 544
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
set forth in the Funds' Prospectuses. In addition, the Funds offer programs such
as Right of Accumulation and Letter of Intent, which are described in the
prospectuses, and are designed to permit investors to aggregate purchases of
different funds, or separate purchases over time, in order to qualify for a
lower sales charge rate. See "Terms and Conditions of Purchase of the AIM
Funds -- Reductions in Initial Sales Charges" in the prospectuses.
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 AIM 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
AIM 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 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.
Class B shares purchased before June 1, 1998 are subject to the following
waivers from the contingent deferred sales charge otherwise due upon redemption
in addition to the waivers provided for redemptions of currently issued Class B
shares as described in the Prospectus: (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 AIM 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
AIM 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.
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment advisor, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds
for shares of the other AIM Funds is set forth in the prospectuses under the
heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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
33
<PAGE> 545
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 A I M
Fund Services, Inc. ("AFS") 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.
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the 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.
QUALIFYING FOR A REDUCED FRONT-END SALES CHARGE
As described in the Prospectus, the front-end sales charge for Class A shares
is calculated by multiplying an investor's total investment by the applicable
sales charge rate. The applicable rate varies with the amount invested. The
Funds offer programs such as Right of Accumulation and Letter of Intent, which
are described in the Prospectus, and are designed to permit investors to
aggregate purchases of different funds, or separate purchases over time, in
order to qualify for a lower sales charge rate. See "Terms and Conditions of
Purchase of the AIM Funds -- Reductions in Initial Sales Charges" in the
Prospectus.
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Funds provide certain services for shareholders and certain investment or
redemption programs. See "Exchange Privilege" and "How to Redeem Shares" in the
Prospectus. All inquiries concerning these programs should be made directly to
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, toll free
at (800)959-4246.
DIVIDEND ORDER
Dividends may be paid to someone other than the registered owner, or sent to
an address other than the address of record. (Please note that signature
guarantees are required to effect this option.) An investor also may direct that
his or her dividends be invested in one of the other AIM Funds and there is no
sales charge for these investments; initial investment minimums apply. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" in the
Prospectus. To affect this option, please contact your authorized dealer. For
more information concerning AIM Funds other than the Funds, please obtain a
current prospectus by contacting your authorized dealer, by writing to A I M
Fund Services, Inc. P.O. Box 4739, Houston, Texas 77210-4739, or by calling toll
free (800) 959-4246.
TAXES
GENERAL
Each Fund is treated as a separate corporation for federal income tax
purposes. To continue to qualify for treatment as a RIC under the Code, each
Fund must distribute to its shareholders for each taxable year at least 90% of
its investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); and (2) the Diversification
Requirements.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
34
<PAGE> 546
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by a Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If more than 50% of the value of a Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, the
Fund will be eligible to, and may, file an election with the Internal Revenue
Service that will enable its shareholders, in effect, to receive the benefit of
the foreign tax credit with respect to any foreign taxes paid by it. Pursuant to
the election, a Fund would treat those taxes as dividends paid to its
shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents its income
from foreign and U.S. possessions sources as his own income from those sources,
and (3) either deduct the taxes deemed paid by him in computing his taxable
income or, alternatively, use the foregoing information in calculating the
foreign tax credit against his federal income tax. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's foreign taxes and income from sources within foreign countries and U.S.
possessions if it makes this election. Pursuant to the Taxpayer Relief Act of
1997 ("Tax Act"), individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Forms 1099 and
all of whose foreign source income is "qualified passive income" may elect each
year to be exempt from the extremely complicated foreign tax credit limitation
and will be able to claim a foreign tax credit without having to file the
detailed Form 1116 that otherwise is required.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign
corporation" (i.e., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which a Fund is a U.S. shareholder -- that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive or (2) an average of at least 50% of its assets produce, or are held for
the production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a portion of any "excess distribution" received
on, or of any gain from disposition of, stock of a PFIC (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to the Fund to the extent it distributes that income to its
shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances, it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
A Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, a Fund also will be allowed to deduct (as ordinary, not capital, loss)
the excess, if any, of its adjusted basis in PFIC stock over the fair market
value thereof as of the taxable year-end, but only to the extent of any net
mark-to-market gains with respect to that stock included in income by the Fund
for prior taxable years. A Fund's adjusted basis in each PFIC's stock subject to
the election will be adjusted to reflect the amounts of income included and
deductions taken thereunder. Regulations proposed in 1992 provided a similar
election with respect to the stock of certain PFICs.
35
<PAGE> 547
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
Each Fund's use of hedging transactions, such as selling (writing) and
purchasing options and Futures Contracts and entering into Forward Contracts,
involves complex rules that will determine, for federal income tax purposes, the
amount, character and timing of recognition of the gains and losses a Fund
realizes in connection therewith. Gains from the disposition of foreign
currencies (except certain gains that may be excluded by future regulations),
and gains from options, Futures and Forward Contracts derived by a Fund with
respect to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Fund at the end of its taxable year generally
will be deemed to have been sold at that time at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net realized gain or loss from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. That 60% portion
will qualify for the reduced maximum tax rates on noncorporate taxpayers' net
capital gain enacted by the Tax Act -- 20% (10% for taxpayers in the 15%
marginal tax bracket) for gain recognized on capital assets held for more than
18 months -- instead of the 28% rate in effect before that legislation, which
now applies to gain on capital assets held for more than one year but no more
than 18 months.
Section 988 of the Code also may apply to gains and losses from transactions
in foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. Each Fund attempts to monitor Section 988 transactions to minimize
any adverse tax impact.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted
basis -- and enters into a "constructive sale" of the same or substantially
similar property, the Fund will be treated as having made an actual sale
thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract or Futures or Forward Contract entered into by a Fund or a
related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds and their shareholders. Investors are urged
to consult their own tax advisors for more detailed information and for
information regarding any foreign, state and local taxes applicable to
distributions received from a Fund.
MISCELLANEOUS INFORMATION
AIM was organized in 1976, and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. 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, 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
independent investment management groups that have a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
36
<PAGE> 548
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of the Funds' assets. State Street is
authorized to establish and has established separate accounts in foreign
currencies and to cause securities of the Trust to be held in separate accounts
outside the United States in the custody of non-U.S. banks.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and 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 Transfer Agency and Service Agreement became effective at
September 8, 1998. The Sub-advisor also serves as each Fund's pricing and
accounting agent. For the fiscal years ended December 31, 1995, December 31,
1996 and December 31, 1997, the accounting services fees paid by the Mid Cap
Fund, Europe Fund, International Fund, Japan Fund, Pacific Fund, and Worldwide
Fund were $79,918, $173,767 and $142,274; $62,660, $139,442 and $138,072;
$40,655, $77,934 and $59,416; $14,483, $35,119 and $26,210; $53,724, $135,182
and $99,321; and $22,092, $48,430 and $41,680, respectively.
INDEPENDENT ACCOUNTANTS
The Trust's and the Funds' independent accountants are PricewaterhouseCoopers
LLP. PricewaterhouseCoopers LLP conducts annual audits of the Funds, assists in
the preparation of the Funds' federal and state income tax returns and consults
with the Trust and the Funds as to matters of accounting, regulatory filings and
federal and state income taxation.
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by PricewaterhouseCoopers LLP as
stated in their opinion appearing herein and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
of liability extended to shareholders of private, for-profit corporations. There
is a remote possibility, however, that under certain circumstances shareholders
of the Trust may be held personally liable for the Trust's obligations. However,
the Trust's Agreement and Declaration of Trust 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 a trustee. If a shareholder is held personally liable for the
obligations of the Trust, the Trust Agreement provides that the shareholder
shall be entitled out of the assets belonging to the applicable Fund (or
allocable to the applicable Class), to be held harmless from and indemnified
against all loss and expense arising from such liability in accordance with the
Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring
financial loss on account of such liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM New Pacific Growth Fund operated under the name of
GT Global New Pacific Growth Fund; AIM Europe Growth Fund operated under the
name GT Global Europe Growth Fund; AIM Japan Growth Fund operated under the name
of GT Global Japan Growth Fund; AIM International Growth Fund operated under the
name of GT Global International Growth Fund; AIM Worldwide Growth Fund operated
under the name of GT Global Worldwide Growth Fund and AIM Mid Cap Growth Fund
operated under the name of GT Global America Mid Cap Growth Fund.
37
<PAGE> 549
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of August 10, 1998, the Trustees and officers of the Trust, as a group,
owned less than 1% of the outstanding shares of any class of the Trust.
To the best knowledge of the Trust, the names and addresses of the holders of
5% or more of the outstanding shares of any class of each Fund's equity
securities as of August 10, 1998, and the percentage of the outstanding shares
held by such holders are set forth below.
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ---- ------------------------- -------- ------------
<S> <C> <C> <C>
Europe Growth Fund -- Advisor Class Charles Schwab & Co. Inc. 50.99% -0-
For the Excl Benef of Our Custs
Reinvest Account
101 Montgomery St.
San Francisco, CA 94104-4122
Attn: Mutual Funds
MLPF&S for the Sole Benefit of Its 14.67% -0-
Customers, Security #
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Europe Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 13.71% -0-
Customers, Security #974U7
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
International Fund -- Advisor Class G.T. Capital Holdings, Inc. 401(k) FBO 7.93% -0-
Account: 565-59-1255
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 7.14% -0-
Account: 217646674
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 5.98% -0-
Account: 545914793
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) P/S 5.82% -0-
A/C 105 34 1352 P
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 5.58% -0-
Account: 562-04-5693
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
38
<PAGE> 550
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ---- ------------------------- -------- ------------
<S> <C> <C> <C>
G.T. Capital Holdings, Inc. 401(k) FBO 5.47% -0-
Account: 546-33-3477
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
Charles Schwab & Co. Inc. 67.51% -0-
For the Excl Benef of Our Custs
Reinvest Account
101 Montgomery St.
San Francisco, CA 94104-4122
Attn: Mutual Funds
Mid Cap Equity Fund -- Class A MLPF&S for the Sole Benefit of its 11.15% -0-
Customers, Security #974U8
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Pacific Fund -- Advisor Class Wells Fargo Bank NA TTEE FBO 28.04 -0-
LGT Asset Management AC 5000201000
Serp Prft Shr Plan ###-##-####
P O Box 9800 MAC 9137-027
Calabasas, CA 91372-0800
G.T. Capital Holdings, Inc. 401(k) FBO 10.31% -0-
Account: 045462854
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
Pacific Fund -- Class A MLPF&S for the Sole Benefit of its 5.71% -0-
Customers, Security #97043
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Japan Fund -- Advisor Class Donaldson Lufkin Jennette Securities 56.36% -0-
Corp. Inc.
P.O. Box 2052
Jersey City, New Jersey 87303-2052
MLPF&S for the Sole Benefit of Its 6.24% -0-
Customers, Security #97K48
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Japan Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 12.54% -0-
Customers, Security #974U9
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
- ---------------
<TABLE>
<S> <C> <C> <C>
* The Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned
beneficially.
</TABLE>
39
<PAGE> 551
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ---- ------------------------- -------- ------------
<S> <C> <C> <C>
Worldwide Growth Fund -- Advisor GT Cap Holdings, Inc. 401(k) FBO 5.42% -0-
Class Acct #548985183
Attn: Human Resources
50 California St. 27th Floor
San Francisco, CA 94111-4624
GT Cap Holdings, Inc. 401(k) PS 5.21% -0-
FBO A/C 548 98 5183 P
Attn: Human Resources
50 California St. 27th Floor
San Francisco, CA 94111-4624
Worldwide Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 6.96% -0-
Customers, Security #974W0
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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).
</TABLE>
The standardized returns for the Class A and Class B shares of the Mid Cap
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
MID CAP FUND MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 7.77% 8.35%
For the five years ended December 31, 1997.................. 13.99% N/A
For the ten years ended December 31, 1997................... 17.03% N/A
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 17.00%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 14.36% N/A
</TABLE>
40
<PAGE> 552
The standardized returns for the Class A and Class B shares of the Europe
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- ------ ----------- -----------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 5.08% 5.55%
For the five years ended December 31, 1997.................. 10.78% N/A
For the ten years ended December 31, 1997................... 7.49% N/A
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 10.37%
</TABLE>
The standardized returns for the Class A and Class B shares of the
International Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------- -------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 2.54% 3.47%
For the five years ended December 31, 1997.................. 7.58% N/A
For the ten years ended December 31, 1997................... 8.10% N/A
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 6.90%
</TABLE>
The standardized returns for the Class A and Class B shares of the Japan Fund,
stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ------ ---------- ----------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... (13.05)% (12.99)%
For the five years ended December 31, 1997.................. 3.13% N/A
For the ten years ended December 31, 1997................... 2.19% N/A
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 0.86%
</TABLE>
The standardized returns for the Class A and Class B shares of the Pacific
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... (47.31)% (47.11)%
For the five years ended December 31, 1997.................. (2.61)% N/A
For the ten years ended December 31, 1997................... 4.01% N/A
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A (4.37)%
</TABLE>
The standardized returns for the Class A and Class B shares of the Worldwide
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE WORLDWIDE
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ --------- ---------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 3.97% 5.02%
For the five years ended December 31, 1997.................. 8.84% N/A
For the ten years ended December 31, 1997................... 10.26% N/A
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 7.79%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 8.42% N/A
</TABLE>
41
<PAGE> 553
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:
P(1+U)(n)=ERV
P = a hypothetical initial payment of $1,000.
Where
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.
The average annual non-standardized returns for the Class A and Class B shares
of the Mid Cap Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
MID CAP FUND MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 14.05% 13.35%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 17.23%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 14.97% N/A
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the Europe Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- ------ ----------- -----------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 11.20% 10.55%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 10.66%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 12.77% N/A
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the International Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------- -------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 8.51% 7.71%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 7.18%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 13.21% N/A
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the Japan Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ------ ---------- ----------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... (7.99)% (8.42)%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 1.22%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 11.78% N/A
</TABLE>
42
<PAGE> 554
The average annual non-standardized returns for the Class A and Class B shares
of the Pacific Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... (44.25)% (44.65)%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A (4.09)%
January 19, 1977 (commencement of operations) through
December 31, 1997......................................... 9.95% N/A
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the Worldwide Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE WORLDWIDE
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ --------- ---------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 10.00% 9.22%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 8.06%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 9.00% N/A
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Mid Cap Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
MID CAP FUND MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 112.80%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 336.53% N/A
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Europe Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- ------ ----------- -----------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 61.77%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 346.74% N/A
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the International Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------- -------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 39.01%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 368.84% N/A
</TABLE>
43
<PAGE> 555
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Japan Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ------ ---------- ----------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 5.91%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 300.11% N/A
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Pacific Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A (17.99)%
January 19, 1977 (commencement of operations) through
December 31, 1997......................................... 630.06% N/A
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Worldwide Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE WORLDWIDE
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ --------- ---------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 44.54%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 148.37% N/A
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B of the Mid Cap Fund, stated as aggregate total returns
for the periods shown, were:
<TABLE>
<CAPTION>
MID CAP FUND MID CAP FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------ ------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 110.80%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 312.60% N/A
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Europe Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (CLASS B)
- ------ ----------- -----------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 59.77%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 322.25% N/A
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the International Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ ------------- -------------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 37.32%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 343.50% N/A
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Japan Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (CLASS B)
- ------ ---------- ----------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 4.15%
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 278.10% N/A
</TABLE>
44
<PAGE> 556
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Pacific Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC PACIFIC
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ --------- ---------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A (19.11)%
January 19, 1977 (commencement of operations) through
December 31, 1997......................................... 589.91% N/A
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Worldwide Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE WORLDWIDE
FUND FUND
PERIOD (CLASS A) (CLASS B)
- ------ --------- ---------
<S> <C> <C>
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. N/A 42.80%
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 134.75% N/A
</TABLE>
Each Fund's investment results will vary from time to time depending upon
market conditions, the composition of each Fund's portfolio and operating
expenses of each Fund, so that current or past yield or total return should not
be considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
Total return figures for the Funds are neither fixed nor guaranteed, and no
Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. 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. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
45
<PAGE> 557
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings and
comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond Index-
Non-U.S.
Salomon Brothers World Government Bond Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price Index
Stangar
Wilshire Associates
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
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
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference 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.
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.
46
<PAGE> 558
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories: 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 edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
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 some time 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.
Standard & Poor's, a division of the McGraw-Hill Companies, Inc. ("S&P"),
rates the securities debt of various entities in categories ranging from "AAA"
to "D" according to quality. Investment grade ratings are the first four
categories: AAA -- An obligation rated "AAA" has the highest rating assigned by
S&P. The obligor's capacity to meet its financial commitment on the obligation
is extremely strong. AA -- An obligation rated "AA" differs from the highest
rated obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong. A -- An obligation rated
"A" is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories. BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation. BB, B, CCC, CC, C -- Obligations rated "BB," "B,"
"CCC," "CC," and "C" are regarded as having significant speculative
characteristics. "BB" indicates the least degree of speculation and "C" the
highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions. BB -- An obligation rated "BB" is less
vulnerable to nonpayment than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation. B -- An obligation rated "B" is more
vulnerable to nonpayment than obligations rated "BB," but the obligor currently
has the capacity to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued. D -- An obligation rated "D" is in payment default. The "D"
rating category is used when payments on an obligation are not made on the date
due even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating also
will be used upon the filing of a bankruptcy petition or the taking of a similar
action if payments on an obligation are jeopardized.
47
<PAGE> 559
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having
a superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 will be denoted with a plus sign
(+) designation. "A-2" -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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.
48
<PAGE> 560
FINANCIAL STATEMENTS
FS
<PAGE> 561
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (34.0%)
ING Groep N.V. ............................................ NETH 405,354 $ 26,560,976 4.3
BANKS-MONEY CENTER
ForeningsSparbanken AB .................................... SWDN 732,160 22,046,095 3.6
BANKS-REGIONAL
Axa - UAP ................................................. FR 161,800 18,200,225 2.9
INSURANCE - MULTI-LINE
UBS AG - Registered ....................................... SWTZ 48,397 18,009,939 2.9
BANKS-MONEY CENTER
CGU PLC ................................................... UK 899,843 16,797,871 2.7
INSURANCE - MULTI-LINE
Banque Nationale de Paris ................................. FR 203,000 16,588,698 2.7
BANKS-MONEY CENTER
National Westminster Bank PLC ............................. UK 847,000 15,146,719 2.4
BANKS-MONEY CENTER
Zurich Versicherungsgesellschaft .......................... SWTZ 23,350 14,913,434 2.4
INSURANCE - MULTI-LINE
Nordbanken Holding AB ..................................... SWDN 1,948,623 14,302,044 2.3
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 949,000 13,286,634 2.1
BANKS-REGIONAL
BPI-SGPS S.A. ............................................. PORT 288,520 9,318,746 1.5
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 865,500 8,952,701 1.4
INSURANCE - MULTI-LINE
Abbey National PLC ........................................ UK 489,353 8,701,969 1.4
BANKS-SUPER REGIONAL
Halifax PLC ............................................... UK 656,800 8,532,149 1.4
BANKS-REGIONAL
------------
211,358,200
------------
Services (19.8%)
Vodafone Group PLC ........................................ UK 1,650,000 20,952,162 3.4
WIRELESS COMMUNICATIONS
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 573,300 20,841,632 3.4
BROADCASTING & PUBLISHING
Orange PLC-/- ............................................. UK 1,953,000 20,707,213 3.3
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 103,383 18,373,225 3.0
WIRELESS COMMUNICATIONS
Telecom Italia SpA ........................................ ITLY 2,465,000 18,023,283 2.9
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 386,359 12,411,080 2.0
RETAILERS-FOOD
Helsingin Puhelin Oyj (Helsinki Telephone Corp.) .......... FIN 152,600 7,104,413 1.1
TELEPHONE NETWORKS
STET Hellas Telecommunications S.A. - ADR-/- {\/} ......... GREC 110,940 4,604,010 0.7
TELECOM - OTHER
------------
123,017,018
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-1
<PAGE> 562
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (13.6%)
Glaxo Wellcome PLC ........................................ UK 559,639 $ 16,810,662 2.7
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 1,600 15,724,466 2.5
PHARMACEUTICALS
SmithKline Beecham PLC .................................... UK 975,500 11,914,815 1.9
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 6,540 10,891,370 1.8
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 1,309,561 9,757,749 1.6
PHARMACEUTICALS
Genset - ADR-/- {\/} ...................................... FR 322,467 9,472,468 1.5
BIOTECHNOLOGY
Astra AB "A" .............................................. SWDN 459,510 9,397,168 1.5
PHARMACEUTICALS
Nearmedic Ltd.-/- ......................................... ASTRI 618,200 633,601 0.1
PHARMACEUTICALS
------------
84,602,299
------------
Consumer Non-Durables (13.0%)
Cadbury Schweppes PLC ..................................... UK 1,236,700 19,152,434 3.1
BEVERAGES - NON-ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 8,100 17,347,981 2.8
FOOD
Heineken N.V. ............................................. NETH 401,500 15,781,115 2.5
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 289,950 15,367,350 2.5
TEXTILES & APPAREL
Reckitt & Colman PLC ...................................... UK 686,640 13,115,982 2.1
HOUSEHOLD PRODUCTS
------------
80,764,862
------------
Capital Goods (9.3%)
Nokia Oyj "A" ............................................. FIN 404,380 29,900,480 4.8
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 79,820 16,253,957 2.6
TELECOM EQUIPMENT
Coflexip - ADR{\/} ........................................ FR 193,500 11,827,688 1.9
CONSTRUCTION
------------
57,982,125
------------
Energy (7.4%)
Viag AG ................................................... GER 26,590 18,314,541 3.0
ELECTRICAL & GAS UTILITIES
Petroleum Geo-Services ASA-/- ............................. NOR 499,600 15,589,059 2.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 1,790,700 11,674,533 1.9
OIL
------------
45,578,133
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-2
<PAGE> 563
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (6.9%)
Baan Company N.V.-/- {\/} ................................. NETH 478,400 $ 17,102,800 2.8
SOFTWARE
Misys PLC ................................................. UK 246,228 13,999,104 2.3
SOFTWARE
Computacenter PLC-/- ...................................... UK 906,400 11,335,675 1.8
COMPUTERS & PERIPHERALS
------------
42,437,579
------------
Consumer Durables (2.7%)
Volvo AB "B" .............................................. SWDN 564,970 16,834,625 2.7
------------
AUTOMOBILES
Materials/Basic Industry (2.0%)
Akzo Nobel N.V. ........................................... NETH 55,500 12,346,074 2.0
CHEMICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $498,518,909) ................ 674,920,915 108.7
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%,
collateralized by $1,515,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $1,516,894,
including accrued interest). (cost $1,484,000) .......... 1,484,000 0.3
------------ -----
TOTAL INVESTMENTS (cost $500,002,909) * .................... 676,404,915 109.0
Other Assets and Liabilities ................................ (55,576,739) (9.0)
------------ -----
NET ASSETS .................................................. $620,828,176 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $500,002,909 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 185,254,268
Unrealized depreciation: (8,852,262)
-------------
Net unrealized appreciation: $ 176,402,006
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-3
<PAGE> 564
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.1 0.1
Finland (FIN/FIM) .................... 5.9 5.9
France (FR/FRF) ...................... 11.6 11.6
Germany (GER/DEM) .................... 3.0 3.0
Greece (GREC/GRD) .................... 0.7 0.7
Italy (ITLY/ITL) ..................... 4.8 4.8
Netherlands (NETH/NLG) ............... 19.5 19.5
Norway (NOR/NOK) ..................... 2.5 2.5
Portugal (PORT/PTE) .................. 4.5 4.5
Sweden (SWDN/SEK) .................... 10.1 10.1
Switzerland (SWTZ/CHF) ............... 12.4 12.4
United Kingdom (UK/GBP) .............. 33.6 33.6
United States (US/USD) ............... (8.7) (8.7)
------ ----- -----
Total ............................... 108.7 (8.7) 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $620,828,176.
The accompanying notes are an integral part of the financial statements.
FS-4
<PAGE> 565
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $500,002,909) (Note 1).......................... $676,404,915
U.S. currency................................................................. $1,199,170
Foreign currencies (cost $14,575,413)......................................... 14,576,258 15,775,428
----------
Receivable for Fund shares sold........................................................... 4,235,397
Dividends and dividend withholding tax reclaims receivable................................ 1,233,641
Other receivable.......................................................................... 148,420
-----------
Total assets............................................................................ 697,797,801
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 70,714,356
Payable for securities purchased.......................................................... 5,029,902
Payable for investment management and administration fees (Note 2)........................ 505,934
Payable for transfer agent fees (Note 2).................................................. 329,805
Payable for service and distribution expenses (Note 2).................................... 243,898
Payable for printing and postage expenses................................................. 80,413
Payable for custodian fees................................................................ 33,888
Payable for fund accounting fees (Note 2)................................................. 14,487
Payable for registration and filing fees.................................................. 6,892
Payable for professional fees............................................................. 5,021
Payable for Trustees' fees and expenses (Note 2).......................................... 2,296
Other accrued expenses.................................................................... 2,733
-----------
Total liabilities....................................................................... 76,969,625
-----------
Net assets.................................................................................. $620,828,176
-----------
-----------
Class A:
Net asset value and redemption price per share ($493,758,256 DIVIDED BY 27,062,196 shares
outstanding)............................................................................... $ 18.25
-----------
-----------
Maximum offering price per share (100/94.5 of $18.25) *..................................... $ 19.31
-----------
-----------
Class B:+
Net asset value and offering price per share ($119,843,766 DIVIDED BY 6,715,341 shares
outstanding)............................................................................... $ 17.85
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($7,226,154
DIVIDED BY 392,184 shares outstanding)..................................................... $ 18.43
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $405,152,368
Undistributed net investment income....................................................... 948,480
Accumulated net realized gain on investments and foreign currency transactions............ 38,345,574
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (20,252)
Net unrealized appreciation of investments................................................ 176,402,006
-----------
Total -- representing net assets applicable to capital shares outstanding................... $620,828,176
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-5
<PAGE> 566
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,392,889)............................ $ 6,744,459
Securities lending income................................................................. 351,896
Interest income........................................................................... 237,576
-----------
Total investment income................................................................. 7,333,931
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,917,028
Service and distribution expenses:(Note 2)
Class A.................................................................... $ 855,821
Class B.................................................................... 533,998 1,389,819
-----------
Interest expense (Note 1)................................................................. 848,608
Transfer agent fees....................................................................... 764,001
Custodian fees............................................................................ 205,616
Fund accounting fees (Note 2)............................................................. 81,435
Printing and postage expenses............................................................. 59,911
Registration and filing fees.............................................................. 56,110
Legal fees................................................................................ 44,747
Audit fees................................................................................ 30,883
Trustees' fees and expenses (Note 2)...................................................... 7,964
Other expenses............................................................................ 6,608
-----------
Total expenses before reductions........................................................ 6,412,730
-----------
Expense reductions (Note 5)........................................................... (27,279)
-----------
Total net expenses...................................................................... 6,385,451
-----------
Net investment income....................................................................... 948,480
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note
1)
Net realized gain on investments............................................. 33,308,247
Net realized gain on foreign currency transactions........................... 509,373
-----------
Net realized gain during the period..................................................... 33,817,620
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... 185,566
Net change in unrealized appreciation of investments......................... 117,058,616
-----------
Net unrealized appreciation during the period........................................... 117,244,182
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 151,061,802
-----------
Net increase in net assets resulting from operations........................................ $152,010,282
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-6
<PAGE> 567
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
--------------- ---------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)........................................... $ 948,480 $ (2,163,876)
Net realized gain on investments and foreign currency transactions..... 33,817,620 107,144,938
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies.......................... 185,566 (237,701)
Net change in unrealized appreciation (depreciation) of investments.... 117,058,616 (31,970,694)
--------------- ---------------
Net increase in net assets resulting from operations................. 152,010,282 72,772,667
--------------- ---------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................. -- (368,261)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................. -- (76,445)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................. -- (1,099)
--------------- ---------------
Total distributions.................................................. -- (445,805)
--------------- ---------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested....................... 2,449,988,999 2,415,165,409
Decrease from capital shares repurchased............................... (2,472,424,916) (2,538,538,626)
--------------- ---------------
Net decrease from capital share transactions......................... (22,435,917) (123,373,217)
--------------- ---------------
Total increase (decrease) in net assets.................................. 129,574,365 (51,046,355)
Net assets:
Beginning of period.................................................... 491,253,811 542,300,166
--------------- ---------------
End of period *........................................................ $ 620,828,176 $ 491,253,811
--------------- ---------------
--------------- ---------------
* Includes undistributed net investment income of....................... $ 948,480 $ --
--------------- ---------------
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-7
<PAGE> 568
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.04) (0.03) 0.04 0.06 0.05
Net realized and unrealized gain
(loss) on investments................ 3.90 1.48 2.16 0.95 (0.69) 2.36
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 3.93 1.44 2.13 0.99 (0.63) 2.41
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- (0.10) (0.05) (0.06)
From net realized gain on
investments.......................... -- (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.13) --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (0.01) (0.12) (0.14) (0.18) (0.08)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 18.25 $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 27.44%(b) 11.20% 19.61% 9.86% (5.8)% 28.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 493,758 $ 407,004 $ 453,792 $ 483,375 $ 646,313 $ 854,701
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.42%(a) (0.29)% (0.26)% 0.38% 0.61% 0.6%
Without expense reductions............ 0.41%(a) (0.43)% (0.32)% 0.32% 0.53% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.73%(a) 1.75% 1.82% 1.83% 1.73% 1.9%
Without expense reductions............ 1.74%(a) 1.89% 1.88% 1.89% 1.81% N/A
Ratio of interest expense to average net
assets++++............................. 0.28%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 40%(a) 107% 123% 108% 91% 67%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-8
<PAGE> 569
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.01) (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain
(loss) on investments................ 3.80 1.47 2.15 0.94 (0.69) 1.85
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 3.79 1.34 2.04 0.91 (0.69) 1.85
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.03) -- (0.06)
From net realized gain on
investments.......................... -- (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.13) --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (0.01) (0.12) (0.07) (0.13) (0.08)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 17.85 $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 26.96%(b) 10.55% 18.79% 9.20% (6.38)% 20.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 119,844 $ 81,011 $ 87,092 $ 73,025 $ 81,602 $ 34,048
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.23)%(a) (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%(a)
Without expense reductions............ (0.24)%(a) (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.38%(a) 2.40% 2.47% 2.48% 2.38% 2.6%(a)
Without expense reductions............ 2.39%(a) 2.54% 2.53% 2.54% 2.46% N/A
Ratio of interest expense to average net
assets++++............................. 0.28%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 40%(a) 107% 123% 108% 91% 67%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-9
<PAGE> 570
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ------------------------ DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D)
-------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.41 $ 12.92 $ 10.85 $ 10.24
-------------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.06 0.01 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 3.96 1.49 2.18 0.71
-------------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. 4.02 1.50 2.19 0.79
-------------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.14)
From net realized gain on
investments.......................... -- (0.01) (0.12) (0.04)
In excess of net investment income.... -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- --
-------------- ----------- ----------- -------------
Total distributions................. -- (0.01) (0.12) (0.18)
-------------- ----------- ----------- -------------
Net asset value, end of period.......... $ 18.43 $ 14.41 $ 12.92 $ 10.85
-------------- ----------- ----------- -------------
-------------- ----------- ----------- -------------
Total investment return (c)............. 27.83 %(b) 11.64% 20.21% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,226 $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.77 %(a) 0.06% 0.09% 0.73%(a)
Without expense reductions............ 0.76 %(a) (0.08)% 0.03% 0.67%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.38 %(a) 1.40% 1.47% 1.48%(a)
Without expense reductions............ 1.39 %(a) 1.54% 1.53% 1.54%(a)
Ratio of interest expense to average net
assets++++............................. 0.28 %(a) N/A N/A N/A
Portfolio turnover rate++++............. 40 %(a) 107% 123% 108%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-10
<PAGE> 571
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Europe Growth Fund (the "Fund" formerly, GT Global Europe Growth Fund), is a
separate series of AIM Growth Series (the "Trust" formerly, G.T. Global Growth
Series). The Trust is organized as a Delaware business trust and is registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as a
diversified, open-end management investment company. The Trust has eight series
of shares in operation, each series corresponding to a distinct portfolio of
investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-11
<PAGE> 572
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $51,984,881
were on loan to brokers. The loans were secured by cash collateral of
$54,717,285, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $351,896.
FS-12
<PAGE> 573
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $39,796,615 with a weighted average interest rate of 6.29%. Interest expense
for the period ended June 30, 1998, was $848,608.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales are made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $7,717 and $789, respectively, of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for the period ended
June 30, 1998. AIM Distributors also makes ongoing
FS-13
<PAGE> 574
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
shareholder servicing and trail commission payments to dealers whose clients
hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $26,482 and $178,096,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, a Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $175,430,452 and $119,926,341, respectively. There were no purchases
or sales of U.S. government obligations by the Fund during the period.
FS-14
<PAGE> 575
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
----------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 122,644,726 $ 2,087,003,868 146,863,882 $ 2,008,141,712
Shares issued in connection with
reinvestment of distributions ........ -- -- 20,229 286,488
------------ --------------- ------------ ---------------
122,644,726 2,087,003,868 146,884,111 2,008,428,200
Shares repurchased ..................... (124,003,141) (2,126,049,350) (153,681,853) (2,115,903,158)
------------ --------------- ------------ ---------------
Net decrease............................ (1,358,415) $ (39,045,482) (6,797,742) $ (107,474,958)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 17,592,826 $ 293,337,166 25,162,463 $ 340,605,118
Shares issued in connection with
reinvestment of distributions ........ -- -- 4,768 66,175
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
------------ --------------- ------------ ---------------
17,592,826 293,337,166 25,167,231 340,671,293
Shares repurchased ..................... (16,641,134) (279,103,045) (26,243,592) (357,657,223)
------------ --------------- ------------ ---------------
Net increase (decrease)................. 951,692 $ 14,234,121 (1,076,361) $ (16,985,930)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,058,228 $ 69,647,965 4,798,844 $ 66,064,822
Shares issued in connection with
reinvestment of distributions ........ -- -- 77 1,094
------------ --------------- ------------ ---------------
4,058,228 69,647,965 4,798,921 66,065,916
Shares repurchased ..................... (3,890,891) (67,272,521) (4,683,709) (64,978,245)
------------ --------------- ------------ ---------------
Net increase............................ 167,337 $ 2,375,444 115,212 $ 1,087,671
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period then ended June 30, 1998, the
Fund's expenses were reduced by $27,279 under these arrangements.
FS-15
<PAGE> 576
GT GLOBAL EUROPE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Europe Growth Fund, one of the funds organized as a series of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the 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 the 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, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Europe Growth Fund as of December 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-16
<PAGE> 577
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (29.2%)
ING Groep N.V. ............................................ NETH 449,610 $ 18,940,753 3.9
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 732,160 16,649,643 3.4
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 44,940 13,968,753 2.8
BANKS-MONEY CENTER
General Accident PLC ...................................... UK 729,800 12,642,677 2.6
INSURANCE - PROPERTY-CASUALTY
Axa - UAP ................................................. FR 161,800 12,519,774 2.6
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 949,000 12,263,760 2.5
BANKS-REGIONAL
National Westminster Bank PLC ............................. UK 658,000 10,934,253 2.2
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 203,000 10,790,014 2.2
BANKS-MONEY CENTER
Unidanmark AS "A" ......................................... DEN 136,300 10,007,284 2.0
BANKS-REGIONAL
Svenska Handelsbanken, Inc. "A" Free ...................... SWDN 288,900 9,991,061 2.0
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 1,344,033 7,602,878 1.5
OTHER FINANCIAL
Abbey National PLC ........................................ UK 419,253 7,510,756 1.5
BANKS-SUPER REGIONAL
------------
143,821,606
------------
Energy (14.3%)
Petroleum Geo-Services ASA-/- ............................. NOR 249,800 15,735,300 3.2
ENERGY EQUIPMENT & SERVICES
Total S.A. "B" ............................................ FR 118,000 12,842,070 2.6
OIL
Shell Transport & Trading Co., PLC ........................ UK 1,534,000 11,083,087 2.3
OIL
Viag AG ................................................... GER 19,990 10,770,259 2.2
ELECTRICAL & GAS UTILITIES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 1,790,700 10,231,703 2.1
OIL
Coflexip - ADR{\/} ........................................ FR 171,610 9,524,355 1.9
ENERGY EQUIPMENT & SERVICES
------------
70,186,774
------------
Services (14.0%)
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 573,300 16,176,381 3.3
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 2,465,000 15,777,115 3.2
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 1,650,000 11,894,089 2.4
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 103,383 11,018,156 2.2
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-17
<PAGE> 578
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Koninklijke Ahold N.V. .................................... NETH 386,359 $ 10,082,079 2.1
RETAILERS-FOOD
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 1,061 3,977,116 0.8
LEISURE & TOURISM
------------
68,924,936
------------
Health Care (10.6%)
Roche Holding AG .......................................... SWTZ 1,600 15,889,361 3.2
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 253,300 9,408,286 1.9
PHARMACEUTICALS
Genset: ................................................... FR -- -- 1.8
BIOTECHNOLOGY
ADR-/- {\/} ............................................. -- 393,667 7,774,923 --
Common-/- ............................................... -- 14,900 891,252 --
Glaxo Wellcome PLC ........................................ UK 363,639 8,598,361 1.8
PHARMACEUTICALS
Schering AG ............................................... GER 63,630 6,138,340 1.3
PHARMACEUTICALS
Incentive AB "A" .......................................... SWDN 15,760 1,419,659 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Nearmedic Ltd.-/- ......................................... ASTRI 618,200 1,272,722 0.3
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 141,507 191,697 --
PHARMACEUTICALS
------------
51,584,601
------------
Technology (7.6%)
Baan Company N.V.-/- {\/} ................................. NETH 478,400 15,787,200 3.2
SOFTWARE
TT Tieto Oy "B" ........................................... FIN 101,828 11,460,254 2.3
COMPUTERS & PERIPHERALS
Misys PLC ................................................. UK 337,828 10,151,482 2.1
SOFTWARE
------------
37,398,936
------------
Consumer Non-Durables (7.2%)
Cadbury Schweppes PLC ..................................... UK 1,236,700 12,458,382 2.5
BEVERAGES - NON-ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 8,100 12,139,463 2.5
FOOD
Gucci Group - NY Registered Shares{\/} .................... NETH 260,550 10,910,531 2.2
TEXTILES & APPAREL
------------
35,508,376
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-18
<PAGE> 579
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (7.1%)
Nokia AB "A" .............................................. FIN 269,400 $ 18,844,695 3.8
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 127,200 16,168,148 3.3
TELECOM EQUIPMENT
------------
35,012,843
------------
Materials/Basic Industry (6.0%)
Ciba Specialty Chemicals AG-/- ............................ SWTZ 166,000 19,775,431 4.0
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 55,500 9,571,231 2.0
CHEMICALS
------------
29,346,662
------------ -----
TOTAL EQUITY INVESTMENTS (cost $412,654,262) ................ 471,784,734 96.0
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Union Bank of Switzerland Roche Warrants "C", expire 7/98
(cost $3,431,328) ........................................ SWTZ 481,700 3,644,246 0.8
------------ -----
PHARMACEUTICALS
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $15,920,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $15,934,933,
including accrued interest). (cost $15,622,000) .......... 15,622,000 3.2
------------ -----
TOTAL INVESTMENTS (cost $431,707,590) * .................... 491,050,980 100.0
Other Assets and Liabilities ................................ 202,831 --
------------ -----
NET ASSETS .................................................. $491,253,811 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $431,707,590 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 65,811,221
Unrealized depreciation: (6,467,831)
-------------
Net unrealized appreciation: $ 59,343,390
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-19
<PAGE> 580
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.3 0.3
Denmark (DEN/DKK) .................... 2.0 2.0
Finland (FIN/FIM) .................... 6.1 6.1
France (FR/FRF) ...................... 14.4 14.4
Germany (GER/DEM) .................... 3.5 3.5
Italy (ITLY/ITL) ..................... 5.3 5.3
Netherlands (NETH/NLG) ............... 16.7 16.7
Norway (NOR/NOK) ..................... 3.2 3.2
Portugal (PORT/PTE) .................. 2.2 2.2
Sweden (SWDN/SEK) .................... 7.2 7.2
Switzerland (SWTZ/CHF) ............... 13.3 0.8 14.1
United Kingdom (UK/GBP) .............. 21.8 21.8
United States (US/USD) ............... 3.2 3.2
------ ----- ----- -----
Total ............................... 96.0 0.8 3.2 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $491,253,811.
The accompanying notes are an integral part of the financial statements.
FS-20
<PAGE> 581
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $431,707,590) (Note 1).......................... $491,050,980
U.S. currency................................................................. $ 317
Foreign currencies (cost $18,334,892)......................................... 18,199,857 18,200,174
----------
Receivable for securities sold............................................................ 19,572,716
Receivable for Fund shares sold........................................................... 1,953,987
Dividends and dividend withholding tax reclaims receivable................................ 186,252
Interest receivable....................................................................... 2,517
-----------
Total assets............................................................................ 530,966,626
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 33,388,567
Payable for securities purchased.......................................................... 5,169,750
Payable for investment management and administration fees (Note 2)........................ 415,152
Payable for transfer agent fees (Note 2).................................................. 256,798
Payable for service and distribution expenses (Note 2).................................... 195,095
Payable for printing and postage expenses................................................. 113,320
Payable for custodian fees................................................................ 26,846
Payable for registration and filing fees.................................................. 17,663
Payable for professional fees............................................................. 17,272
Payable for fund accounting fees (Note 2)................................................. 10,165
Payable for Trustees' fees and expenses (Note 2).......................................... 3,013
Other accrued expenses.................................................................... 99,174
-----------
Total liabilities....................................................................... 39,712,815
-----------
Net assets.................................................................................. $491,253,811
-----------
-----------
Class A:
Net asset value and redemption price per share ($407,003,587 DIVIDED BY 28,420,611 shares
outstanding)............................................................................... $ 14.32
-----------
-----------
Maximum offering price per share (100/95.25 of $14.32) *.................................... $ 15.03
-----------
-----------
Class B:+
Net asset value and offering price per share ($81,010,803 DIVIDED BY 5,763,649 shares
outstanding)............................................................................... $ 14.06
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,239,421
DIVIDED BY 224,847 shares outstanding)..................................................... $ 14.41
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $427,588,285
Accumulated net realized gain on investments and foreign currency transactions............ 4,527,954
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (205,818)
Net unrealized appreciation of investments................................................ 59,343,390
-----------
Total -- representing net assets applicable to capital shares outstanding................... $491,253,811
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-21
<PAGE> 582
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,472,615)............................ $ 6,804,153
Interest income........................................................................... 1,008,013
-----------
Total investment income................................................................. 7,812,166
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 5,228,246
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 1,554,410
Class B.................................................................... 910,363 2,464,773
-----------
Transfer agent fees (Note 2).............................................................. 1,655,972
Custodian fees............................................................................ 433,551
Fund accounting fees (Note 2)............................................................. 138,072
Registration and filing fees.............................................................. 126,714
Printing and postage expenses............................................................. 112,239
Audit fees................................................................................ 38,142
Legal fees................................................................................ 20,986
Trustees' fees and expenses (Note 2)...................................................... 8,387
Other expenses (Note 1)................................................................... 497,313
-----------
Total expenses before reductions........................................................ 10,724,395
-----------
Expense reductions (Notes 1 & 5)...................................................... (748,353)
-----------
Total net expenses...................................................................... 9,976,042
-----------
Net investment loss......................................................................... (2,163,876)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 107,873,761
Net realized loss on foreign currency transactions........................... (728,823)
-----------
Net realized gain during the year....................................................... 107,144,938
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... (237,701)
Net change in unrealized appreciation of investments......................... (31,970,694)
-----------
Net unrealized depreciation during the year............................................. (32,208,395)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 74,936,543
-----------
Net increase in net assets resulting from operations........................................ $72,772,667
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-22
<PAGE> 583
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- --------------
Decrease in net assets
Operations:
Net investment loss...................................................... $ (2,163,876) $ (1,938,485)
Net realized gain on investments and foreign currency transactions....... 107,144,938 86,541,400
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies....................................... (237,701) (218,619)
Net change in unrealized appreciation (depreciation) of investments...... (31,970,694) 23,691,090
-------------- --------------
Net increase in net assets resulting from operations................... 72,772,667 108,075,386
-------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (368,261) (4,360,146)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (76,445) (815,186)
Advisor Class: (Note 1)
Distributions to shareholders:
From net realized gain on investments.................................... (1,099) (29,590)
-------------- --------------
Total distributions.................................................... (445,805) (5,204,922)
-------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 2,415,165,409 3,224,591,371
Decrease from capital shares repurchased................................. (2,538,538,626) (3,342,278,802)
-------------- --------------
Net decrease from capital share transactions........................... (123,373,217) (117,687,431)
-------------- --------------
Total decrease in net assets............................................... (51,046,355) (14,816,967)
Net assets:
Beginning of year........................................................ 542,300,166 557,117,133
-------------- --------------
End of year *............................................................ $ 491,253,811 $ 542,300,166
-------------- --------------
-------------- --------------
* Includes undistributed net investment income of......................... $ -- $ --
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-23
<PAGE> 584
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.04) (0.03) 0.04 0.06 0.05
Net realized and unrealized gain
(loss) on investments................ 1.48 2.16 0.95 (0.69) 2.36
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.44 2.13 0.99 (0.63) 2.41
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.10) (0.05) (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.01) (0.12) (0.14) (0.18) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.20% 19.61% 9.86% (5.8)% 28.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 407,004 $ 453,792 $ 483,375 $ 646,313 $ 854,701
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.29)% (0.26)% 0.38% 0.61% 0.6%
Without expense reductions............ (0.43)% (0.32)% 0.32% 0.53% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.75% 1.82% 1.83% 1.73% 1.9%
Without expense reductions............ 1.89% 1.88% 1.89% 1.81% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-24
<PAGE> 585
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain
(loss) on investments................ 1.47 2.15 0.94 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.34 2.04 0.91 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.03) -- (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.07) (0.13) (0.08)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.55% 18.79% 9.20% (6.38)% 20.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 81,011 $ 87,092 $ 73,025 $ 81,602 $ 34,048
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%(a)
Without expense reductions............ (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.40% 2.47% 2.48% 2.38% 2.6%(a)
Without expense reductions............ 2.54% 2.53% 2.54% 2.46% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-25
<PAGE> 586
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.92 $ 10.85 $ 10.24
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 1.49 2.18 0.71
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.50 2.19 0.79
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.14)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04)
In excess of net investment income.... -- -- --
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.18)
---------- ---------- -------------
Net asset value, end of period.......... $ 14.41 $ 12.92 $ 10.85
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 11.64% 20.21% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.06% 0.09% 0.73%(a)
Without expense reductions............ (0.08)% 0.03% 0.67%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.40% 1.47% 1.48%(a)
Without expense reductions............ 1.54% 1.53% 1.54%(a)
Portfolio turnover rate++++............. 107% 123% 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-26
<PAGE> 587
GT GLOBAL EUROPE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Europe Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
FS-27
<PAGE> 588
GT GLOBAL EUROPE GROWTH FUND
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$19,959,963 were on loan to brokers. The loans were secured by cash collateral
of $20,701,800, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $541,865. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
FS-28
<PAGE> 589
GT GLOBAL EUROPE GROWTH FUND
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $21,092,373 with a weighted average interest rate of 6.31%. Interest expense
for the year ended December 31, 1997, was $465,718, included in "Other expenses"
on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $4,461
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $15,594 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $501,201. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For
FS-29
<PAGE> 590
GT GLOBAL EUROPE GROWTH FUND
performing shareholder servicing, reporting, and general transfer agent
services, GT Services receives an annual maintenance fee of $17.50 per account,
a new account fee of $4.00 per account, a per transaction fee of $1.75 for all
transactions other than exchanges and a per exchange fee of $2.25. GT Services
also is reimbursed by the Fund for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $540,359,758 and $667,512,449, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 146,863,882 $ 2,008,141,712 247,661,557 $ 2,968,073,960
Shares issued in connection with
reinvestment of distributions......... 20,229 286,488 261,336 3,297,924
---------------- -------------------- ---------------- --------------------
146,884,111 2,008,428,200 247,922,893 2,971,371,884
Shares repurchased...................... (153,681,853) (2,115,903,158) (257,136,969) (3,090,222,730)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (6,797,742) $ (107,474,958) (9,214,076) $ (118,850,846)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,162,463 $ 340,605,118 15,643,994 $ 188,596,754
Shares issued in connection with
reinvestment of distributions......... 4,768 66,175 53,171 663,732
---------------- -------------------- ---------------- --------------------
25,167,231 340,671,293 15,697,165 189,260,486
Shares repurchased...................... (26,243,592) (357,657,223) (15,609,973) (188,238,304)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. (1,076,361) $ (16,985,930) 87,192 $ 1,022,182
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,798,844 $ 66,064,822 5,230,224 $ 63,929,457
Shares issued in connection with
reinvestment of distributions......... 77 1,094 2,336 29,544
---------------- -------------------- ---------------- --------------------
4,798,921 66,065,916 5,232,560 63,959,001
Shares repurchased...................... (4,683,709) (64,978,245) (5,189,081) (63,817,768)
---------------- -------------------- ---------------- --------------------
Net increase............................ 115,212 $ 1,087,671 43,479 $ 141,233
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $206,488 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2362 per share (representing an approximate total of
$8,046,337). The total amount of taxes paid by the Fund to such countries was
approximately $.0432 per share (representing an approximate total of
$1,472,615).
FS-30
<PAGE> 591
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (32.3%)
UBS AG - Registered-/- .................................... SWTZ 16,213 $ 6,033,399 3.1
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 640,020 4,697,468 2.4
BANKS-REGIONAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,327,073 2.2
BANKS-REGIONAL
Abbey National PLC ........................................ UK 235,000 4,178,911 2.1
BANKS-SUPER REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 387,000 4,003,114 2.1
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 254,400 3,561,770 1.8
BANKS-REGIONAL
ForeningsSparbanken AB .................................... SWDN 116,030 3,493,783 1.8
BANKS-REGIONAL
ING Groep N.V. ............................................ NETH 51,236 3,357,259 1.7
BANKS-MONEY CENTER
Axa - UAP ................................................. FR 28,350 3,188,976 1.6
INSURANCE - MULTI-LINE
Schroders PLC ............................................. UK 114,000 2,942,795 1.5
BANKS-MONEY CENTER
Zurich Versicherungsgesellschaft .......................... SWTZ 4,439 2,835,149 1.5
INSURANCE - MULTI-LINE
National Westminster Bank PLC ............................. UK 136,000 2,432,059 1.2
BANKS-MONEY CENTER
M & G Group PLC ........................................... UK 83,500 2,255,155 1.2
INVESTMENT MANAGEMENT
Royal Bank of Canada ...................................... CAN 34,200 2,056,601 1.1
BANKS-REGIONAL
CGU PLC ................................................... UK 110,000 2,053,431 1.1
INSURANCE - MULTI-LINE
Banque Nationale de Paris ................................. FR 24,379 1,992,196 1.0
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 79,520 1,945,020 1.0
BANKS-MONEY CENTER
Safra Republic Holdings S.A.{\/} .......................... LUX 24,400 1,830,000 0.9
OTHER FINANCIAL
State Bank of India Ltd. - Reg. S GDR-/- {c} {\/} ......... IND 144,410 1,704,038 0.9
BANKS-REGIONAL
BPI-SGPS S.A. ............................................. PORT 44,210 1,427,914 0.7
BANKS-MONEY CENTER
Nichiei Co., Ltd. ......................................... JPN 18,000 1,228,900 0.6
OTHER FINANCIAL
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 691,190 0.4
BANKS-MONEY CENTER
Kokusai Securities Co., Ltd. .............................. JPN 41,000 406,234 0.2
SECURITIES BROKER
Kookmin Bank-/- ........................................... KOR 99,604 370,789 0.2
BANKS-MONEY CENTER
------------
63,013,224
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-31
<PAGE> 592
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (22.9%)
Telecom Italia SpA ........................................ ITLY 708,900 $ 5,183,248 2.7
TELEPHONE NETWORKS
Orange PLC-/- ............................................. UK 468,000 4,962,097 2.6
WIRELESS COMMUNICATIONS
EMI Group PLC ............................................. UK 540,000 4,724,662 2.4
LEISURE & TOURISM
Vodafone Group PLC ........................................ UK 366,500 4,653,920 2.4
WIRELESS COMMUNICATIONS
Telecom Corporation of New Zealand Ltd.: .................. NZ -- -- 2.0
TELEPHONE NETWORKS
Common .................................................. -- 891,300 3,679,954 --
Installment Receipts .................................... -- 52,600 112,415 --
Woolworths Ltd. ........................................... AUSL 1,029,000 3,354,185 1.7
RETAILERS-OTHER
EMAP PLC .................................................. UK 154,000 3,116,514 1.6
BROADCASTING & PUBLISHING
Reuters Group PLC ......................................... UK 272,000 3,111,037 1.6
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 182,000 2,400,735 1.2
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,336,613 1.2
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 11,746 2,087,499 1.1
WIRELESS COMMUNICATIONS
Koninklijke Ahold N.V. .................................... NETH 59,119 1,899,090 1.0
RETAILERS-FOOD
Ezaki Glico Co., Ltd. ..................................... JPN 270,000 1,536,776 0.8
RETAILERS-FOOD
Telstra Corp. Ltd. - Installment Receipts ................. AUSL 437,200 1,123,810 0.6
TELEPHONE NETWORKS
Vendex International N.V. ................................. NETH 62 2,333 --
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. JPN 44 414 --
RETAILERS-APPAREL
------------
44,285,302
------------
Consumer Non-Durables (10.8%)
Nestle S.A. - Registered .................................. SWTZ 1,881 4,028,587 2.1
FOOD
Diageo PLC ................................................ UK 278,000 3,295,709 1.7
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 47,900 2,538,700 1.3
TEXTILES & APPAREL
Foster's Brewing Group Ltd. ............................... AUSL 970,600 2,290,004 1.2
BEVERAGES - ALCOHOLIC
Asahi Breweries Ltd. ...................................... JPN 180,000 2,278,151 1.2
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 35,800 2,203,158 1.1
HOUSEHOLD PRODUCTS
United Biscuits (Holdings) PLC ............................ UK 509,000 2,039,740 1.0
FOOD
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-32
<PAGE> 593
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Amway Japan Ltd. .......................................... JPN 125,000 $ 1,328,922 0.7
HOUSEHOLD PRODUCTS
South African Breweries Ltd. .............................. SAFR 44,200 910,878 0.5
BEVERAGES - ALCOHOLIC
------------
20,913,849
------------
Energy (9.8%)
Viag AG ................................................... GER 5,792 3,989,388 2.1
ELECTRICAL & GAS UTILITIES
Petroleum Geo-Services ASA-/- ............................. NOR 100,600 3,139,030 1.6
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 412,000 2,903,056 1.5
OIL
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 147,900 2,736,150 1.4
GAS PRODUCTION & DISTRIBUTION
Burmah Castrol PLC ........................................ UK 130,000 2,322,591 1.2
OIL
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 315,300 2,055,610 1.1
OIL
Coflexip - ADR{\/} ........................................ FR 30,260 1,849,643 0.9
OIL
------------
18,995,468
------------
Health Care (8.9%)
Roche Holding AG .......................................... SWTZ 409 4,019,567 2.1
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 535,095 3,987,079 2.1
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,945 3,239,100 1.7
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 97,313 1,990,091 1.0
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 70,000 1,868,084 1.0
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR-/- {c} {\/} ................ HGRY 23,400 1,866,150 1.0
PHARMACEUTICALS
------------
16,970,071
------------
Capital Goods (4.6%)
Nokia Oyj "A" ............................................. FIN 52,600 3,889,325 2.0
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 14,440 2,940,455 1.5
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 90,000 2,050,336 1.1
OFFICE EQUIPMENT
------------
8,880,116
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-33
<PAGE> 594
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.6%)
Volvo AB "B" .............................................. SWDN 106,320 $ 3,168,057 1.6
AUTOMOBILES
Mabuchi Motor Co., Ltd. ................................... JPN 31,000 1,972,951 1.0
AUTOMOBILES
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 1,962,573 1.0
AUTO PARTS
------------
7,103,581
------------
Technology (1.6%)
Baan Company N.V.-/- {\/} ................................. NETH 42,920 1,534,390 0.8
SOFTWARE
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 60,000 1,501,410 0.8
COMPUTERS & PERIPHERALS
------------
3,035,800
------------
Materials/Basic Industry (1.3%)
Akzo Nobel N.V. ........................................... NETH 11,570 2,573,767 1.3
------------
CHEMICALS
Multi-Industry/Miscellaneous (0.6%)
Shanghai Industrial Holdings Ltd. ......................... HK 486,000 1,144,821 0.6
MULTI-INDUSTRY
Vedior .................................................... NETH 61 1,731 --
MISCELLANEOUS
------------
1,146,552
------------ -----
TOTAL EQUITY INVESTMENTS (cost $161,426,444) ................ 186,917,730 96.4
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%,
collateralized by $10,640,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $10,653,300,
including accrued interest) (cost $10,444,000) .......... 10,444,000 5.4
------------ -----
TOTAL INVESTMENTS (cost $171,870,444) * .................... 197,361,730 101.8
Other Assets and Liabilities ................................ (3,584,545) (1.8)
------------ -----
NET ASSETS .................................................. $193,777,185 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $172,933,198 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 35,868,141
Unrealized depreciation: (11,439,609)
-------------
Net unrealized appreciation: $ 24,428,532
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-34
<PAGE> 595
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
----------------------------
SHORT-TERM
&
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY OTHER TOTAL
- -------------------------------------- ------------- ----- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.7 6.7
Brazil (BRZL/BRL) .................... 2.6 2.6
Canada (CAN/CAD) ..................... 1.1 1.1
Finland (FIN/FIM) .................... 2.0 2.0
France (FR/FRF) ...................... 5.0 5.0
Germany (GER/DEM) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 1.6 1.6
Hungary (HGRY/HUF) ................... 1.0 1.0
India (IND/INR) ...................... 0.9 0.9
Italy (ITLY/ITL) ..................... 3.8 3.8
Japan (JPN/JPY) ...................... 7.4 7.4
Korea (KOR/KRW) ...................... 0.2 0.2
Luxembourg (LUX/LUF) ................. 0.9 0.9
Netherlands (NETH/NLG) ............... 7.2 7.2
New Zealand (NZ/NZD) ................. 2.0 2.0
Norway (NOR/NOK) ..................... 1.6 1.6
Portugal (PORT/PTE) .................. 1.8 1.8
Singapore (SING/SGD) ................. 0.4 0.4
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 6.8 6.8
Switzerland (SWTZ/CHF) ............... 10.5 10.5
United Kingdom (UK/GBP) .............. 30.3 30.3
United States (US/USD) ............... 3.6 3.6
----- ----- -----
Total ............................... 96.4 3.6 100.0
----- ----- -----
----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,777,185.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- ------------
<S> <C> <C> <C> <C>
British Pounds.......................... 5,170,795 0.59400 7/20/98 $ 48,055
British Pounds.......................... 4,771,542 0.60196 10/2/98 46,083
Deutsche Marks.......................... 2,198,262 1.74900 8/26/98 60,171
French Francs........................... 5,057,106 5.94360 8/6/98 74,464
Japanese Yen............................ 3,616,113 133.29000 7/7/98 135,106
Japanese Yen............................ 727,347 130.50000 8/6/98 38,937
Japanese Yen............................ 7,279,847 131.10000 8/12/98 347,918
Swiss Francs............................ 5,655,612 1.47700 9/21/98 96,571
-------------- ------------
Total Contracts to Sell (Receivable
amount $35,323,929).................. 34,476,624 847,305
-------------- ------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 17.79%.
Total Open Forward Foreign Currency Contracts................................... $ 847,305
------------
------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-35
<PAGE> 596
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,870,444) (Note 1)....................... $197,361,730
U.S. currency................................................................. $ 42
Foreign currencies (cost $43,627)............................................. 43,621 43,663
-------
Receivable for open forward foreign currency contracts (Note 1)........................ 847,305
Dividends and dividend withholding tax reclaims receivable............................. 611,952
Receivable for Fund shares sold........................................................ 44,949
Interest receivable.................................................................... 1,654
------------
Total assets......................................................................... 198,911,253
------------
Liabilities:
Payable for Fund shares repurchased.................................................... 4,495,643
Payable for securities purchased....................................................... 167,496
Payable for investment management and administration fees (Note 2)..................... 157,585
Payable for transfer agent fees (Note 2)............................................... 87,461
Payable for service and distribution expenses (Note 2)................................. 84,627
Payable for printing and postage expenses.............................................. 61,636
Payable for custodian fees............................................................. 29,469
Payable for professional fees.......................................................... 25,276
Payable for Trustees' fees and expenses (Note 2)....................................... 3,505
Payable for registration and filing fees............................................... 3,270
Payable for fund accounting fees (Note 2).............................................. 2,807
Other accrued expenses................................................................. 15,293
------------
Total liabilities.................................................................... 5,134,068
------------
Net assets............................................................................... $193,777,185
------------
------------
Class A:
Net asset value and redemption price per share ($143,957,678 DIVIDED BY 16,887,447 shares
outstanding)............................................................................ $ 8.52
------------
------------
Maximum offering price per share (100/94.5 of $8.52) *................................... $ 9.02
------------
------------
Class B:+
Net asset value and offering price per share ($49,567,348 DIVIDED BY 6,072,995 shares
outstanding)............................................................................ $ 8.16
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($252,159
DIVIDED BY 29,471 shares outstanding)................................................... $ 8.56
------------
------------
Net assets consist of:
Paid in capital (Note 4)............................................................... $147,699,757
Undistributed net investment income.................................................... 736,445
Accumulated net realized gain on investments and foreign currency transactions......... 19,005,373
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................ 844,324
Net unrealized appreciation of investments............................................. 25,491,286
------------
Total -- representing net assets applicable to capital shares outstanding................ $193,777,185
------------
------------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-36
<PAGE> 597
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $288,274)............................... $ 2,361,211
Interest income............................................................................ 322,812
Securities lending income.................................................................. 171,562
-----------
Total investment income.................................................................. 2,855,585
-----------
Expenses:
Investment management and administration fees (Note 2)..................................... 996,492
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 261,811
Class B..................................................................... 270,170 531,981
-----------
Transfer agent fees (Note 2)............................................................... 325,600
Custodian fees............................................................................. 81,050
Professional Fees.......................................................................... 55,029
Registration and filing fees............................................................... 51,200
Printing and postage expenses.............................................................. 42,250
Fund accounting fees (Note 2).............................................................. 27,640
Trustees' fees and expenses (Note 2)....................................................... 6,516
Other expenses (Note 1).................................................................... 8,219
-----------
Total expenses before reductions......................................................... 2,125,977
-----------
Expense reductions (Note 5)............................................................ (6,837)
-----------
Total net expenses....................................................................... 2,119,140
-----------
Net investment income........................................................................ 736,445
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 13,546,039
Net realized gain on foreign currency transactions............................ 2,112,549
-----------
Net realized gain during the period...................................................... 15,658,588
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (710,893)
Net change in unrealized appreciation of investments.......................... 8,535,197
-----------
Net unrealized appreciation during the period............................................ 7,824,304
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 23,482,892
-----------
Net increase in net assets resulting from operations......................................... $24,219,337
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-37
<PAGE> 598
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.04 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.81 0.69 0.84 0.32 (0.82) 2.78
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.85 0.72 0.83 0.35 (0.86) 2.81
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- -- (0.20) -- --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (1.97) (0.99) (0.44) (0.99) --
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.52 $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.08%(b) 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 143,958 $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.89%(a) 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.88%(a) 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.90%(a) 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.91%(a) 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 51%(a) 72% 74% 75% 96% 90%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-38
<PAGE> 599
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.79 0.65 0.83 0.32 (0.82) 2.25
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.80 0.62 0.76 0.28 (0.92) 2.24
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- (0.04) --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- -- (0.20) -- --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (1.94) (0.99) (0.44) (0.99) --
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.16 $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.72%(b) 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 49,567 $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.24%(a) (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ 0.23%(a) (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.55%(a) 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.56%(a) 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 51%(a) 72% 74% 75% 96% 90%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-39
<PAGE> 600
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ------------------------ DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995
-------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.72 $ 9.01 $ 9.11 $ 8.49
-------------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.79 0.65 0.87 1.03
-------------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. 0.84 0.72 0.89 1.06
-------------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- -- (0.20)
-------------- ----------- ----------- -------------
Total distributions................. -- (2.01) (0.99) (0.44)
-------------- ----------- ----------- -------------
Net asset value, end of period.......... $ 8.56 $ 7.72 $ 9.01 $ 9.11
-------------- ----------- ----------- -------------
-------------- ----------- ----------- -------------
Total investment return (c)............. 10.75 %(b) 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 252 $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 1.24 %(a) 0.70% 0.21% 0.59%(a)
Without expense reductions............ 1.23 %(a) 0.57% 0.10% 0.51%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.55 %(a) 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.56 %(a) 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 51 %(a) 72% 74% 75%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-40
<PAGE> 601
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------- -----------------
Decrease in net assets
Operations:
Net investment income......................................................... $ 736,445 $ 427,766
Net realized gain on investments and foreign currency transactions............ 15,658,588 38,105,893
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies........................................ (710,893) 286,534
Net change in unrealized appreciation (depreciation) of investments........... 8,535,197 (14,668,685)
---------------- -----------------
Net increase in net assets resulting from operations........................ 24,219,337 24,151,508
---------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.................................................... -- (425,877)
From net realized gain on investments......................................... -- (29,789,043)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... -- (10,955,953)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.................................................... -- (1,888)
From net realized gain on investments......................................... -- (56,864)
---------------- -----------------
Total distributions......................................................... -- (41,229,625)
---------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 479,246,906 663,662,225
Decrease from capital shares repurchased...................................... (514,139,082) (703,298,069)
---------------- -----------------
Net decrease from capital share transactions................................ (34,892,176) (39,635,844)
---------------- -----------------
Total decrease in net assets.................................................... (10,672,839) (56,713,961)
Net assets:
Beginning of period........................................................... 204,450,024 261,163,985
---------------- -----------------
End of period *............................................................... $ 193,777,185 $ 204,450,024
---------------- -----------------
---------------- -----------------
* Includes undistributed net investment income of.............................. $ 736,445 $ --
---------------- -----------------
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-41
<PAGE> 602
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM International Growth Fund (the "Fund" formerly, GT Global International
Growth Fund), is a separate series of AIM Growth Series (the "Trust" formerly,
G.T. Global Growth Series ). The Trust is organized as a Delaware business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The Trust has
eight series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-42
<PAGE> 603
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $21,489,285
were on loan to brokers. The loans were secured by cash collateral of
$22,551,564, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $171,562.
FS-43
<PAGE> 604
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $1,201,545 with a weighted average interest rate of 6.26%. Interest expense
for the period ended June 30, 1998 was $2,297, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $2,985 and $2,625, respectively, of such
sales charges. Purchases of Class A shares exceeding $500,000 may be subject to
a contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for the period ended
June 30, 1998. AIM Distributors also
FS-44
<PAGE> 605
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $12,093 and $118,618,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $48,153,983 and $72,265,377, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
FS-45
<PAGE> 606
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 40,426,588 $335,523,591 40,276,923 $372,306,238
Shares issued in connection with reinvestment of
distributions................................................ -- -- 3,306,465 24,897,200
----------- ------------ ----------- ------------
40,426,588 335,523,591 43,583,388 397,203,438
Shares repurchased............................................. (42,859,903) (357,980,924) (46,298,211) (433,072,839)
----------- ------------ ----------- ------------
Net decrease................................................... (2,433,315) $(22,457,333) (2,714,823) $(35,869,401)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
CLASS B
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 15,955,626 $125,312,223 25,433,444 $233,714,318
Shares issued in connection with reinvestment of
distributions................................................ -- -- 1,311,193 9,480,349
----------- ------------ ----------- ------------
15,955,626 125,312,223 26,744,637 243,194,667
Shares repurchased............................................. (17,489,434) (137,511,761) (26,525,397) (246,915,890)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (1,533,808) $(12,199,538) 219,240 $ (3,721,223)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,272,018 $ 18,411,092 2,419,305 $ 23,205,242
Shares issued in connection with reinvestment of
distributions................................................ -- -- 7,757 58,878
----------- ------------ ----------- ------------
2,272,018 18,411,092 2,427,062 23,264,120
Shares repurchased............................................. (2,279,344) (18,646,397) (2,441,431) (23,309,340)
----------- ------------ ----------- ------------
Net decrease................................................... (7,326) $ (235,305) (14,369) $ (45,220)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $6,837 under these arrangements.
FS-46
<PAGE> 607
GT GLOBAL INTERNATIONAL GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global International Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the 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 the 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, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global International Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-47
<PAGE> 608
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.7%)
HSBC Holdings PLC ......................................... HK 180,100 $ 4,439,453 2.2
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................. SWDN 772,120 4,367,701 2.1
OTHER FINANCIAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,132,897 2.0
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 405,000 4,076,601 2.0
INSURANCE - MULTI-LINE
M & G Group PLC ........................................... UK 175,000 4,044,540 2.0
INVESTMENT MANAGEMENT
ForeningsSparbanken AB .................................... SWDN 145,230 3,302,595 1.6
BANKS-REGIONAL
Abbey National PLC ........................................ UK 182,400 3,267,626 1.6
BANKS-SUPER REGIONAL
ING Groep N.V. ............................................ NETH 76,097 3,205,744 1.6
OTHER FINANCIAL
National Westminster Bank PLC ............................. UK 162,000 2,692,020 1.3
BANKS-MONEY CENTER
Lloyds TSB Group PLC ...................................... UK 196,000 2,532,874 1.2
BANKS-REGIONAL
Unidanmark AS "A" ......................................... DEN 34,300 2,518,341 1.2
BANKS-REGIONAL
Axa - UAP ................................................. FR 32,050 2,479,968 1.2
INSURANCE - MULTI-LINE
Nichiei Co., Ltd. ......................................... JPN 22,800 2,428,506 1.2
OTHER FINANCIAL
Schroders PLC ............................................. UK 76,000 2,387,323 1.2
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} ........................ IND 125,000 2,234,375 1.1
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 6,554 2,037,187 1.0
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 35,379 1,880,492 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 1,235,000 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ...................................................... THAI 320,000 588,800 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 84,910 448,345 0.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ........................ SWTZ 275 397,645 0.2
BANKS-MONEY CENTER
------------
54,698,033
------------
Services (20.0%)
EMI Group PLC ............................................. UK 578,000 4,821,412 2.4
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 1,279,000 4,274,721 2.1
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-48
<PAGE> 609
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Italia SpA ........................................ ITLY 609,900 $ 3,903,636 1.9
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 725,500 3,515,509 1.7
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 305,000 3,330,460 1.6
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. .................................... NETH 117,919 3,077,109 1.5
RETAILERS-FOOD
EMAP PLC .................................................. UK 180,000 2,682,266 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 208,000 2,619,639 1.3
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,491,763 1.2
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 370,000 2,390,115 1.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ........................ PORT 46,400 2,153,565 1.0
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 17,619 1,877,764 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................. NETH 31,755 1,752,853 0.9
RETAILERS-OTHER
Vodafone Group PLC ........................................ UK 165,928 1,196,098 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 437,200 922,880 0.4
TELEPHONE NETWORKS
Fast Retailing Co., Ltd. .................................. JPN 44 705 --
RETAILERS-APPAREL
------------
41,010,495
------------
Energy (10.5%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 197,900 4,724,863 2.3
GAS PRODUCTION & DISTRIBUTION
Shell Transport & Trading Co., PLC ........................ UK 478,000 3,453,530 1.7
OIL
Viag AG ................................................... GER 5,792 3,120,627 1.5
ELECTRICAL & GAS UTILITIES
Total S.A. "B" ............................................ FR 28,580 3,110,393 1.5
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 47,990 3,022,967 1.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 355,200 2,029,542 1.0
OIL
Coflexip - ADR{\/} ........................................ FR 35,230 1,955,265 1.0
ENERGY EQUIPMENT & SERVICES
------------
21,417,187
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-49
<PAGE> 610
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (8.7%)
Roche Holding AG .......................................... SWTZ 543 $ 5,392,449 2.6
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,709 2,773,059 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 23,400 2,688,075 1.3
PHARMACEUTICALS
Schering AG ............................................... GER 26,700 2,575,730 1.3
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 80,000 2,280,460 1.1
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 115,313 1,997,573 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 21,368 28,947 --
PHARMACEUTICALS
------------
17,736,293
------------
Materials/Basic Industry (7.1%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 829,400 4,060,647 2.0
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- ............................ SWTZ 31,880 3,797,837 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 15,210 2,623,035 1.3
CHEMICALS
BOC Group PLC ............................................. UK 136,000 2,235,402 1.1
CHEMICALS
CRH PLC ................................................... UK 138,600 1,604,483 0.8
BUILDING MATERIALS & COMPONENTS
------------
14,321,404
------------
Consumer Non-Durables (6.0%)
Asahi Breweries Ltd. ...................................... JPN 210,000 3,057,471 1.5
BEVERAGES - ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 1,771 2,654,196 1.3
FOOD
Amway Japan Ltd. .......................................... JPN 125,000 2,394,636 1.2
HOUSEHOLD PRODUCTS
Diageo PLC ................................................ UK 235,000 2,158,990 1.0
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 42,000 1,036,184 0.5
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 24,500 1,013,985 0.5
HOUSEHOLD PRODUCTS
------------
12,315,462
------------
Capital Goods (4.9%)
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 31,500 4,003,905 2.0
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 120,000 2,795,402 1.4
OFFICE EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-50
<PAGE> 611
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Nokia AB "A" .............................................. FIN 28,300 $ 1,979,602 1.0
TELECOM EQUIPMENT
Kurita Water Industries Ltd. .............................. JPN 95,000 968,199 0.5
ENVIRONMENTAL
------------
9,747,108
------------
Multi-Industry/Miscellaneous (3.3%)
BBA Group PLC ............................................. UK 395,000 2,646,305 1.3
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 686,000 2,549,758 1.2
MULTI-INDUSTRY
Hutchison Whampoa ......................................... HK 279,000 1,749,939 0.8
MULTI-INDUSTRY
------------
6,946,002
------------
Technology (3.3%)
Cap Gemini N.V. ........................................... NETH 69,120 2,356,054 1.1
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 88,000 2,211,801 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................. NETH 65,360 2,156,880 1.0
SOFTWARE
Koei Co., Ltd. ............................................ JPN 43,300 205,716 0.1
SOFTWARE
------------
6,930,451
------------
Consumer Durables (1.9%)
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 2,436,432 1.2
AUTO PARTS
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,388,527 0.7
HOUSING
------------
3,824,959
------------ -----
TOTAL EQUITY INVESTMENTS (cost $171,991,305) ................ 188,947,394 92.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-51
<PAGE> 612
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,795,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $20,814,506,
including accrued interest).
(cost $20,403,000) ...................................... $ 20,403,000 10.0
------------ -----
TOTAL INVESTMENTS (cost $192,394,305) * .................... 209,350,394 102.4
Other Assets and Liabilities ................................ (4,900,370) (2.4)
------------ -----
NET ASSETS .................................................. $204,450,024 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $193,457,059 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 27,995,828
Unrealized depreciation: (12,102,493)
-------------
Net unrealized appreciation: $ 15,893,335
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-52
<PAGE> 613
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.7 5.7
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.2 1.2
Finland (FIN/FIM) .................... 1.0 1.0
France (FR/FRF) ...................... 6.6 6.6
Germany (GER/DEM) .................... 2.8 2.8
Hong Kong (HK/HKD) ................... 4.9 4.9
Hungary (HGRY/HUF) ................... 1.3 1.3
India (IND/INR) ...................... 1.1 1.1
Italy (ITLY/ITL) ..................... 2.9 2.9
Japan (JPN/JPY) ...................... 9.3 9.3
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 2.0 2.0
Netherlands (NETH/NLG) ............... 7.9 7.9
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.5 1.5
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 4.7 4.7
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... 7.6 7.6
------ --- ----------
Total ............................... 92.4 7.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $204,450,024.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,904,418 1.72492 2/23/98 $ 153,742
French Francs........................... 5,079,036 5.72800 2/6/98 245,685
French Francs........................... 1,998,309 5.77490 2/6/98 79,649
Japanese Yen............................ 4,528,736 120.70000 1/7/98 367,702
Japanese Yen............................ 770,321 118.82300 2/4/98 71,267
Japanese Yen............................ 8,992,174 122.40000 2/12/98 533,970
Swiss Francs............................ 5,872,843 1.42180 3/19/98 105,494
-------------- --------------
Total Contracts to Sell (Receivable
amount $32,703,346).................. 31,145,837 1,557,509
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.23%.
Total Open Forward Foreign Currency Contracts................................... $ 1,557,509
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-53
<PAGE> 614
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,991,305) (Note 1).......................... $188,947,394
Repurchase agreement, at value and cost................................................... 20,403,000
U.S. currency.................................................................. $ 518
Foreign currencies (cost $2,476,057)........................................... 2,469,130 2,469,648
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 1,557,509
Receivable for securities sold............................................................ 409,819
Dividends and dividend withholding tax reclaims receivable................................ 280,212
Receivable for Fund shares sold........................................................... 36,825
Interest receivable....................................................................... 3,502
-----------
Total assets............................................................................ 214,107,909
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 8,454,213
Payable for securities purchased.......................................................... 746,544
Payable for investment management and administration fees (Note 2)........................ 164,822
Payable for service and distribution expenses (Note 2).................................... 88,263
Payable for printing and postage expenses................................................. 67,943
Payable for transfer agent fees (Note 2).................................................. 45,803
Payable for professional fees............................................................. 32,257
Payable for registration and filing fees.................................................. 17,314
Payable for custodian fees................................................................ 16,939
Payable for Trustees' fees and expenses (Note 2).......................................... 5,340
Payable for fund accounting fees (Note 2)................................................. 2,463
Other accrued expenses.................................................................... 15,984
-----------
Total liabilities....................................................................... 9,657,885
-----------
Net assets.................................................................................. $204,450,024
-----------
-----------
Class A:
Net asset value and redemption price per share ($148,143,474 DIVIDED BY 19,320,762 shares
outstanding)............................................................................... $ 7.67
-----------
-----------
Maximum offering price per share (100/95.25 of $7.67) *..................................... $ 8.05
-----------
-----------
Class B:+
Net asset value and offering price per share ($56,022,575 DIVIDED BY 7,606,803 shares
outstanding)............................................................................... $ 7.36
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($283,975 DIVIDED
BY 36,797 shares outstanding).............................................................. $ 7.72
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $182,591,933
Accumulated net realized gain on investments and foreign currency transactions............ 3,346,785
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 1,555,217
Net unrealized appreciation of investments................................................ 16,956,089
-----------
Total -- representing net assets applicable to capital shares outstanding................... $204,450,024
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-54
<PAGE> 615
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $720,333).............................. $ 4,147,307
Interest income........................................................................... 693,646
-----------
Total investment income................................................................. 4,840,953
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,309,873
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 607,400
Class B.................................................................... 625,899 1,233,299
-----------
Transfer agent fees (Note 2).............................................................. 645,736
Custodian fees............................................................................ 199,701
Professional fees......................................................................... 82,923
Registration and filing fees.............................................................. 78,995
Fund accounting fees (Note 2)............................................................. 59,416
Printing and postage expenses............................................................. 42,984
Trustees' fees and expenses (Note 2)...................................................... 13,387
Other expenses (Note 1)................................................................... 44,923
-----------
Total expenses before reductions........................................................ 4,711,237
-----------
Expense reductions (Notes 1 & 5)...................................................... (298,050)
-----------
Total net expenses...................................................................... 4,413,187
-----------
Net investment income....................................................................... 427,766
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 32,730,836
Net realized gain on foreign currency transactions........................... 5,375,057
-----------
Net realized gain during the year....................................................... 38,105,893
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 286,534
Net change in unrealized appreciation of investments......................... (14,668,685)
-----------
Net unrealized depreciation during the year............................................. (14,382,151)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 23,723,742
-----------
Net increase in net assets resulting from operations........................................ $24,151,508
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-55
<PAGE> 616
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 427,766 $ (860,684)
Net realized gain on investments and foreign currency transactions....... 38,105,893 37,931,580
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies....................................... 286,534 205,239
Net change in unrealized depreciation of investments..................... (14,668,685) (7,070,173)
------------- -------------
Net increase in net assets resulting from operations................... 24,151,508 30,205,962
------------- -------------
Class A:
Distributions to shareholders:
From net investment income............................................... (425,877) --
From net realized gain on investments.................................... (29,789,043) (20,343,820)
Class B:
Distributions to shareholders:
From net investment income............................................... -- --
From net realized gain on investments.................................... (10,955,953) (6,672,791)
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (1,888) --
From net realized gain on investments.................................... (56,864) (46,941)
------------- -------------
Total distributions.................................................... (41,229,625) (27,063,552)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 663,662,225 1,289,311,201
Decrease from capital shares repurchased................................. (703,298,069) (1,410,140,865)
------------- -------------
Net decrease from capital share transactions........................... (39,635,844) (120,829,664)
------------- -------------
Total decrease in net assets............................................... (56,713,961) (117,687,254)
Net assets:
Beginning of year........................................................ 261,163,985 378,851,239
------------- -------------
End of year *............................................................ $204,450,024 $ 261,163,985
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-56
<PAGE> 617
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.69 0.84 0.32 (0.82) 2.78
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.72 0.83 0.35 (0.86) 2.81
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.97) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-57
<PAGE> 618
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.65 0.83 0.32 (0.82) 2.25
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.62 0.76 0.28 (0.92) 2.24
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- -------------
Total distributions................. (1.94) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-58
<PAGE> 619
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.01 $ 9.11 $ 8.49
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.65 0.87 1.03
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.72 0.89 1.06
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- (0.20)
---------- ---------- -------------
Total distributions................. (2.01) (0.99) (0.44)
---------- ---------- -------------
Net asset value, end of period.......... $ 7.72 $ 9.01 $ 9.11
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.70% 0.21% 0.59%(a)
Without expense reductions............ 0.57% 0.10% 0.51%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 72% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-59
<PAGE> 620
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global International Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
FS-60
<PAGE> 621
GT GLOBAL INTERNATIONAL GROWTH FUND
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$13,985,826 were on loan to brokers. The loans were secured by cash collateral
of $14,709,765, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $277,743. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
FS-61
<PAGE> 622
GT GLOBAL INTERNATIONAL GROWTH FUND
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $3,563,759 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997 was $18,147, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $11,166
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. During the year ended December
31, 1997, GT Global collected CDSC's in the amount of $6,515. GT Global also
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $351,900. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer
FS-62
<PAGE> 623
GT GLOBAL INTERNATIONAL GROWTH FUND
agent services, GT Services receives an annual maintenance fee of $17.50 per
account, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. GT
Services also is reimbursed by the Fund for its out-of-pocket expenses for such
items as postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $157,702,649 and $236,135,186, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 40,276,923 $ 372,306,238 122,327,179 $ 1,141,723,541
Shares issued in connection with
reinvestment of distributions......... 3,306,465 24,897,200 1,912,490 16,848,644
--------------- ------------------ ---------------- --------------------
43,583,388 397,203,438 124,239,669 1,158,572,185
Shares repurchased...................... (46,298,211) (433,072,839) (136,198,803) (1,274,970,792)
--------------- ------------------ ---------------- --------------------
Net decrease............................ (2,714,823) $ (35,869,401) (11,959,134) $ (116,398,607)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,433,444 $ 233,714,318 11,345,619 $ 103,852,840
Shares issued in connection with
reinvestment of distributions......... 1,311,193 9,480,349 678,796 5,819,941
--------------- ------------------ ---------------- --------------------
26,744,637 243,194,667 12,024,415 109,672,781
Shares repurchased...................... (26,525,397) (246,915,890) (12,451,843) (114,133,394)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. 219,240 $ (3,721,223) (427,428) $ (4,460,613)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,419,305 $ 23,205,242 2,233,829 $ 21,033,137
Shares issued in connection with
reinvestment of distributions......... 7,757 58,878 3,723 33,098
--------------- ------------------ ---------------- --------------------
2,427,062 23,264,120 2,237,552 21,066,235
Shares repurchased...................... (2,441,431) (23,309,340) (2,228,201) (21,036,679)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. (14,369) $ (45,220) 9,351 $ 29,556
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $20,307 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2321 per share (representing an approximate total of
$4,876,007). The total amount of taxes paid by the Fund to such countries was
approximately $.0343 per share (representing an approximate total of $720,333).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$26,594,230 as a capital gain dividend for the fiscal year ended December 31,
1997.
FS-63
<PAGE> 624
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (18.3%)
Ito-Yokado Co., Ltd. ............................................... 65,000 $ 3,069,719 4.5
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ........................................ 1,048,200 2,882,550 4.2
RETAILERS-OTHER
Yoshinoya D&C Co., Ltd. ............................................ 200 1,735,734 2.5
RESTAURANTS
Secom .............................................................. 26,000 1,506,184 2.2
CONSUMER SERVICES
Fuji Photo Film .................................................... 31,000 1,082,881 1.6
CONSUMER SERVICES
Ezaki Glico Co., Ltd. .............................................. 150,000 853,764 1.3
RETAILERS-FOOD
Fast Retailing Co., Ltd. ........................................... 87,000 817,965 1.2
RETAILERS-APPAREL
Tsutsumi Jewelry Co., Ltd. ......................................... 41,800 553,222 0.8
RETAILERS-OTHER
------------
12,502,019
------------
Consumer Durables (15.9%)
Sony Corp. ......................................................... 42,000 3,629,855 5.3
CONSUMER ELECTRONICS
Bridgestone Corp. .................................................. 127,000 3,012,656 4.4
AUTO PARTS
Citizen Watch Co., Ltd. ............................................ 325,000 2,691,292 3.9
CONSUMER ELECTRONICS
Hitachi Ltd. ....................................................... 240,000 1,570,840 2.3
CONSUMER ELECTRONICS
------------
10,904,643
------------
Health Care (11.8%)
Takeda Chemical Industries{z} ...................................... 190,000 5,070,514 7.4
PHARMACEUTICALS
Yamanouchi Pharmaceutical .......................................... 105,000 2,194,619 3.2
PHARMACEUTICALS
Taisho Pharmaceuticals ............................................. 43,000 805,453 1.2
PHARMACEUTICALS
------------
8,070,586
------------
Technology (9.9%)
Matsushita-Kotobuki Electronics Ltd. ............................... 110,000 2,752,586 4.0
COMPUTERS & PERIPHERALS
NEC Corp. .......................................................... 230,000 2,150,792 3.1
SEMICONDUCTORS
Murata Manufacturing Co., Ltd. ..................................... 58,000 1,887,611 2.8
INSTRUMENTATION & TEST
------------
6,790,989
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-64
<PAGE> 625
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Finance (7.8%)
Nichiei Co., Ltd. .................................................. 47,500 $ 3,242,930 4.7
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................ 154,000 991,249 1.5
OTHER FINANCIAL
Jafco Co., Ltd. .................................................... 22,000 588,703 0.9
INVESTMENT MANAGEMENT
Kokusai Securities Co., Ltd. ....................................... 47,000 465,683 0.7
SECURITIES BROKER
------------
5,288,565
------------
Capital Goods (7.2%)
Canon, Inc. ........................................................ 140,000 3,189,412 4.7
OFFICE EQUIPMENT
Kurita Water Industries Ltd. ....................................... 80,000 948,868 1.4
ENVIRONMENTAL
Tsudakoma Corp. .................................................... 300,000 559,774 0.8
MACHINERY & ENGINEERING
Higashi Nihon House ................................................ 50,000 192,016 0.3
CONSTRUCTION
------------
4,890,070
------------
Consumer Non-Durables (4.6%)
Amway Japan Ltd.{z} ................................................ 125,000 1,328,923 1.9
HOUSEHOLD PRODUCTS
Asahi Breweries Ltd. ............................................... 100,000 1,265,640 1.9
BEVERAGES - ALCOHOLIC
Paris Miki, Inc. ................................................... 42,000 553,135 0.8
OTHER CONSUMER GOODS
------------
3,147,698
------------
Materials/Basic Industry (3.1%)
Sekisui Chemical Co., Ltd. ......................................... 285,000 1,463,441 2.1
CHEMICALS
Toyo Exterior ...................................................... 70,000 698,633 1.0
BUILDING MATERIALS & COMPONENTS
------------
2,162,074
------------ -----
TOTAL EQUITY INVESTMENTS (cost $69,791,818) .......................... 53,756,644 78.6
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Corporate Bonds (1.1%)
Japan (1.1%)
Higashi Nihon House Co., Convertible Bond, 0.375% due 4/30/00
(cost $1,089,201){=} ............................................ 1,150,000 768,260 1.1
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-65
<PAGE> 626
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF VALUE % OF NET
OPTIONS CONTRACTS (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY14,500 expire 9/98 ............. 80 $ 95,465 0.2
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY15,000 expire 9/98 ............. 40 66,536 0.1
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY13,500, expire 9/98 ............ 20 11,572 --
INDEX OPTIONS
------------ -----
TOTAL OPTIONS (cost $312,378) ........................................ 173,573 0.3
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENTS (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co., due July 1,
1998, for an effective yield of 5.70%, collateralized by $8,970,000
U.S. Treasury Bills, 5.75% due 12/31/98 (market value of collateral
is $8,981,213, including accrued interest). ...................... 8,805,000 12.9
Dated June 30, 1998, with BankAmerica Robertson Stephens, due July
1, 1998, for an effective yield of 5.20%, collateralized by
$3,010,000 U.S. Treasury Notes, 5.50% due 2/15/08 (market value of
the collateral is $3,102,296, including accrued interest). ....... 3,000,000 4.4
------------ -----
TOTAL REPURCHASE AGREEMENTS (cost $11,805,000) ....................... 11,805,000 17.3
------------ -----
TOTAL INVESTMENTS (cost $82,998,397) * .............................. 66,503,477 97.3
Other Assets and Liabilities ......................................... 1,874,670 2.7
------------ -----
NET ASSETS ........................................................... $ 68,378,147 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{=} Security denominated in Swiss Francs.
* For Federal income tax purposes, cost is $85,518,436 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,274,621
Unrealized depreciation: (21,289,580)
-------------
Net unrealized depreciation: $ (19,014,959)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-66
<PAGE> 627
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 727,985 131.03600 8/12/98 $ 5,118
-------------- --------------
Total Contracts to Buy (Payable amount
$722,867)............................ 727,985 5,118
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS A
PERCENTAGE OF NET ASSETS IS 1.06%.
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 16,015,664 131.00000 8/12/98 778,229
Japanese Yen............................ 16,015,664 131.10000 8/12/98 765,420
Japanese Yen............................ 12,375,740 131.03600 8/12/98 597,793
-------------- --------------
Total Contracts to Sell (Receivable
amount $46,548,510).................. 44,407,068 2,141,442
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 64.94%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 2,146,560
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURE CONTRACT OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
EXPIRATION NO. OF
DESCRIPTION DATE CONTRACTS CURRENCY MARKET VALUE
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$5,623,919)............................ 9/11/98 100 JPY $ 5,559,703
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-67
<PAGE> 628
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $71,193,397) (Note 1)............................. $54,698,477
Repurchase agreement, at value and cost..................................................... 11,805,000
U.S. currency.................................................................... $ 331
Foreign currencies (cost $293,481)............................................... 293,481 293,812
---------
Receivable for Fund shares sold............................................................. 3,622,288
Receivable for open forward foreign currency contracts, net (Note 1)........................ 2,146,560
Receivable for initial and variation margin (Note 1)........................................ 347,204
Receivable from A I M Advisors, Inc......................................................... 106,467
Dividends receivable........................................................................ 20,588
Interest receivable......................................................................... 2,310
-----------
Total assets.............................................................................. 73,042,706
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 4,184,044
Payable for securities purchased............................................................ 173,033
Payable for investment management and administration fees (Note 2).......................... 133,734
Payable for transfer agent fees (Note 2).................................................... 60,101
Payable for service and distribution expenses (Note 2)...................................... 30,734
Payable for registration and filing fees.................................................... 27,989
Payable for custodian fees.................................................................. 21,209
Payable for professional fees............................................................... 14,426
Payable for printing and postage expenses................................................... 12,900
Payable for Trustees' fees and expenses (Note 2)............................................ 3,651
Payable for fund accounting fees............................................................ 710
Other accrued expenses...................................................................... 2,028
-----------
Total liabilities......................................................................... 4,664,559
-----------
Net assets.................................................................................... $68,378,147
-----------
-----------
Class A:
Net asset value and redemption price per share ($43,219,218 DIVIDED BY 4,783,487 shares
outstanding)................................................................................. $ 9.04
-----------
-----------
Maximum offering price per share (100/94.5 of $9.04) *........................................ $ 9.57
-----------
-----------
Class B:
Net asset value and offering price per share ($23,237,481 DIVIDED BY 2,668,709 shares
outstanding)................................................................................. $ 8.71
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,921,448 DIVIDED
BY 210,451 shares outstanding)............................................................... $ 9.13
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $92,686,210
Accumulated net investment loss............................................................. (81,971)
Accumulated net realized loss on investments and foreign currency transactions.............. (9,808,762)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 2,141,806
Net unrealized depreciation of investments.................................................. (16,559,136)
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $68,378,147
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-68
<PAGE> 629
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 474,076
Dividend income (net of foreign withholding tax of $54,913)................................ 311,172
Securities lending income.................................................................. 41,203
----------
Total investment income.................................................................. 826,451
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 424,257
Transfer agent fees (Note 2)............................................................... 206,700
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 79,225
Class B...................................................................... 122,163 201,388
----------
Registration and filing fees............................................................... 53,200
Custodian fees............................................................................. 36,820
Printing and postage expenses.............................................................. 27,150
Audit fees................................................................................. 19,444
Legal fees................................................................................. 18,825
Fund accounting fees (Note 2).............................................................. 11,719
Trustees' fees and expenses (Note 2)....................................................... 6,516
Other expenses............................................................................. 22,913
----------
Total expenses before reductions......................................................... 1,028,932
----------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)................................... (106,467)
Expense reductions (Note 5)............................................................ (14,043)
----------
Total net expenses....................................................................... 908,422
----------
Net investment loss.......................................................................... (81,971)
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (9,001,687)
Net realized gain on foreign currency transactions............................. 5,062,824
----------
Net realized loss during the period...................................................... (3,938,863)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... (606,853)
Net change in unrealized depreciation of investments........................... 5,058,306
----------
Net unrealized appreciation during the period............................................ 4,451,453
----------
Net realized and unrealized gain on investments and foreign currencies....................... 512,590
----------
Net increase in net assets resulting from operations......................................... $ 430,619
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-69
<PAGE> 630
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss....................................................... $ (81,971) $ (801,848)
Net realized loss on investments and foreign currency transactions........ (3,938,863) (1,309,551)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (606,853) 630,890
Net change in unrealized appreciation (depreciation) of investments....... 5,058,306 (8,170,261)
------------- -------------
Net increase (decrease) in net assets resulting from operations......... 430,619 (9,650,770)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (110,678)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (61,407)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (71,057)
------------- -------------
Total distributions..................................................... -- (243,142)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 145,883,696 280,419,107
Decrease from capital shares repurchased.................................. (177,120,451) (267,455,599)
------------- -------------
Net increase (decrease) from capital share transactions................. (31,236,755) 12,963,508
------------- -------------
Total increase (decrease) in net assets..................................... (30,806,136) 3,069,596
Net assets:
Beginning of period....................................................... 99,184,283 96,114,687
------------- -------------
End of period *........................................................... $68,378,147 $99,184,283
------------- -------------
------------- -------------
* Includes accumulated net investment loss of............................ $ (81,971) $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-70
<PAGE> 631
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.00) * (0.08) (0.04) (0.04) (0.04) (0.14)
Net realized and unrealized gain
(loss) on investments................ 0.08 (0.70) (0.77) 0.26 0.79 3.05
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.08 (0.78) (0.81) 0.22 0.75 2.91
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.02) (0.43) (1.37) (0.21) --
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.04 $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 0.78%(b) (7.99)% (7.43)% 1.94% 6.56% 33.45%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 43,219 $ 44,583 $ 63,585 $ 111,105 $ 98,066 $ 88,487
Ratio of net investment loss to average
net assets
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.07)%(a) (0.61)% (0.40)% (0.40)% (0.32)% (0.3)%
Without expense reductions and/or
reimbursement........................ (0.35)%(a) (0.68)% (0.50)% (0.55)% (0.44)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.97%(a) 1.99% 1.84% 1.99% 1.91% 2.1%
Without expense reductions and/or
reimbursement........................ 2.25%(a) 2.06% 1.94% 2.14% 2.03% N/A
Portfolio turnover rate++++............. 38%(a) 58% 31% 67% 49% 104%
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) Calculated based upon average shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* Without reimbursement, the net investment income (loss) per share
would have been reduced (increased) by $0.01 for Class A, Class B, and
Advisor Class.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-71
<PAGE> 632
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.04) * (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain
(loss) on investments................ 0.08 (0.66) (0.75) 0.25 0.79 1.90
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.04 (0.80) (0.86) 0.13 0.66 1.72
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.02) (0.43) (1.37) (0.21) --
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.71 $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 0.46%(b) (8.42)% (8.05)% 1.20% 5.81% 17.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 23,237 $ 24,250 $ 32,116 $ 41,274 $ 27,355 $ 3,699
Ratio of net investment loss to average
net assets
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.72)%(a) (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%(a)
Without expense reductions and/or
reimbursement........................ (1.00)%(a) (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.62%(a) 2.64% 2.49% 2.64% 2.56% 2.7%(a)
Without expense reductions and/or
reimbursement........................ 2.90%(a) 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate++++............. 38%(a) 58% 31% 67% 49% 104%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) Calculated based upon average shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* Without reimbursement, the net investment income (loss) per share
would have been reduced (increased) by $0.01 for Class A, Class B, and
Advisor Class.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-72
<PAGE> 633
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ----------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D)
-------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.05 $ 9.81 $ 11.02 $ 10.50
-------------- ---------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01* (0.01) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ 0.07 (0.73) (0.77) 1.89
-------------- ---------- ----------- -------------
Net increase (decrease) from
investment operations.............. 0.08 (0.74) (0.78) 1.89
-------------- ---------- ----------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.02) (0.43) (1.37)
-------------- ---------- ----------- -------------
Net asset value, end of period.......... $ 9.13 $ 9.05 $ 9.81 $ 11.02
-------------- ---------- ----------- -------------
-------------- ---------- ----------- -------------
Total investment return (c)............. 0.88 %(b) (7.54)% (7.14)% 18.14%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,921 $ 30,351 $ 413 $ 558
Ratio of net investment loss to average
net assets
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.28 %(a) (0.26)% (0.05)% (0.05)%(a)
Without expense reductions and/or
reimbursement........................ 0.00 %(a) (0.33)% (0.15)% (0.20)%(a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.62 %(a) 1.64% 1.49% 1.64%(a)
Without expense reductions and/or
reimbursement........................ 1.90 %(a) 1.71% 1.59% 1.79%(a)
Portfolio turnover rate++++............. 38 %(a) 58% 31% 67%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) Calculated based upon average shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* Without reimbursement, the net investment income (loss) per share
would have been reduced (increased) by $0.01 for Class A, Class B, and
Advisor Class.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-73
<PAGE> 634
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Japan Growth Fund (the "Fund" formerly, GT Global Japan Growth Fund), is a
separate series of AIM Growth Series (the "Trust" formerly, G.T. Global Growth
Series). The Trust is organized as a Delaware business trust and is registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as a
diversified, open-end management investment company. The Trust has eight series
of shares in operation, each series corresponding to a distinct portfolio of
investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-74
<PAGE> 635
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counter party is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" 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. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At June 30,
1998, the Fund had segregated securities valued at $5,974,181 and cash of
$481,000 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of $3,290,562 were on loan to
brokers. The loans were secured by cash collateral of $3,404,600 received by the
Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
FS-75
<PAGE> 636
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. The
cash collateral is invested in a securities lending trust which consists of a
portfolio of high quality short duration securities whose average effective
duration is restricted to 120 days or less. For the period ended June 30, 1998,
the Fund received securities lending fees of $41,203.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and unrealized appreciation of securities held, or for excise tax on
income and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first served basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $4,412,250 with a weighted average interest rate of 6.33%. Interest expense
for the period ended June 30, 1998, was $3,103, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% of the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average net asset value of the
Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales are made. For the
FS-76
<PAGE> 637
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
period ended June 30, 1998, AIM Distributors and GT Global retained $1,034 and
$8,184, respectively, of such sales charges. Purchases of Class A shares
exceeding $500,000 may be subject to a contingent deferred sales charge ("CDSC")
upon redemption, in accordance with the Fund's current prospectus. GT Global
collected such CDSCs in the amount of $1,128 for the period ended June 30, 1998.
AIM Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $14,289 and $98,773,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, a Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $12,620,542 and $26,435,339, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
FS-77
<PAGE> 638
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
----------------------------------- -----------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,202,303 $ 118,957,767 18,880,969 $ 187,727,101
Shares issued in connection with
reinvestment of distributions......... -- -- 9,319 84,712
--------------- ------------------ --------------- ------------------
13,202,303 118,957,767 18,890,288 187,811,813
Shares repurchased...................... (13,392,072) (120,751,220) (20,434,942) (203,841,370)
--------------- ------------------ --------------- ------------------
Net decrease............................ (189,769) $ (1,793,453) (1,544,654) $ (16,029,557)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,914,601 $ 16,766,520 5,059,734 $ 49,439,098
Shares issued in connection with
reinvestment of distributions......... -- -- 4,729 41,630
--------------- ------------------ --------------- ------------------
1,914,601 16,766,520 5,064,463 49,480,728
Shares repurchased...................... (2,044,364) (17,839,618) (5,648,959) (54,991,415)
--------------- ------------------ --------------- ------------------
Net decrease............................ (129,763) $ (1,073,098) (584,496) $ (5,510,687)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,122,667 $ 10,159,409 4,149,684 $ 43,125,403
Shares issued in connection with
reinvestment of distributions......... -- -- 126 1,163
--------------- ------------------ --------------- ------------------
1,122,667 10,159,409 4,149,810 43,126,566
Shares repurchased...................... (4,265,077) (38,529,613) (839,053) (8,622,814)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (3,142,410) $ (28,370,204) 3,310,757 $ 34,503,752
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $14,043 under these arrangements.
FS-78
<PAGE> 639
GT GLOBAL JAPAN GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Japan Growth Fund, a series of shares of beneficial interest of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the 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, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Japan Growth Fund, as of December 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-79
<PAGE> 640
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Services (17.3%)
Ito-Yokado Co., Ltd. ................................................ 90,000 $ 4,586,207 4.6
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ......................................... 1,048,200 2,227,425 2.3
RETAILERS-OTHER
DDI Corp. ........................................................... 763 2,017,126 2.0
WIRELESS COMMUNICATIONS
Yoshinoya D&C Co., Ltd. ............................................. 200 1,823,755 1.8
RESTAURANTS
Secom ............................................................... 25,000 1,597,701 1.6
CONSUMER SERVICES
Fast Retailing Co., Ltd. ............................................ 99,000 1,585,517 1.6
RETAILERS-APPAREL
Aoyama Trading Co., Ltd. ............................................ 75,200 1,342,651 1.4
RETAILERS-APPAREL
Ezaki Glico Co., Ltd. ............................................... 167,000 1,078,782 1.1
RETAILERS-FOOD
Tsutsumi Jewelry Co., Ltd. .......................................... 31,800 389,885 0.4
RETAILERS-OTHER
Fujitsu Business Systems ............................................ 15,000 241,379 0.3
BUSINESS & PUBLIC SERVICES
Xebio Co., Ltd. ..................................................... 25,000 199,234 0.2
RETAILERS-APPAREL
Nitori Co. .......................................................... 400 2,066 --
RETAILERS-OTHER
-----------
17,091,728
-----------
Consumer Durables (11.7%)
Sony Corp. .......................................................... 55,000 4,888,889 4.9
CONSUMER ELECTRONICS
Bridgestone Corp. ................................................... 165,000 3,578,161 3.6
AUTO PARTS
Citizen Watch Co., Ltd. ............................................. 240,000 1,609,195 1.6
CONSUMER ELECTRONICS
Hitachi Ltd. ........................................................ 220,000 1,567,816 1.6
CONSUMER ELECTRONICS
-----------
11,644,061
-----------
Health Care (11.5%)
Takeda Chemical Industries{z} ....................................... 250,000 7,126,437 7.2
PHARMACEUTICALS
Yamanouchi Pharmaceutical ........................................... 135,000 2,896,552 2.9
PHARMACEUTICALS
Taisho Pharmaceuticals .............................................. 55,000 1,403,448 1.4
PHARMACEUTICALS
-----------
11,426,437
-----------
Technology (9.3%)
NEC Corp. ........................................................... 300,000 3,195,402 3.2
SEMICONDUCTORS
Matsushita-Kotobuki Electronics Ltd. ................................ 120,000 3,016,092 3.0
COMPUTERS & PERIPHERALS
Murata Manufacturing Co., Ltd. ...................................... 105,000 2,639,080 2.7
INSTRUMENTATION & TEST
Koei Co., Ltd. ...................................................... 87,400 415,234 0.4
SOFTWARE
-----------
9,265,808
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-80
<PAGE> 641
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Capital Goods (7.7%)
Canon, Inc. ......................................................... 200,000 $ 4,659,004 4.7
OFFICE EQUIPMENT
Tsudakoma Corp. ..................................................... 494,000 1,082,636 1.1
MACHINERY & ENGINEERING
Kurita Water Industries Ltd. ........................................ 80,000 815,326 0.8
ENVIRONMENTAL
Shima Seiki Manufacturing Ltd. ...................................... 20,000 749,425 0.8
MACHINE TOOLS
Higashi Nihon House ................................................. 73,000 332,835 0.3
CONSTRUCTION
NEC System Integration & Construction ............................... 60 920 --
CONSTRUCTION
Japan Foundation Engineering ........................................ 90 503 --
CONSTRUCTION
-----------
7,640,649
-----------
Finance (7.5%)
Nichiei Co., Ltd. ................................................... 60,000 6,390,805 6.5
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................. 175,000 942,720 1.0
OTHER FINANCIAL
-----------
7,333,525
-----------
Consumer Non-Durables (4.6%)
Amway Japan Ltd. .................................................... 160,000 3,065,134 3.1
HOUSEHOLD PRODUCTS
Asahi Breweries Ltd. ................................................ 105,000 1,528,736 1.5
BEVERAGES - ALCOHOLIC
-----------
4,593,870
-----------
Materials/Basic Industry (1.8%)
Sekisui Chemical Co., Ltd. .......................................... 200,000 1,016,092 1.0
CHEMICALS
Toyo Exterior ....................................................... 80,000 524,138 0.5
BUILDING MATERIALS & COMPONENTS
Gakken .............................................................. 240,000 336,552 0.3
PAPER/PACKAGING
-----------
1,876,782
----------- -----
TOTAL EQUITY INVESTMENTS (cost $92,954,815) ........................... 70,872,860 71.4
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-81
<PAGE> 642
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C>
Corporate Bonds (0.8%)
Japan (0.8%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) ............................... CHF 1,150,000 $ 771,601 0.8
----------- -----
<CAPTION>
NUMBER OF
OPTIONS CONTRACTS
- -------------------------------------------------------------- -----------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY15,500, expire 3/98 .... JPY 120 455,172 0.5
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY14,000, expire 3/98 .... JPY 20 30,651 --
INDEX OPTIONS
----------- -----
TOTAL OPTIONS (cost $334,778) ................................ 485,823 0.5
----------- -----
<CAPTION>
REPURCHASE AGREEMENT
- --------------------------------------------------------------
<S> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $23,430,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $23,451,977,
including accrued interest). (cost $22,989,000) .......... 22,989,000 23.2
----------- -----
TOTAL INVESTMENTS (cost $117,367,794) * ..................... 95,119,284 95.9
Other Assets and Liabilities ................................. 4,064,999 4.1
----------- -----
NET ASSETS ................................................... $99,184,283 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $119,887,833 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,797,228
Unrealized depreciation: (31,565,777)
-------------
Net unrealized depreciation: $ (24,768,549)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-82
<PAGE> 643
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 21,593,557 122.50000 2/12/98 $ 1,263,586
Japanese Yen............................ 16,966,366 122.40000 2/12/98 1,007,490
Japanese Yen............................ 8,483,183 122.50500 2/12/98 496,042
-------------- --------------
Total Contracts to Sell (Receivable
amount $49,810,224).................. 47,043,106 $ 2,767,118
-------------- --------------
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 47.43%.
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$7,173,761)............................ 3/16/98 100 JPY $6,542,693
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-83
<PAGE> 644
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $94,378,794) (Note 1)........................... $72,130,284
Repurchase agreement, at value and cost................................................... 22,989,000
U.S. currency.................................................................. $ 124
Foreign currencies (cost $2,767,554)........................................... 2,751,171 2,751,295
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 2,767,118
Receivable for miscellaneous, initial and variation margin (Note 1)....................... 826,113
Receivable for Fund shares sold........................................................... 275,360
Dividends receivable...................................................................... 53,462
Interest receivable....................................................................... 4,204
-----------
Total assets............................................................................ 101,796,836
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,364,729
Payable for investment management and administration fees (Note 2)........................ 83,695
Payable for transfer agent fees (Note 2).................................................. 44,494
Payable for service and distribution expenses (Note 2).................................... 35,023
Payable for printing and postage expenses................................................. 31,839
Payable for professional fees............................................................. 23,063
Payable for custodian fees................................................................ 12,832
Payable for registration and filing fees.................................................. 6,592
Payable for Trustees' fees and expenses (Note 2).......................................... 5,377
Payable for fund accounting fees.......................................................... 1,383
Other accrued expenses.................................................................... 3,526
-----------
Total liabilities....................................................................... 2,612,553
-----------
Net assets.................................................................................. $99,184,283
-----------
-----------
Class A:
Net asset value and redemption price per share ($44,582,914 DIVIDED BY 4,973,256 shares
outstanding)............................................................................... $ 8.96
-----------
-----------
Maximum offering price per share (100/95.25 of $8.96) *..................................... $ 9.41
-----------
-----------
Class B:+
Net asset value and offering price per share ($24,250,220 DIVIDED BY 2,798,472 shares
outstanding)............................................................................... $ 8.67
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($30,351,149
DIVIDED BY 3,352,861 shares outstanding)................................................... $ 9.05
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $123,922,965
Accumulated net realized loss on investments and foreign currency transactions............ (5,869,899)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 2,748,659
Net unrealized depreciation of investments................................................ (21,617,442)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $99,184,283
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-84
<PAGE> 645
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 916,186
Dividend income (net of foreign withholding tax of $92,217)................................ 523,661
----------
Total investment income.................................................................. 1,439,847
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 1,017,788
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 212,419
Class B...................................................................... 317,148 529,567
----------
Transfer agent fees (Note 2)............................................................... 407,750
Registration and filing fees............................................................... 107,110
Custodian fees............................................................................. 78,324
Printing and postage expenses.............................................................. 53,056
Audit fees................................................................................. 45,260
Legal fees................................................................................. 31,455
Fund accounting fees (Note 2).............................................................. 26,210
Trustees' fees and expenses (Note 2)....................................................... 13,140
Other expenses............................................................................. 4,283
----------
Total expenses before reductions......................................................... 2,313,943
----------
Expense reductions (Notes 1 & 5)....................................................... (72,248)
----------
Total net expenses....................................................................... 2,241,695
----------
Net investment loss.......................................................................... (801,848)
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (8,229,791)
Net realized gain on foreign currency transactions............................. 6,920,240
----------
Net realized loss during the year........................................................ (1,309,551)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... 630,890
Net change in unrealized depreciation of investments........................... (8,170,261)
----------
Net unrealized depreciation during the year.............................................. (7,539,371)
----------
Net realized and unrealized loss on investments and foreign currencies....................... (8,848,922)
----------
Net decrease in net assets resulting from operations......................................... $(9,650,770)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-85
<PAGE> 646
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Increase (Decrease) in net assets
Operations:
Net investment loss...................................................... $ (801,848) $ (841,456)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (1,309,551) 3,852,937
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 630,890 (464,975)
Net change in unrealized depreciation of investments..................... (8,170,261) (11,261,238)
------------- -------------
Net decrease in net assets resulting from operations................... (9,650,770) (8,714,732)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (110,678) (2,883,812)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (61,407) (1,472,016)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (71,057) (18,593)
------------- -------------
Total distributions.................................................... (243,142) (4,374,421)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 280,419,107 510,718,392
Decrease from capital shares repurchased................................. (267,455,599) (554,451,474)
------------- -------------
Net increase (decrease) from capital share transactions................ 12,963,508 (43,733,082)
------------- -------------
Total increase (decrease) in net assets.................................... 3,069,596 (56,822,235)
Net assets:
Beginning of year........................................................ 96,114,687 152,936,922
------------- -------------
End of year *............................................................ $99,184,283 $96,114,687
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-86
<PAGE> 647
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.08) (0.04) (0.04) (0.04) (0.14)
Net realized and unrealized gain
(loss) on investments................ (0.70) (0.77) 0.26 0.79 3.05
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.78) (0.81) 0.22 0.75 2.91
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (7.99)% (7.43)% 1.94% 6.56% 33.45%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 44,583 $ 63,585 $ 111,105 $ 98,066 $ 88,487
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.61)% (0.40)% (0.40)% (0.32)% (0.3)%
Without expense reductions............ (0.68)% (0.50)% (0.55)% (0.44)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.99% 1.84% 1.99% 1.91% 2.1%
Without expense reductions............ 2.06% 1.94% 2.14% 2.03% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-87
<PAGE> 648
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain
(loss) on investments................ (0.66) (0.75) 0.25 0.79 1.90
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.80) (0.86) 0.13 0.66 1.72
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (8.42)% (8.05)% 1.20% 5.81% 17.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 24,250 $ 32,116 $ 41,274 $ 27,355 $ 3,699
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%(a)
Without expense reductions............ (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.64% 2.49% 2.64% 2.56% 2.7%(a)
Without expense reductions............ 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-88
<PAGE> 649
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.81 $ 11.02 $ 10.50
---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.01) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.73) (0.77) 1.89
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.74) (0.78) 1.89
---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37)
---------- ---------- -------------
Net asset value, end of period.......... $ 9.05 $ 9.81 $ 11.02
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (7.54)% (7.14)% 18.14%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 30,351 $ 413 $ 558
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.26)% (0.05)% (0.05)%(a)
Without expense reductions............ (0.33)% (0.15)% (0.20)%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.64% 1.49% 1.64%(a)
Without expense reductions............ 1.71% 1.59% 1.79%(a)
Portfolio turnover rate++++............. 58% 31% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-89
<PAGE> 650
GT GLOBAL JAPAN GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Japan Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The Company has
eight series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
FS-90
<PAGE> 651
GT GLOBAL JAPAN GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" 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. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At December
31, 1997, the Fund had segregated securities valued at $7,126,437 and cash of
$824,000 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of $5,491,954 were on loan
to brokers. The loans were secured by cash collateral of $5,811,500 received by
the Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended December 31, 1997, the Fund received securities lending fees of
$53,675 which were used to reduce custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and
FS-91
<PAGE> 652
GT GLOBAL JAPAN GROWTH FUND
unrealized appreciation of securities held, or for excise tax on income and
capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets. For
the year ended December 31, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees to
the Manager at the following annualized rates: 0.975% on the first $500 million
of average daily net assets of the Fund; 0.95% on the next $500 million; 0.925%
of the next $500 million and 0.90% on amounts thereafter. These fees are
computed daily and paid monthly, and are subject to reduction in any period to
the extent that the Fund's expenses (exclusive of brokerage commissions, taxes,
interest, distribution-related expenses and extraordinary expenses) exceed the
most stringent limits prescribed by the laws or regulations of any state in
which the Fund's shares are offered for sale, based on the average net asset
value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $23,200
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $24,083 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected such
CDSCs in the amount of $260,311. In addition, GT Global makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for GT Global's expenditures incurred in providing services as distributor.
Expenses incurred under the Class B Plan in excess of 1.00% annually may be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan
FS-92
<PAGE> 653
GT GLOBAL JAPAN GROWTH FUND
and/or reimbursements by the Manager or GT Global of portions of the Fund's
other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services is also reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $53,454,101 and $47,110,095, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 18,880,969 $ 187,727,101 39,042,903 $ 423,073,924
Shares issued in connection with
reinvestment of distributions......... 9,319 84,712 225,741 2,221,785
---------------- -------------------- ---------------- --------------------
18,890,288 187,811,813 39,268,644 425,295,709
Shares repurchased...................... (20,434,942) (203,841,370) (42,853,058) (464,603,203)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (1,544,654) $ (16,029,557) (3,584,414) $ (39,307,494)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,059,734 $ 49,439,098 7,303,169 $ 77,038,650
Shares issued in connection with
reinvestment of distributions......... 4,729 41,630 111,715 1,070,181
---------------- -------------------- ---------------- --------------------
5,064,463 49,480,728 7,414,884 78,108,831
Shares repurchased...................... (5,648,959) (54,991,415) (7,859,944) (82,438,811)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (584,496) $ (5,510,687) (445,060) $ (4,329,980)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,149,684 $ 43,125,403 666,196 $ 7,296,458
Shares issued in connection with
reinvestment of distributions......... 126 1,163 1,759 17,394
---------------- -------------------- ---------------- --------------------
4,149,810 43,126,566 667,955 7,313,852
Shares repurchased...................... (839,053) (8,622,814) (676,463) (7,409,460)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. 3,310,757 $ 34,503,752 (8,508) $ (95,608)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $18,573 under these arrangements.
FS-93
<PAGE> 654
GT GLOBAL JAPAN GROWTH FUND
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $194,123 as a capital gain dividend for the fiscal year ended
December 31, 1997.
FS-94
<PAGE> 655
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (28.3%)
Hong Kong Telecommunications Ltd. ......................... HK 3,300,200 $ 6,197,859 5.0
TELEPHONE NETWORKS
News Corp., Ltd. Preferred ................................ AUSL 761,650 5,409,957 4.4
BROADCASTING & PUBLISHING
Telstra Corp., Ltd. - Installment Receipts ................ AUSL 1,627,300 4,182,927 3.4
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- ......................... HK 1,800,000 3,124,879 2.5
WIRELESS COMMUNICATIONS
Brambles Industries Ltd. .................................. AUSL 149,050 2,932,692 2.4
BUSINESS & PUBLIC SERVICES
Singapore Press Holdings Ltd. ............................. SING 385,352 2,578,903 2.1
BROADCASTING & PUBLISHING
Woolworths Ltd. ........................................... AUSL 704,950 2,297,894 1.8
RETAILERS-OTHER
TABCORP Holdings Ltd. ..................................... AUSL 426,400 2,184,155 1.8
LEISURE & TOURISM
Philippine Long Distance Telephone Co. .................... PHIL 85,290 1,952,422 1.6
TELEPHONE - LONG DISTANCE
Telecom Corporation of New Zealand Ltd. ................... NZ 431,200 1,780,317 1.4
TELEPHONE NETWORKS
Telekom Malaysia Bhd. ..................................... MAL 700,000 1,182,005 1.0
TELEPHONE NETWORKS
Malaysia International Shipping Bhd. - Foreign ............ MAL 458,000 668,412 0.5
TRANSPORTATION - SHIPPING
Berjaya Sports Toto Bhd. .................................. MAL 300,000 445,061 0.4
LEISURE & TOURISM
------------
34,937,483
------------
Finance (23.4%)
National Australia Bank Ltd. .............................. AUSL 386,050 5,105,467 4.1
BANKS-REGIONAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 683,350 4,726,511 3.8
BANKS-REGIONAL
HSBC Holdings PLC ......................................... HK 183,021 4,476,603 3.6
BANKS-MONEY CENTER
Development Bank of Singapore - Foreign ................... SING 728,000 4,031,270 3.2
BANKS-MONEY CENTER
Hang Seng Bank ............................................ HK 550,000 3,109,390 2.5
BANKS-MONEY CENTER
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 800,000 2,724,312 2.2
BANKS-REGIONAL
State Bank of India Ltd. - Reg. S GDR{c} {\/} ............. IND 146,070 1,723,626 1.4
BANKS-REGIONAL
AMP Ltd.-/- ............................................... AUSL 91,800 1,077,251 0.9
INSURANCE-LIFE
Cathay Life Insurance Co., Ltd. ........................... TWN 300,000 917,004 0.7
INSURANCE-BROKER
First Commercial Bank ..................................... TWN 350,000 646,997 0.5
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-95
<PAGE> 656
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
China Development Corp.-/- ................................ TWN 270,000 $ 624,873 0.5
BANKS-MONEY CENTER
------------
29,163,304
------------
Multi-Industry/Miscellaneous (10.2%)
Hutchison Whampoa ......................................... HK 1,150,000 6,070,991 4.9
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 829,000 1,952,791 1.6
MULTI-INDUSTRY
Ocean-Land Group Ltd. ..................................... HK 9,358,000 1,811,810 1.5
MULTI-INDUSTRY
Beijing Enterprises Holdings Ltd.-/- ...................... HK 1,165,000 1,766,860 1.4
MULTI-INDUSTRY
Pacific Dunlop Ltd. ....................................... AUSL 616,200 998,561 0.8
MULTI-INDUSTRY
------------
12,601,013
------------
Consumer Durables (7.9%)
Cheung Kong (Holdings) Ltd. ............................... HK 942,000 4,632,488 3.7
HOUSING
New World Development Co., Ltd. ........................... HK 2,000,000 3,872,217 3.1
HOUSING
City Developments Ltd. .................................... SING 500,000 1,397,690 1.1
HOUSING
------------
9,902,395
------------
Materials/Basic Industry (7.8%)
Broken Hill Proprietary Co., Ltd. ......................... AUSL 434,300 3,680,737 3.0
MISC. MATERIALS & COMMODITIES
CSR Ltd. .................................................. AUSL 899,300 2,601,973 2.1
BUILDING MATERIALS & COMPONENTS
Rio Tinto Ltd. ............................................ AUSL 212,100 2,528,449 2.0
MISC. MATERIALS & COMMODITIES
Capral Aluminum Ltd. ...................................... AUSL 634,500 894,272 0.7
METALS - NON-FERROUS
------------
9,705,431
------------
Energy (6.7%)
CLP Holdings Ltd. ......................................... HK 1,059,000 4,825,131 3.9
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 500,000 1,325,301 1.1
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign-/- ............................................... THAI 164,600 1,249,632 1.0
OIL
Electricity Generating Public Co., Ltd. - Foreign-/- ...... THAI 535,900 832,775 0.7
ELECTRICAL & GAS UTILITIES
------------
8,232,839
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-96
<PAGE> 657
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (3.5%)
New World Infrastructure Ltd.-/- .......................... HK 2,000,000 $ 2,297,515 1.8
CONSTRUCTION
Cheung Kong Infrastructure Holdings ....................... HK 1,000,000 1,890,933 1.5
CONSTRUCTION
Taiwan Semiconductor Manufacturing Co.-/- ................. TWN 125,000 258,362 0.2
MACHINERY & ENGINEERING
------------
4,446,810
------------
Consumer Non-Durables (1.9%)
Foster's Brewing Group Ltd. ............................... AUSL 1,012,600 2,389,097 1.9
------------
BEVERAGES - ALCOHOLIC
Technology (1.6%)
Asustek Computer Inc. - Reg. S GDR-/- {c} {\/} ............ TWN 131,700 1,055,244 0.8
COMPUTERS & PERIPHERALS
Compeq Manufacturing Co., Ltd.-/- ......................... TWN 191,200 1,018,590 0.8
COMPUTERS & PERIPHERALS
------------
2,073,834
------------
Health Care (0.5%)
Cochlear Ltd. ............................................. AUSL 150,900 587,448 0.5
HEALTH CARE SERVICES
------------ -----
TOTAL EQUITY INVESTMENTS (cost $143,745,670) ................ 114,039,654 91.8
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an efffective yield of 5.70%,
collateralized by $7,030,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $7,038,788,
including accrued interest). (cost $6,898,000) .......... 6,898,000 5.5
------------ -----
TOTAL INVESTMENTS (cost $150,643,670) * .................... 120,937,654 97.3
Other Assets and Liabilities ................................ 3,355,046 2.7
------------ -----
NET ASSETS .................................................. $124,292,700 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $151,742,022 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,617,724
Unrealized depreciation: (35,422,092)
-------------
Net unrealized depreciation: $ (30,804,368)
-------------
-------------
</TABLE>
Abbreviations:
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-97
<PAGE> 658
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 33.6 33.6
Hong Kong (HK/HKD) ................... 37.0 37.0
India (IND/INR) ...................... 1.4 1.4
Malaysia (MAL/MYR) ................... 1.9 1.9
New Zealand (NZ/NZD) ................. 1.4 1.4
Philippines (PHIL/PHP) ............... 2.7 2.7
Singapore (SING/SGD) ................. 8.6 8.6
Taiwan (TWN/TWD) ..................... 3.5 3.5
Thailand (THAI/THB) .................. 1.7 1.7
United States (US/USD) ............... 8.2 8.2
------ --- -----
Total ............................... 91.8 8.2 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $124,292,700.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 5,792,879 1.52036 07/14/98 $ 343,835
------------ -------------
Total Contract to Sell (Receivable
amount $6,136,714)................... 5,792,879 343,835
------------ -------------
THE VALUE OF CONTRACT TO SELL AS
PERCENTAGE OF NET ASSETS IS 4.66%
Total Open Forward Foreign Currency
Contract............................. $ 343,835
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-98
<PAGE> 659
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $150,643,670) (Note 1).......................... $120,937,654
U.S. currency.................................................................. $ 189
Foreign currencies (cost $8,517,849)........................................... 8,259,284 8,259,473
---------
Receivable for securities sold............................................................ 7,665,166
Dividends receivable...................................................................... 596,708
Receivable for open forward foreign currency contracts.................................... 343,835
Receivable from A I M Advisors, Inc....................................................... 337,887
Receivable for Fund shares sold........................................................... 145,782
Interest receivable....................................................................... 1,092
-----------
Total assets............................................................................ 138,287,597
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 9,408,146
Payable for securities purchased.......................................................... 3,757,964
Payable for investment management and administration fees (Note 2)........................ 366,742
Payable for transfer agent fees (Note 2).................................................. 163,275
Payable for custodian fees................................................................ 76,620
Payable for printing and postage expenses................................................. 68,011
Payable for service and distribution expenses (Note 2).................................... 58,543
Payable for professional fees............................................................. 38,892
Payable for registration and filing fees.................................................. 18,624
Payable for fund accounting fees (Note 2)................................................. 2,078
Payable for Trustees' fees and expenses (Note 2).......................................... 1,694
Other accrued expenses.................................................................... 34,308
-----------
Total liabilities....................................................................... 13,994,897
-----------
Net assets.................................................................................. $124,292,700
-----------
-----------
Class A:
Net asset value and redemption price per share ($86,769,083 DIVIDED BY 17,308,641 shares
outstanding)............................................................................... $ 5.01
-----------
-----------
Maximum offering price per share (100/94.5 of $5.01) *...................................... $ 5.30
-----------
-----------
Class B:+
Net asset value and offering price per share ($36,779,247 DIVIDED BY 7,593,164 shares
outstanding)............................................................................... $ 4.84
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($744,370 DIVIDED
BY 148,367 shares outstanding)............................................................. $ 5.02
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $218,876,228
Undistributed net investment income....................................................... 903,288
Accumulated net realized loss on investments and foreign currency transactions............ (65,853,447)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 72,647
Net unrealized depreciation of investments................................................ (29,706,016)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $124,292,700
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-99
<PAGE> 660
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $89,177) (Note 1)...................... $ 2,353,281
Interest income........................................................................... 316,124
Securities lending income................................................................. 144,671
-----------
Total investment income................................................................. 2,814,076
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 848,177
Transfer agent fees (Note 2).............................................................. 588,000
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 216,644
Class B..................................................................... 241,418 458,062
----------
Custodian fees............................................................................ 113,500
Registration and filing fees.............................................................. 72,400
Printing and postage expenses............................................................. 52,075
Legal fees................................................................................ 39,760
Audit fees................................................................................ 25,929
Fund accounting fees (Note 2)............................................................. 22,357
Trustees' fees and expenses (Note 2)...................................................... 6,516
Other expenses (Note 1)................................................................... 82,578
-----------
Total expenses before reductions........................................................ 2,309,354
-----------
Expenses reimbursed by A I M Advisors, Inc. (Note 2).................................. (337,887)
Expense reductions (Note 5)........................................................... (60,679)
-----------
Total net expenses...................................................................... 1,910,788
-----------
Net investment income....................................................................... 903,288
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments.............................................. (19,697,597)
Net realized gain on foreign currency transactions............................ 2,092,223
----------
Net realized loss during the period..................................................... (17,605,374)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (1,217,598)
Net change in unrealized depreciation of investments.......................... (10,343,511)
----------
Net unrealized depreciation during the period........................................... (11,561,109)
-----------
Net realized and unrealized loss on investments and foreign currencies...................... (29,166,483)
-----------
Net decrease in net assets resulting from operations........................................ $(28,263,195)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-100
<PAGE> 661
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- --------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income..................................................... $ 903,288 $ 864,307
Net realized loss on investments and foreign currency transactions........ (17,605,374) (48,653,550)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (1,217,598) 1,286,651
Net change in unrealized depreciation of investments...................... (10,343,511) (113,591,619)
------------- --------------
Net decrease in net assets resulting from operations.................... (28,263,195) (160,094,211)
------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (427,042)
From net realized gain on investments..................................... -- (15,152,919)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- --
From net realized gain on investments..................................... -- (6,636,532)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (13,447)
From net realized gain on investments..................................... -- (179,887)
------------- --------------
Total distributions..................................................... -- (22,409,827)
------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 768,827,723 1,697,761,633
Decrease from capital shares repurchased.................................. (809,387,115) (1,836,766,167)
------------- --------------
Net decrease from capital share transactions............................ (40,559,392) (139,004,534)
------------- --------------
Total decrease in net assets................................................ (68,822,587) (321,508,572)
Net assets:
Beginning of period....................................................... 193,115,287 514,623,859
------------- --------------
End of period *.......................................................... $124,292,700 $ 193,115,287
------------- --------------
------------- --------------
* Includes undistributed net investment income of.......................... $ 903,288 $ --
------------- --------------
------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-101
<PAGE> 662
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03* 0.05 0.02 0.11 0.02 (0.03)
Net realized and unrealized gain
(loss) on investments................ (1.50) (5.84) 2.44 0.79 (3.15) 6.23
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (1.47) (5.79) 2.46 0.90 (3.13) 6.20
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.03) -- (0.10) (0.01) --
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.07) --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (0.85) (1.81) (0.53) (0.63) (0.65)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 5.01 $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (22.69)%(b) (44.24)% 20.04% 7.45% (19.73)% 60.61%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 86,769 $ 135,807 $ 361,244 $ 383,722 $ 404,680 $ 498,898
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.21%(a) 0.41% 0.17% 0.91% 0.11% (0.3)%
Without expense reductions and/or
reimbursement........................ 0.75%(a) 0.14% 0.04% 0.86% N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.92%(a) 1.66% 1.86% 1.89% 1.81% 1.9%
Without expense reductions and/or
reimbursement........................ 2.38%(a) 1.93% 1.99% 1.94% N/A N/A
Ratio of interest expense to average net
assets++++............................. 0.09%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 92%(a) 80% 93% 63% 87% 117%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement of Fund operating expenses per share of $0.01.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-102
<PAGE> 663
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.02* (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain
(loss) on investments................ (1.46) (5.67) 2.38 0.75 (3.15) 5.27
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (1.44) (5.70) 2.32 0.78 (3.21) 5.17
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.02) -- --
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.07) --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (0.82) (1.81) (0.45) (0.62) (0.65)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 4.84 $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (22.77)%(b) (44.65)% 19.28% 6.54% (20.30)% 46.30%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 36,779 $ 55,820 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.56%(a) (0.24)% (0.48)% 0.26% (0.54)% (0.9)%(a)
Without expense reductions and/or
reimbursement........................ 0.10%(a) (0.51)% (0.61)% 0.21% N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.57%(a) 2.31% 2.51% 2.54% 2.46% 2.5%(a)
Without expense reductions and/or
reimbursement........................ 3.03%(a) 2.58% 2.64% 2.59% N/A N/A
Ratio of interest expense to average net
assets++++............................. 0.09%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 92%(a) 80% 93% 63% 87% 117%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement of Fund operating expenses per share of $0.01.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-103
<PAGE> 664
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ----------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D)
-------------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.45 $ 13.16 $ 12.45 $ 12.89
-------------- ----------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.04* 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (1.47) (5.89) 2.45 0.05
-------------- ----------- ---------- -------------
Net increase (decrease) from
investment operations.............. (1.43) (5.81) 2.52 0.14
-------------- ----------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- (0.08) -- (0.15)
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43)
In excess of net realized gain on
investments.......................... -- -- -- --
-------------- ----------- ---------- -------------
Total distributions................. -- (0.90) (1.81) (0.58)
-------------- ----------- ---------- -------------
Net asset value, end of period.......... $ 5.02 $ 6.45 $ 13.16 $ 12.45
-------------- ----------- ---------- -------------
-------------- ----------- ---------- -------------
Total investment return (c)............. (22.17)%)(b) (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 744 $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.56 %(a) 0.76% 0.52% 1.26%(a)
Without expense reductions and/or
reimbursement........................ 1.10 %(a) 0.49% 0.39% 1.21%(a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.57 %(a) 1.31% 1.51% 1.54%(a)
Without expense reductions and/or
reimbursement........................ 2.03 %(a) 1.58% 1.64% 1.59%(a)
Ratio of interest expense to average net
assets++++............................. 0.09 %(a) N/A N/A N/A
Portfolio turnover rate++++............. 92 %(a) 80% 93% 63%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement of Fund operating expenses per share of $0.01.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-104
<PAGE> 665
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM New Pacific Growth Fund (the "Fund" formerly, GT Global New Pacific Growth
Fund), is a separate series of AIM Growth Series (the "Trust" formerly, G.T.
Global Growth Series ). The Trust is organized as a Delaware business trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Trust has eight
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income securities are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for securities of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-105
<PAGE> 666
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" 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. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option in extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S.government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $26,982,549
were on loan to brokers. The loans were secured by cash collateral of
$28,586,659, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to
FS-106
<PAGE> 667
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
120 days or less. For the period ended June 30, 1998, the Fund received
securities lending fees of $144,671.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$3,081,427 which expires in 2005.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $6,571,267 with a weighted average interest rate of 6.33%. Interest expense
for the period ended June 30, 1998, was $69,364, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets on the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors retained $3,202 of such sales charges. Purchases of Class A shares
exceeding $500,000 may be subject to a contingent deferred sales charge ("CDSC")
upon
FS-107
<PAGE> 668
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
redemption, in accordance with the Fund's current prospectus. AIM Distributors
and GT Global collected such CDSCs in the amount of $10,090 and $2,399,
respectively for the period ended June 30, 1998. AIM Distributors also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $13,651 and $124,324,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Funds. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% of the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $73,078,048 and $101,866,381, respectively. There were no purchases
or sales of U.S. government obligations during the period.
FS-108
<PAGE> 669
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------------ ---------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ------------ ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 112,119,757 $ 661,452,247 110,903,994 $ 1,213,154,082
Shares issued in connection with reinvestment of
distributions............................................. -- -- 2,058,341 13,577,615
------------ ------------- ------------- ---------------
112,119,757 661,452,247 112,962,335 1,226,731,697
Shares repurchased.......................................... (115,779,632) (692,548,182) (119,529,679) (1,324,924,362)
------------ ------------- ------------- ---------------
Net decrease................................................ (3,659,875) $ (31,095,935) (6,567,344) $ (98,192,665)
------------ ------------- ------------- ---------------
------------ ------------- ------------- ---------------
<CAPTION>
CLASS B
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................. 14,719,157 $ 83,694,422 37,888,593 $ 423,842,967
Shares issued in connection with reinvestment of
distributions............................................. -- -- 856,732 5,478,474
------------ ------------- ------------- ---------------
14,719,157 83,694,422 38,745,325 429,321,441
Shares repurchased.......................................... (16,021,430) (92,123,012) (41,705,872) (470,119,000)
------------ ------------- ------------- ---------------
Net decrease................................................ (1,302,273) $ (8,428,590) (2,960,547) $ (40,797,559)
------------ ------------- ------------- ---------------
------------ ------------- ------------- ---------------
<CAPTION>
ADVISOR CLASS
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................. 4,413,141 $ 23,681,054 4,493,439 $ 41,526,678
Shares issued in connection with reinvestment of
distributions............................................. -- -- 25,872 181,817
------------ ------------- ------------- ---------------
4,413,141 23,681,054 4,519,311 41,708,495
Shares repurchased.......................................... (4,495,633) (24,715,921) (4,408,085) (41,722,805)
------------ ------------- ------------- ---------------
Net increase (decrease)..................................... (82,492) $ (1,034,867) 111,226 $ (14,310)
------------ ------------- ------------- ---------------
------------ ------------- ------------- ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $60,679 under these arrangements.
FS-109
<PAGE> 670
GT GLOBAL NEW PACIFIC GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global New Pacific Growth Fund, a series of shares of beneficial interest of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
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, 1997 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 GT
Global New Pacific Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-110
<PAGE> 671
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (26.5%)
Hong Kong Telecommunications Ltd. ......................... HK 7,039,964 $ 14,491,505 7.5
TELEPHONE NETWORKS
Brambles Industries Ltd. .................................. AUSL 250,000 4,959,606 2.6
BUSINESS & PUBLIC SERVICES
Woolworths Ltd. ........................................... AUSL 1,440,000 4,812,822 2.5
RETAILERS-OTHER
Telekom Malaysia Bhd. ..................................... MAL 1,500,000 4,440,154 2.3
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- ......................... HK 2,358,000 4,047,416 2.1
WIRELESS COMMUNICATIONS
Singapore Press Holdings Ltd. - Foreign ................... SING 302,000 3,786,215 2.0
BROADCASTING & PUBLISHING
Qantas Airways Ltd. ....................................... AUSL 1,770,000 3,132,009 1.6
TRANSPORTATION - AIRLINES
Genting Bhd. .............................................. MAL 1,109,000 2,783,205 1.4
LEISURE & TOURISM
Telstra Corp. Ltd. ........................................ AUSL 1,293,300 2,730,010 1.4
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 484,000 2,345,288 1.2
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. .................... PHIL 85,290 1,876,380 1.0
TELEPHONE - LONG DISTANCE
Mahanagar Telephone Nigam Ltd. - GDR-/- {\/} .............. IND 112,850 1,750,304 0.9
TELECOM - OTHER
------------
51,154,914
------------
Finance (22.1%)
Hang Seng Bank ............................................ HK 957,800 9,239,924 4.8
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 1,370,000 9,050,621 4.7
BANKS-REGIONAL
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 1,139,000 6,632,323 3.4
BANKS-REGIONAL
Development Bank of Singapore - Foreign ................... SING 712,000 6,091,979 3.1
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 180,000 4,436,988 2.3
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 773,000 4,294,444 2.2
BANKS-MONEY CENTER
City Developments Ltd. .................................... SING 376,000 1,742,602 0.9
REAL ESTATE
State Bank of India Ltd. - GDR{\/} ........................ IND 76,100 1,360,288 0.7
BANKS-REGIONAL
------------
42,849,169
------------
Multi-Industry/Miscellaneous (10.7%)
Hutchison Whampoa ......................................... HK 1,500,000 9,408,273 4.9
MULTI-INDUSTRY
Pacific Dunlop Ltd. ....................................... AUSL 1,900,000 4,023,063 2.1
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-111
<PAGE> 672
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Citic Pacific Ltd. ........................................ HK 950,000 $ 3,776,215 2.0
CONGLOMERATE
China Resources Enterprise Ltd. ........................... HK 1,500,000 3,349,035 1.7
CONGLOMERATE
------------
20,556,586
------------
Consumer Durables (10.0%)
New World Development Co., Ltd. ........................... HK 2,000,000 6,917,468 3.6
HOUSING
Cheung Kong (Holdings) Ltd. ............................... HK 942,000 6,169,775 3.2
HOUSING
Sun Hung Kai Properties Ltd. .............................. HK 880,000 6,132,800 3.2
HOUSING
------------
19,220,043
------------
Capital Goods (7.0%)
Cheung Kong Infrastructure Holdings ....................... HK 2,285,000 6,458,218 3.3
CONSTRUCTION
New World Infrastructure Ltd.-/- .......................... HK 2,000,000 4,504,098 2.3
CONSTRUCTION
Venture Manufacturing Ltd. ................................ SING 640,000 1,787,285 0.9
MACHINERY & ENGINEERING
Harbin Power Equipment Co., Ltd. .......................... HK 7,384,000 895,781 0.5
ELECTRICAL PLANT/EQUIPMENT
------------
13,645,382
------------
Materials/Basic Industry (6.9%)
Leighton Holdings Ltd. .................................... AUSL 1,365,000 4,766,695 2.5
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 370,000 3,435,077 1.8
MISC. MATERIALS & COMMODITIES
Pasminco Ltd. ............................................. AUSL 2,500,000 2,866,636 1.5
METALS - NON-FERROUS
QNI Ltd. .................................................. AUSL 3,160,000 2,099,941 1.1
METALS - NON-FERROUS
------------
13,168,349
------------
Energy (6.4%)
China Light & Power Co., Ltd. ............................. HK 1,059,000 5,876,879 3.0
ELECTRICAL & GAS UTILITIES
Hong Kong Electric Holdings Ltd. .......................... HK 968,000 3,679,112 1.9
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 500,000 1,675,000 0.9
ELECTRICAL & GAS UTILITIES
YTL Power International Bhd.-/- ........................... MAL 1,395,000 1,073,629 0.6
ENERGY SOURCES
------------
12,304,620
------------ -----
TOTAL EQUITY INVESTMENTS (cost $192,261,568) ................ 172,899,063 89.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-112
<PAGE> 673
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $43,535,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $43,575,836,
including accrued interest). (cost $42,717,000) .......... $ 42,717,000 22.1
------------ -----
TOTAL INVESTMENTS (cost $234,978,568) * .................... 215,616,063 111.7
Other Assets and Liabilities ................................ (22,500,776) (11.7)
------------ -----
NET ASSETS .................................................. $193,115,287 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $236,076,920 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,360,873
Unrealized depreciation: (26,821,730)
-------------
Net unrealized depreciation: $ (20,460,857)
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 21.8 21.8
Hong Kong (HK/HKD) ................... 46.3 46.3
India (IND/INR) ...................... 1.6 1.6
Malaysia (MAL/MYR) ................... 4.3 4.3
New Zealand (NZ/NZD) ................. 1.2 1.2
Philippines (PHIL/PHP) ............... 1.9 1.9
Singapore (SING/SGD) ................. 12.5 12.5
United States & Other (US/USD) ....... 10.4 10.4
------ ----- -----
Total ............................... 89.6 10.4 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,115,287.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 20,137,999 1.44937 2/24/98 $ 1,160,974
Singapore Dollars....................... 9,970,754 1.67140 3/17/98 140,530
------------ -------------
Total Contracts to Sell (Receivable
amount $31,410,257).................. 30,108,753 1,301,504
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.59%
Total Open Forward Foreign Currency
Contracts............................ $ 1,301,504
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-113
<PAGE> 674
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $192,261,568) (Note 1)............................ $172,899,063
Repurchase agreement, at value and cost..................................................... 42,717,000
U.S. currency.................................................................... $ 896
Foreign currencies (cost $732,774)............................................... 741,289 742,185
---------
Receivable for open forward foreign currency contracts...................................... 1,301,504
Dividends and dividend withholding tax reclaims receivable.................................. 583,258
Receivable for Fund shares sold............................................................. 540,345
Receivable for securities sold.............................................................. 153,396
Miscellaneous receivable.................................................................... 15,083
Interest receivable......................................................................... 6,882
-----------
Total assets.............................................................................. 218,958,716
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 24,103,460
Payable for securities purchased............................................................ 1,206,279
Payable for investment management and administration fees (Note 2).......................... 163,399
Payable for service and distribution expenses (Note 2)...................................... 89,450
Payable for printing and postage expenses................................................... 86,532
Payable for transfer agent fees (Note 2).................................................... 84,573
Payable for professional fees............................................................... 38,325
Payable for custodian fees.................................................................. 33,378
Payable for registration and filing fees.................................................... 21,314
Payable for fund accounting fees (Note 2)................................................... 4,340
Payable for Trustees' fees and expenses (Note 2)............................................ 3,557
Other accrued expenses...................................................................... 8,822
-----------
Total liabilities......................................................................... 25,843,429
-----------
Net assets.................................................................................... $193,115,287
-----------
-----------
Class A:
Net asset value and redemption price per share ($135,807,280 DIVIDED BY 20,968,516 shares
outstanding)................................................................................. $ 6.48
-----------
-----------
Maximum offering price per share (100/95.25 of $6.48) *....................................... $ 6.80
-----------
-----------
Class B:+
Net asset value and offering price per share ($55,819,596 DIVIDED BY 8,895,437 shares
outstanding)................................................................................. $ 6.28
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,488,411 DIVIDED
BY 230,859 shares outstanding)............................................................... $ 6.45
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $259,435,620
Accumulated net realized loss on investments and foreign currency transactions.............. (48,248,073)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 1,290,245
Net unrealized depreciation of investments.................................................. (19,362,505)
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $193,115,287
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-114
<PAGE> 675
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $412,339) (Note 1).................... $ 7,263,612
Interest income.......................................................................... 674,416
------------
Total investment income................................................................ 7,938,028
------------
Expenses:
Investment management and administration fees (Note 2)................................... 3,736,264
Service and distribution expenses: (Note 2)
Class A.................................................................. $ 942,945
Class B.................................................................. 1,119,211 2,062,156
------------
Transfer agent fees (Note 2)............................................................. 1,240,570
Custodian fees........................................................................... 419,674
Registration and filing fees............................................................. 138,810
Printing and postage expenses............................................................ 103,925
Fund accounting fees (Note 2)............................................................ 99,321
Audit fees............................................................................... 58,095
Legal fees............................................................................... 35,175
Trustees' fees and expenses (Note 2)..................................................... 10,532
Other expenses (Note 1).................................................................. 213,092
------------
Total expenses before reductions....................................................... 8,117,614
------------
Expense reductions (Notes 1 & 5)..................................................... (1,043,893)
------------
Total net expenses..................................................................... 7,073,721
------------
Net investment income...................................................................... 864,307
------------
Net realized and unrealized loss on investments and foreign currencies: (Note
1)
Net realized loss on investments........................................... (48,105,392)
Net realized loss on foreign currency transactions......................... (548,158)
------------
Net realized loss during the year...................................................... (48,653,550)
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies......................................... 1,286,651
Net change in unrealized appreciation of investments....................... (113,591,619)
------------
Net unrealized depreciation during the year............................................ (112,304,968)
------------
Net realized and unrealized loss on investments and foreign currencies..................... (160,958,518)
------------
Net decrease in net assets resulting from operations....................................... $(160,094,211)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-115
<PAGE> 676
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 864,307 $ (26,838)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (48,653,550) 94,284,448
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 1,286,651 (106)
Net change in unrealized appreciation (depreciation) of investments...... (113,591,619) 36,883,188
------------- -------------
Net increase (decrease) in net assets resulting from operations........ (160,094,211) 131,140,692
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (427,042) --
From net realized gain on investments.................................... (15,152,919) (44,900,913)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... -- --
From net realized gain on investments.................................... (6,636,532) (18,754,735)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (13,447) --
From net realized gain on investments.................................... (179,887) (250,756)
------------- -------------
Total distributions.................................................... (22,409,827) (63,906,404)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,697,761,633 5,158,291,909
Decrease from capital shares repurchased................................. (1,836,766,167) (5,226,446,724)
------------- -------------
Net decrease from capital share transactions........................... (139,004,534) (68,154,815)
------------- -------------
Total decrease in net assets............................................... (321,508,572) (920,527)
Net assets:
Beginning of year........................................................ 514,623,859 515,544,386
------------- -------------
End of year *............................................................ $ 193,115,287 $ 514,623,859
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-116
<PAGE> 677
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.02 0.11 0.02 (0.03)
Net realized and unrealized gain
(loss) on investments................ (5.84) 2.44 0.79 (3.15) 6.23
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (5.79) 2.46 0.90 (3.13) 6.20
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.10) (0.01) --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.85) (1.81) (0.53) (0.63) (0.65)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (44.24)% 20.04% 7.45% (19.73)% 60.61%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 135,807 $ 361,244 $ 383,722 $ 404,680 $ 498,898
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.41% 0.17% 0.91% 0.11% (0.3)%
Without expense reductions............ 0.14% 0.04% 0.86% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.66% 1.86% 1.89% 1.81% 1.9%
Without expense reductions............ 1.93% 1.99% 1.94% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-117
<PAGE> 678
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain
(loss) on investments................ (5.67) 2.38 0.75 (3.15) 5.27
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.70) 2.32 0.78 (3.21) 5.17
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.02) -- --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.82) (1.81) (0.45) (0.62) (0.65)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (44.65)% 19.28% 6.54% (20.30)% 46.30%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 55,820 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.24)% (0.48)% 0.26% (0.54)% (0.9)%(a)
Without expense reductions............ (0.51)% (0.61)% 0.21% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.31% 2.51% 2.54% 2.46% 2.5%(a)
Without expense reductions............ 2.58% 2.64% 2.59% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-118
<PAGE> 679
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.16 $ 12.45 $ 12.89
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (5.89) 2.45 0.05
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.81) 2.52 0.14
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.08) -- (0.15)
From net realized gain on
investments.......................... (0.82) (1.81) (0.43)
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.90) (1.81) (0.58)
---------- ---------- -------------
Net asset value, end of period.......... $ 6.45 $ 13.16 $ 12.45
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.76% 0.52% 1.26%
Without expense reductions............ 0.49% 0.39% 1.21%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.31% 1.51% 1.54%(a)
Without expense reductions............ 1.58% 1.64% 1.59%(a)
Portfolio turnover rate++++............. 80% 93% 63%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-119
<PAGE> 680
GT GLOBAL NEW PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global New Pacific Growth Fund ("Fund") is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant
accounting policies in conformity with generally accepted accounting principles
consistently followed by the Funds in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market, as of
the close of business on the day the securities are being valued, or, lacking
any sales, at the last available bid price. In cases where securities are traded
on more than one exchange, the securities are valued on the exchange determined
by Chancellor LGT Asset Management, Inc. (the "Manager") to be the primary
market.
Fixed income securities are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for securities of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and
FS-120
<PAGE> 681
GT GLOBAL NEW PACIFIC GROWTH FUND
Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund enters into a closing purchase transaction, a gain or loss is realized
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option in extinguished. If a written call option
is exercised, a gain or loss is realized from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the cost of the underlying
security purchased would be decreased by the premium originally received. The
Fund can write options only on a covered basis, which, for a call, requires that
the Fund hold the underlying security, and, for a put, requires the Fund to set
aside cash, U.S.government securities or other liquid securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the stock and bond markets and to fluctuations in currency
values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately $9,252,981
were on loan to brokers. The loans were secured by cash collateral of
$9,953,563, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $756,559 which were used to reduce
custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$3,081,427 which expires in 2005.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
FS-121
<PAGE> 682
GT GLOBAL NEW PACIFIC GROWTH FUND
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $8,681,157 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997, was $193,664, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets on the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $21,605
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $42,069 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected CDSCs in
the amount of $894,766. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and
FS-122
<PAGE> 683
GT GLOBAL NEW PACIFIC GROWTH FUND
a per exchange fee of $2.25. GT Services also is reimbursed by the Fund for its
out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% of the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $290,053,136 and $442,944,807, respectively. There were
no purchases or sales of U.S. government obligations during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 110,903,994 $1,213,154,082 285,658,529 $3,783,795,259
Shares issued in connection with reinvestment of
distributions............................................. 2,058,341 13,577,615 2,934,435 37,677,963
----------- ------------- ----------- -------------
112,962,335 1,226,731,697 288,592,964 3,821,473,222
Shares repurchased.......................................... (119,529,679) (1,324,924,362) (291,833,470) (3,895,314,036)
----------- ------------- ----------- -------------
Net decrease................................................ (6,567,344) $ (98,192,665) (3,240,506) $ (73,840,814)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 37,888,593 $ 423,842,967 96,986,480 $1,263,551,513
Shares issued in connection with reinvestment of
distributions............................................. 856,732 5,478,474 1,241,219 15,565,185
----------- ------------- ----------- -------------
38,745,325 429,321,441 98,227,699 1,279,116,698
Shares repurchased.......................................... (41,705,872) (470,119,000) (97,020,480) (1,273,495,413)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... (2,960,547) $ (40,797,559) 1,207,219 $ 5,621,285
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 4,493,439 $ 41,526,678 4,311,411 $ 57,463,326
Shares issued in connection with reinvestment of
distributions............................................. 25,872 181,817 18,530 238,663
----------- ------------- ----------- -------------
4,519,311 41,708,495 4,329,941 57,701,989
Shares repurchased.......................................... (4,408,085) (41,722,805) (4,285,455) (57,637,275)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... 111,226 $ (14,310) 44,486 $ 64,714
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $287,334 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2886 per share (representing an approximate total of
$7,701,422). The total amount of taxes paid by the Fund to such countries was
approximately $.0155 per share (representing an approximate total of $412,339).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$20,539,592 as a capital gain dividend for the fiscal year ended December 31,
1997.
FS-123
<PAGE> 684
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (32.8%)
SLM Holding Corp. ......................................... US 92,000 $ 4,508,001 3.2
OTHER FINANCIAL
Chase Manhattan Corp. ..................................... US 55,600 4,197,797 3.0
BANKS-MONEY CENTER
Citicorp .................................................. US 26,200 3,910,350 2.8
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 58,400 3,540,500 2.6
INSURANCE - MULTI-LINE
ING Groep N.V. ............................................ NETH 39,487 2,587,401 1.9
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,430,832 1.8
INSURANCE - MULTI-LINE
UBS AG - Registered-/- .................................... SWTZ 6,521 2,426,573 1.7
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,420,837 1.7
BANKS-REGIONAL
Nordbanken Holding AB ..................................... SWDN 325,006 2,385,403 1.7
BANKS-REGIONAL
Schroders PLC ............................................. UK 84,000 2,168,375 1.6
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 117,000 2,080,564 1.5
BANKS-SUPER REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,946,093 1.4
BANKS-REGIONAL
ForeningsSparbanken AB .................................... SWDN 59,720 1,798,231 1.3
BANKS-REGIONAL
Royal Bank of Canada ...................................... CAN 27,200 1,635,659 1.2
BANKS-REGIONAL
Bank Hapoalim Ltd.-/- ..................................... ISRL 437,400 1,324,623 1.0
BANKS-REGIONAL
HSBC Holdings PLC ......................................... HK 51,496 1,259,567 0.9
BANKS-MONEY CENTER
Old Mutual South Africa Trust PLC ......................... UK 661,500 1,253,636 0.9
REAL ESTATE INVESTMENT TRUST
State Bank of India Ltd. - Reg. S GDR-/- {c} {\/} ......... IND 104,140 1,228,852 0.9
BANKS-REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 103,000 1,020,540 0.7
SECURITIES BROKER
Nichiei Co., Ltd. ......................................... JPN 9,900 675,895 0.5
OTHER FINANCIAL
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 472,609 0.3
BANKS-MONEY CENTER
Kookmin Bank-/- ........................................... KOR 73,781 274,659 0.2
BANKS-MONEY CENTER
------------
45,546,997
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-124
<PAGE> 685
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (24.1%)
Federated Department Stores, Inc.-/- ...................... US 67,900 $ 3,653,869 2.6
RETAILERS-APPAREL
Service Corporation International ......................... US 71,400 3,061,275 2.2
CONSUMER SERVICES
EMI Group PLC ............................................. UK 333,000 2,913,541 2.1
LEISURE & TOURISM
CVS Corp. ................................................. US 74,800 2,912,525 2.1
RETAILERS-OTHER
Woolworths Ltd. ........................................... AUSL 813,000 2,650,099 1.9
RETAILERS-OTHER
EMAP PLC .................................................. UK 118,000 2,387,978 1.7
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 321,900 2,353,629 1.7
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 182,000 2,311,087 1.7
WIRELESS COMMUNICATIONS
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,227,000 1.6
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 56,959 1,829,704 1.3
RETAILERS-FOOD
Reuters Group PLC ......................................... UK 155,133 1,774,355 1.3
BROADCASTING & PUBLISHING
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 9,661 1,716,953 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 121,000 1,670,473 1.2
TELEPHONE NETWORKS
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 11,500 1,255,656 0.9
TELEPHONE NETWORKS
Telstra Corp. Ltd. - Installment Receipts ................. AUSL 333,100 856,224 0.6
TELEPHONE NETWORKS
------------
33,574,368
------------
Health Care (10.1%)
Warner-Lambert Co. ........................................ US 59,200 4,107,000 3.0
PHARMACEUTICALS
Bristol Myers Squibb Co. .................................. US 30,900 3,551,569 2.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 286,418 2,134,146 1.5
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 189 1,857,452 1.3
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR-/- {c} {\/} ................ HGRY 16,200 1,291,950 0.9
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 39,000 1,040,790 0.8
PHARMACEUTICALS
------------
13,982,907
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-125
<PAGE> 686
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (7.0%)
Monsanto Co. .............................................. US 56,200 $ 3,140,175 2.3
CHEMICALS
Millenium Chemicals, Inc. ................................. US 79,400 2,689,675 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 8,790 1,955,351 1.4
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 29,400 1,896,300 1.4
CHEMICALS
------------
9,681,501
------------
Technology (5.1%)
Compaq Computer Corp. ..................................... US 99,200 2,814,800 2.0
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 36,900 2,735,213 2.0
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 25,844 1,507,028 1.1
SEMICONDUCTORS
------------
7,057,041
------------
Consumer Durables (4.6%)
Ford Motor Co. ............................................ US 30,400 1,793,600 1.3
AUTOMOBILES
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 1,763,318 1.3
AUTO PARTS
Volvo AB "B" .............................................. SWDN 51,200 1,525,626 1.1
AUTOMOBILES
Mabuchi Motor Co., Ltd. ................................... JPN 20,000 1,272,872 0.9
AUTOMOBILES
------------
6,355,416
------------
Consumer Non-Durables (4.4%)
Diageo PLC ................................................ UK 164,160 1,946,128 1.4
BEVERAGES - ALCOHOLIC
RJR Nabisco Holdings Corp. ................................ US 61,300 1,455,875 1.1
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,202,358 0.9
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 16,600 879,800 0.6
TEXTILES & APPAREL
Amway Japan Ltd. .......................................... JPN 55,400 588,978 0.4
HOUSEHOLD PRODUCTS
------------
6,073,139
------------
Capital Goods (3.8%)
Textron, Inc. ............................................. US 34,500 2,473,219 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 8,310 1,692,187 1.2
TELECOM EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-126
<PAGE> 687
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Canon, Inc. ............................................... JPN 50,000 $ 1,139,076 0.8
OFFICE EQUIPMENT
------------
5,304,482
------------
Energy (3.3%)
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,867,257 1.3
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 49,240 1,536,440 1.1
ENERGY EQUIPMENT & SERVICES
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 64,800 1,198,800 0.9
GAS PRODUCTION & DISTRIBUTION
------------
4,602,497
------------
Multi-Industry/Miscellaneous (0.6%)
Shanghai Industrial Holdings Ltd. ......................... HK 370,000 871,571 0.6
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $109,904,796) ................ 133,049,919 95.8
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Co., due July
1, 1998, for an effective yield of 5.70%, collateralized
by $11,960,000 U.S. Treasury Bills, 5.75% due 12/31/98
(market value of collateral is $11,974,950, including
accrued interest). (cost $11,738,000) ................... 11,738,000 8.4
------------ -----
TOTAL INVESTMENTS (cost $121,642,796) * .................... 144,787,919 104.2
Other Assets and Liabilities ................................ (5,861,658) (4.2)
------------ -----
NET ASSETS .................................................. $138,926,261 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $122,098,557 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 30,443,660
Unrealized depreciation: (7,754,298)
-------------
Net unrealized appreciation: $ 22,689,362
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-127
<PAGE> 688
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
--------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ---------- ----------- ------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.5 5.5
Brazil (BRZL/BRL) .................... 1.8 1.8
Canada (CAN/CAD) ..................... 1.2 1.2
Czech Republic (CZCH/CSK) ............ 1.2 1.2
France (FR/FRF) ...................... 1.2 1.2
Hong Kong (HK/HKD) ................... 1.5 1.5
Hungary (HGRY/HUF) ................... 0.9 0.9
India (IND/INR) ...................... 0.9 0.9
Israel (ISRL/ILS) .................... 1.0 1.0
Italy (ITLY/ITL) ..................... 1.7 1.7
Japan (JPN/JPY) ...................... 5.0 5.0
Korea (KOR/KRW) ...................... 0.2 0.2
Netherlands (NETH/NLG) ............... 5.2 5.2
New Zealand (NZ/NZD) ................. 1.6 1.6
Norway (NOR/NOK) ..................... 1.1 1.1
Portugal (PORT/PTE) .................. 1.2 1.2
Singapore (SING/SGD) ................. 0.3 0.3
Sweden (SWDN/SEK) .................... 4.1 4.1
Switzerland (SWTZ/CHF) ............... 3.0 3.0
United Kingdom (UK/GBP) .............. 19.6 19.6
United States (US/USD) ............... 37.6 4.2 41.8
----- --- ------
Total ............................... 95.8 4.2 100.0
----- --- ------
----- --- ------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $138,926,261.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
British Pounds.......................... 5,337,595 0.59400 7/20/98 $ 49,605
French Francs........................... 1,094,325 5.94360 8/6/98 16,113
Japanese Yen............................ 2,254,774 130.50000 8/6/98 120,705
Japanese Yen............................ 2,256,752 130.86000 8/12/98 112,192
Swiss Francs............................ 1,131,122 1.47770 9/21/98 19,314
---------- -------------
Total Contracts to Sell (Receivable
amount $12,392,497).................. 12,074,568 $ 317,929
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 8.69%
Total Open Forward Foreign Currency
Contracts............................ $ 317,929
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-128
<PAGE> 689
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $121,642,796) (Note 1)............................. $144,787,919
U.S. currency..................................................................... $ 701
Foreign currencies (cost $11,376)................................................. 11,376 12,077
---------
Receivable for open forward foreign currency contracts (Note 1).............................. 317,929
Dividends and dividend withholding tax reclaims receivable................................... 285,982
Receivable for Fund shares sold.............................................................. 7,508
Interest receivable.......................................................................... 1,859
-----------
Total assets............................................................................... 145,413,274
-----------
Liabilities:
Payable for Fund shares repurchased.......................................................... 5,999,730
Payable for investment management and administration fees (Note 2)........................... 114,066
Payable for transfer agent fees (Note 2)..................................................... 110,943
Payable for printing and postage expenses.................................................... 92,874
Payable for service and distribution expenses (Note 2)....................................... 63,646
Payable for custodian fees................................................................... 30,896
Payable for professional fees................................................................ 28,206
Payable for securities purchased............................................................. 25,005
Payable for registration and filing fees..................................................... 10,549
Payable for Trustees' fees and expenses (Note 2)............................................. 4,581
Payable for fund accounting fees (Note 2).................................................... 2,102
Other accrued expenses....................................................................... 4,415
-----------
Total liabilities.......................................................................... 6,487,013
-----------
Net assets..................................................................................... $138,926,261
-----------
-----------
Class A:
Net asset value and redemption price per share ($95,789,457 DIVIDED BY 6,010,096 shares
outstanding).................................................................................. $ 15.94
-----------
-----------
Maximum offering price per share (100/94.5 of $15.94) *........................................ $ 16.87
-----------
-----------
Class B:+
Net asset value and offering price per share ($41,963,181 DIVIDED BY 2,762,324 shares
outstanding).................................................................................. $ 15.19
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,173,623 DIVIDED
BY 72,854 shares outstanding)................................................................. $ 16.11
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)..................................................................... $103,912,599
Undistributed net investment income.......................................................... 167,690
Accumulated net realized gain on investments and foreign currency transactions............... 11,383,706
Net unrealized appreciation on translation of assets and liabilities in foreign currencies... 317,143
Net unrealized appreciation of investments................................................... 23,145,123
-----------
Total -- representing net assets applicable to capital shares outstanding...................... $138,926,261
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-129
<PAGE> 690
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $128,555)............................... $1,344,061
Interest income............................................................................ 211,993
Securities lending income.................................................................. 60,268
----------
Total investment income.................................................................. 1,616,322
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 730,851
Service and distribution expenses: (Note 2)
Class A....................................................................... $ 179,462
Class B....................................................................... 224,655 404,117
---------
Transfer agent fees (Note 2)............................................................... 215,028
Custodian fees............................................................................. 49,232
Printing and postage expenses (Note 2)..................................................... 34,933
Registration and filing fees............................................................... 34,503
Audit fees................................................................................. 24,978
Legal fees................................................................................. 20,747
Fund accounting fees....................................................................... 20,266
Trustees' fees and expenses (Note 2)....................................................... 6,154
Other expenses (Note 1).................................................................... 6,048
----------
Total expenses before reductions......................................................... 1,546,857
----------
Expense reductions (Note 5)............................................................ (2,929)
----------
Total net expenses....................................................................... 1,543,928
----------
Net investment income........................................................................ 72,394
----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments................................................ 9,255,158
Net realized gain on foreign currency transactions.............................. 745,466
---------
Net realized gain during the period...................................................... 10,000,624
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies.......................................................... (341,260)
Net change in unrealized appreciation of investments............................ 7,779,189
---------
Net unrealized appreciation during the period............................................ 7,437,929
----------
Net realized and unrealized gain on investments and foreign currencies....................... 17,438,553
----------
Net increase in net assets resulting from operations......................................... $17,510,947
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-130
<PAGE> 691
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income..................................................... $ 72,394 $ 212,595
Net realized gain on investments and foreign currency transactions........ 10,000,624 28,144,058
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (341,260) 162,616
Net change in unrealized appreciation (depreciation) of investments....... 7,779,189 (11,824,112)
------------- -------------
Net increase in net assets resulting from operations.................... 17,510,947 16,695,157
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (109,138)
From net realized gain on investments..................................... -- (22,666,381)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (10,444,406)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (8,161)
From net realized gain on investments..................................... -- (358,231)
------------- -------------
Total distributions..................................................... -- (33,586,317)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 206,230,402 243,618,368
Decrease from capital shares repurchased.................................. (236,221,895) (256,140,244)
------------- -------------
Net decrease from capital share transactions............................ (29,991,493) (12,521,876)
------------- -------------
Total decrease in net assets................................................ (12,480,546) (29,413,036)
Net assets:
Beginning of period....................................................... 151,406,807 180,819,843
------------- -------------
End of period *........................................................... $138,926,261 $151,406,807
------------- -------------
------------- -------------
* Includes undistributed net investment income of.......................... $ 167,690 $ 95,296
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-131
<PAGE> 692
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 1996 (D) 1995 (D) 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.02 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.66 1.55 1.79 1.74 (1.16) 3.92
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.68 1.60 1.82 1.74 (1.16) 3.96
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.02) -- -- -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (4.05) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 15.94 $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.78%(b) 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 95,789 $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.28%(a) 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.28%(a) 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.87%(a) 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.87%(a) 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 34%(a) 92% 80% 113% 86% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-132
<PAGE> 693
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 (D) 1995 (D) 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.58 1.49 1.75 1.73 (1.16) 2.72
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.55 1.44 1.66 1.61 (1.27) 2.68
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 15.19 $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 11.45%(b) 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 41,963 $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.37)%(a) (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.37)%(a) (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.52%(a) 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.52%(a) 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 34%(a) 92% 80% 113% 86% 92%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-133
<PAGE> 694
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-----------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER JUNE 1, 1995
JUNE 30, 31, TO
1998 ---------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 (D) 1995
-------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.38 $ 16.81 $ 16.86 $ 15.26
-------------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.68 1.57 1.79 2.02
-------------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.73 1.69 1.88 2.05
-------------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- (0.09) -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45)
-------------- ---------- ---------- -------------
Total distributions................. -- (4.12) (1.93) (0.45)
-------------- ---------- ---------- -------------
Net asset value, end of period.......... $ 16.11 $ 14.38 $ 16.81 $ 16.86
-------------- ---------- ---------- -------------
-------------- ---------- ---------- -------------
Total investment return (c)............. 11.96 %(b) 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,174 $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.63 %(a) 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.63 %(a) 0.58% 0.41% 0.23%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.52 %(a) 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.52 %(a) 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 34 %(a) 92% 80% 113%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-134
<PAGE> 695
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Worldwide Growth Fund (the "Fund" formerly, GT Global Worldwide Growth
Fund), is a separate series of AIM Growth Series (the "Trust" formerly, G.T.
Global Growth Series ). The Trust is organized as a Delaware business trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Trust has eight
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-135
<PAGE> 696
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counter party is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $9,461,607
were on loan to brokers. The loans were secured by cash collateral of
$9,905,382, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $60,268.
FS-136
<PAGE> 697
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $12,876,000 with a weighted average interest rate of 6.24%. Interest expense
for the period ended June 30, 1998 was $2,230, and is included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $331 and $2,657, respectively, of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for Class A for the
period ended June 30, 1998. AIM
FS-137
<PAGE> 698
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $9,640 and $103,837,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which a Fund compensates AIM Distributors for the
purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes,interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $19,806,884 and $43,210,209, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
FS-138
<PAGE> 699
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 9,222,918 $143,043,076 9,536,130 $163,326,296
Shares issued in connection with reinvestment of
distributions................................................ -- -- 1,372,411 19,227,529
----------- ------------ ----------- ------------
9,222,918 143,043,076 10,908,541 182,553,825
Shares repurchased............................................. (10,488,575) (163,123,097) (11,147,719) (193,303,890)
----------- ------------ ----------- ------------
Net decrease................................................... (1,265,657) $(20,080,021) (239,178) $(10,750,065)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
CLASS B
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,281,310 $ 33,570,859 1,034,341 $ 17,020,574
Shares issued in connection with reinvestment of
distributions................................................ -- -- 688,809 9,238,884
----------- ------------ ----------- ------------
2,281,310 33,570,859 1,723,150 26,259,458
Shares repurchased............................................. (2,819,573) (41,571,005) (1,675,941) (28,047,548)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (538,263) $ (8,000,146) 47,209 $ (1,788,090)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 1,898,297 $ 29,616,467 1,924,783 $ 34,438,694
Shares issued in connection with reinvestment of
distributions................................................ -- -- 25,931 366,391
----------- ------------ ----------- ------------
1,898,297 29,616,467 1,950,714 34,805,085
Shares repurchased............................................. (2,008,114) (31,527,793) (1,914,043) (34,788,806)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (109,817) $ (1,911,326) 36,671 $ 16,279
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5 EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $2,929 under these arrangements.
FS-139
<PAGE> 700
GT GLOBAL WORLDWIDE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Worldwide Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the 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, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimated
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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Worldwide Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-140
<PAGE> 701
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.9%)
Student Loan Marketing Association ........................ US 31,800 $ 4,424,175 2.9
OTHER FINANCIAL
Citicorp .................................................. US 31,600 3,995,420 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 70,500 3,798,187 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 33,500 3,668,250 2.4
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 104,000 2,563,593 1.7
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,365,435 1.6
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,312,203 1.5
BANKS-REGIONAL
Nordbanken Holding AB-/- .................................. SWDN 398,006 2,251,426 1.5
OTHER FINANCIAL
Schroders PLC ............................................. UK 70,000 2,198,851 1.5
BANKS-MONEY CENTER
ING Groep N.V. ............................................ NETH 47,300 1,992,610 1.3
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 84,560 1,922,932 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ........................ IND 103,400 1,848,275 1.2
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,796,273 1.2
BANKS-REGIONAL
Old Mutual South Africa Trust PLC ......................... UK 971,000 1,550,571 1.0
REAL ESTATE INVESTMENT TRUST
Nichiei Co., Ltd. ......................................... JPN 10,400 1,107,739 0.7
OTHER FINANCIAL
Union Bank of Switzerland - Bearer ........................ SWTZ 588 850,237 0.6
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 844,444 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/}{=} ..................................... THAI 249,000 458,160 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 62,644 330,775 0.2
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 12,644 226,512 0.2
BANKS-SUPER REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 23,000 160,383 0.1
INVESTMENT MANAGEMENT
Bank Inicjatyw Gospodarczych BIG S.A. - GDR{\/} ........... POL 3,066 46,757 --
BANKS-REGIONAL
------------
40,713,208
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-141
<PAGE> 702
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (23.2%)
Federated Department Stores, Inc.-/- ...................... US 82,200 $ 3,539,738 2.3
RETAILERS-APPAREL
Service Corporation International ......................... US 86,400 3,191,400 2.1
CONSUMER SERVICES
CVS Corp. ................................................. US 45,100 2,889,219 1.9
RETAILERS-OTHER
EMI Group PLC ............................................. UK 333,000 2,777,734 1.8
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 813,000 2,717,239 1.8
RETAILERS-OTHER
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,635,000 1.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 158,000 2,354,433 1.6
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 308,900 1,977,100 1.3
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 179,000 1,954,598 1.3
BROADCASTING & PUBLISHING
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 16,300 1,897,931 1.3
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 70,359 1,836,026 1.2
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 16,716 1,781,526 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 15,100 1,616,328 1.1
TELEPHONE NETWORKS
Portugal Telecom S.A. - Registered ........................ PORT 33,450 1,552,516 1.0
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 150,000 968,966 0.6
RETAILERS-FOOD
Vodafone Group PLC ........................................ UK 113,586 818,789 0.5
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 333,100 703,136 0.5
TELEPHONE NETWORKS
------------
35,211,679
------------
Health Care (10.3%)
Bristol Myers Squibb Co. .................................. US 37,300 3,529,513 2.3
PHARMACEUTICALS
Warner-Lambert Co. ........................................ US 23,800 2,951,200 1.9
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 239 2,373,473 1.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 55,400 2,057,714 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 15,800 1,815,025 1.2
PHARMACEUTICALS
Schering AG ............................................... GER 16,580 1,599,461 1.1
PHARMACEUTICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-142
<PAGE> 703
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Takeda Chemical Industries ................................ JPN 40,000 $ 1,140,230 0.8
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,091 1,478 --
PHARMACEUTICALS
------------
15,468,094
------------
Materials/Basic Industry (8.3%)
Monsanto Co. .............................................. US 67,900 2,851,800 1.9
CHEMICALS
Hercules, Inc. ............................................ US 54,000 2,703,375 1.8
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 35,300 2,292,294 1.5
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 11,290 1,947,013 1.3
CHEMICALS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 285,600 1,398,265 0.9
PAPER/PACKAGING
CRH PLC ................................................... UK 114,500 1,325,493 0.9
BUILDING MATERIALS & COMPONENTS
------------
12,518,240
------------
Energy (6.1%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 138,200 3,299,525 2.2
GAS PRODUCTION & DISTRIBUTION
Petroleum Geo-Services ASA-/- ............................. NOR 31,920 2,010,692 1.3
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,914,614 1.3
OIL
Total S.A. "B" ............................................ FR 17,380 1,891,485 1.3
OIL
------------
9,116,316
------------
Technology (5.2%)
Compaq Computer Corp.-/- .................................. US 60,000 3,386,250 2.2
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 44,500 3,126,125 2.1
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 31,144 1,401,480 0.9
SEMICONDUCTORS
------------
7,913,855
------------
Capital Goods (4.0%)
Textron, Inc. ............................................. US 43,800 2,737,500 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 15,440 1,962,549 1.3
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 60,000 1,397,701 0.9
OFFICE EQUIPMENT
------------
6,097,750
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-143
<PAGE> 704
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.5%)
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 $ 2,189,068 1.4
AUTO PARTS
Ford Motor Co. ............................................ US 36,200 1,762,488 1.2
AUTOMOBILES
Bridgestone Corp. ......................................... JPN 65,000 1,409,579 0.9
AUTO PARTS
------------
5,361,135
------------
Consumer Non-Durables (3.4%)
RJR Nabisco Holdings Corp. ................................ US 73,300 2,748,750 1.8
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,383,142 0.9
BEVERAGES - ALCOHOLIC
Amway Japan Ltd. .......................................... JPN 55,400 1,061,303 0.7
HOUSEHOLD PRODUCTS
------------
5,193,195
------------
Multi-Industry/Miscellaneous (1.2%)
Shanghai Industrial Holdings Ltd. ......................... HK 490,000 1,821,256 1.2
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $124,048,794) ................ 139,414,728 92.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $11,755,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $11,766,026,
including accrued interest). (cost $11,535,000) .......... 11,535,000 7.6
------------ -----
TOTAL INVESTMENTS (cost $135,583,794) * .................... 150,949,728 99.7
Other Assets and Liabilities ................................ 457,079 0.3
------------ -----
NET ASSETS .................................................. $151,406,807 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $136,039,555 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 21,802,933
Unrealized depreciation: (6,892,760)
-------------
Net unrealized appreciation: $ 14,910,173
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-144
<PAGE> 705
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.2 5.2
Brazil (BRZL/BRL) .................... 3.5 3.5
Czech Republic (CZCH/CSK) ............ 1.1 1.1
France (FR/FRF) ...................... 2.6 2.6
Germany (GER/DEM) .................... 1.1 1.1
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 1.2 1.2
India (IND/INR) ...................... 1.2 1.2
Italy (ITLY/ITL) ..................... 1.3 1.3
Japan (JPN/JPY) ...................... 5.6 5.6
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 0.9 0.9
Netherlands (NETH/NLG) ............... 3.8 3.8
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 2.2 2.2
Singapore (SING/SGD) ................. 0.6 0.6
Sweden (SWDN/SEK) .................... 2.8 2.8
Switzerland (SWTZ/CHF) ............... 2.2 2.2
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 15.8 15.8
United States (US/USD) ............... 34.6 7.9 42.5
------ ----- -----
Total ............................... 92.1 7.9 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $151,406,807.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 613,677 1.76130 2/27/98 $ (10,861)
---------- -------------
Total Contracts to Buy (Payable amount
$624,538)............................ 613,677 (10,861)
---------- -------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.41%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,476,511 0.61245 1/20/98 $ (6,991)
British Pounds.......................... 1,476,511 0.60002 1/20/98 23,429
Deutsche Marks.......................... 1,729,455 1.73540 2/27/98 56,876
French Francs........................... 2,830,938 5.72800 2/6/98 136,939
Japanese Yen............................ 2,310,962 118.82300 2/4/98 213,801
Japanese Yen............................ 4,318,711 122.20000 2/12/98 263,940
Swiss Francs............................ 1,174,569 1.42180 3/19/98 21,099
---------- -------------
Total Contracts to Sell (Receivable
amount $16,026,750).................. 15,317,657 709,093
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.12%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 698,232
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-145
<PAGE> 706
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,583,794) (Note 1).......................... $150,949,728
U.S. currency.................................................................. $ 48
Foreign currencies (cost $1,578,009)........................................... 1,536,226 1,536,274
---------
Receivable for Fund shares sold........................................................... 1,036,495
Receivable for open forward foreign currency contracts, net (Note 1)...................... 698,232
Dividends and dividend withholding tax reclaims receivable................................ 221,497
Receivable for securities sold............................................................ 194,078
Interest receivable....................................................................... 1,858
Miscellaneous receivable.................................................................. 646
-----------
Total assets............................................................................ 154,638,808
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,788,587
Payable for investment management and administration fees (Note 2)........................ 121,861
Payable for printing and postage expenses................................................. 96,022
Payable for transfer agent fees (Note 2).................................................. 89,810
Payable for service and distribution expenses (Note 2).................................... 67,726
Payable for professional fees............................................................. 37,204
Payable for custodian fees................................................................ 12,019
Payable for Trustees' fees and expenses (Note 2).......................................... 6,727
Payable for registration and filing fees.................................................. 5,626
Payable for fund accounting fees (Note 2)................................................. 1,924
Other accrued expenses.................................................................... 4,495
-----------
Total liabilities....................................................................... 3,232,001
-----------
Net assets.................................................................................. $151,406,807
-----------
-----------
Class A:
Net asset value and redemption price per share ($103,769,443 DIVIDED BY 7,275,753 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($45,009,871 DIVIDED BY 3,300,587 shares
outstanding)............................................................................... $ 13.64
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,627,493
DIVIDED BY 182,671 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $133,904,092
Undistributed net investment income....................................................... 95,296
Accumulated net realized gain on investments and foreign currency transactions............ 1,383,082
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 658,403
Net unrealized appreciation of investments................................................ 15,365,934
-----------
Total -- representing net assets applicable to capital shares outstanding................... $151,406,807
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-146
<PAGE> 707
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $275,397).............................. $ 2,764,013
Interest income........................................................................... 645,128
-----------
Total investment income................................................................. 3,409,141
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 1,619,691
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 400,318
Class B.................................................................... 496,417 896,735
-----------
Transfer agent fees (Note 2).............................................................. 455,298
Custodian fees............................................................................ 111,017
Printing and postage expenses (Note 2).................................................... 63,005
Registration and filing fees.............................................................. 53,920
Audit fees................................................................................ 47,254
Fund accounting fees...................................................................... 41,680
Legal fees................................................................................ 29,476
Trustees' fees and expenses (Note 2)...................................................... 13,218
Other expenses (Note 1)................................................................... 12,217
-----------
Total expenses before reductions........................................................ 3,343,511
-----------
Expense reductions (Notes 1 & 5)...................................................... (146,965)
-----------
Total net expenses...................................................................... 3,196,546
-----------
Net investment income....................................................................... 212,595
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 25,979,995
Net realized gain on foreign currency transactions........................... 2,164,063
-----------
Net realized gain during the year....................................................... 28,144,058
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 162,616
Net change in unrealized appreciation of investments......................... (11,824,112)
-----------
Net unrealized depreciation during the year............................................. (11,661,496)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 16,482,562
-----------
Net increase in net assets resulting from operations........................................ $16,695,157
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-147
<PAGE> 708
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 212,595 $ (81,643)
Net realized gain on investments and foreign currency transactions....... 28,144,058 21,499,978
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 162,616 111,081
Net change in unrealized appreciation (depreciation) of investments...... (11,824,112) (1,481,639)
------------- -------------
Net increase in net assets resulting from operations................... 16,695,157 20,047,777
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (109,138) --
From net realized gain on investments.................................... (22,666,381) (13,087,564)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (10,444,406) (5,727,628)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (8,161) --
From net realized gain on investments.................................... (358,231) (175,598)
------------- -------------
Total distributions.................................................... (33,586,317) (18,990,790)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 243,618,368 290,210,249
Decrease from capital shares repurchased................................. (256,140,244) (314,217,462)
------------- -------------
Net decrease from capital share transactions........................... (12,521,876) (24,007,213)
------------- -------------
Total decrease in net assets............................................... (29,413,036) (22,950,226)
Net assets:
Beginning of year........................................................ 180,819,843 203,770,069
------------- -------------
End of year *............................................................ $151,406,807 $180,819,843
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ 95,296 $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-148
<PAGE> 709
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.55 1.79 1.74 (1.16) 3.92
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.60 1.82 1.74 (1.16) 3.96
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.02) -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Total distributions................. (4.05) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-149
<PAGE> 710
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.49 1.75 1.73 (1.16) 2.72
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.44 1.66 1.61 (1.27) 2.68
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Total distributions................. (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-150
<PAGE> 711
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------
JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO
---------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.81 $ 16.86 $ 15.26
------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.57 1.79 2.02
------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.69 1.88 2.05
------------- ------------- -------------
Distributions to shareholders:
From net investment income............ (0.09) -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45)
------------- ------------- -------------
Total distributions................. (4.12) (1.93) (0.45)
------------- ------------- -------------
Net asset value, end of period.......... $ 14.38 $ 16.81 $ 16.86
------------- ------------- -------------
------------- ------------- -------------
Total investment return (c)............. 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.58% 0.41% 0.23%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-151
<PAGE> 712
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Worldwide Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
FS-152
<PAGE> 713
GT GLOBAL WORLDWIDE GROWTH FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a counter
party is unable to meet the terms of a contract or if the value of the currency
changes unfavorably. The Fund may enter into Forward Contracts in connection
with planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$12,659,388 were on loan to brokers. The loans were secured by cash collateral
of $13,106,152, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $137,889 which were used to reduce
the Fund's custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
FS-153
<PAGE> 714
GT GLOBAL WORLDWIDE GROWTH FUND
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with the BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,000,000 with a weighted average interest rate of 6.44%. Interest expense
for the year ended December 31, 1997 was $1,431, included in "Other Expenses" on
the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $8,456
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $3,645 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $272,024. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
FS-154
<PAGE> 715
GT GLOBAL WORLDWIDE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's Expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B, and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $138,743,808 and $176,373,627, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 9,536,130 $163,326,296 14,357,786 $250,471,583
Shares issued in connection with reinvestment of distributions... 1,372,411 19,227,529 670,053 11,082,654
---------- ------------ ---------- ------------
10,908,541 182,553,825 15,027,839 261,554,237
Shares repurchased............................................... (11,147,719) (193,303,890) (16,192,391) (283,412,820)
---------- ------------ ---------- ------------
Net decrease..................................................... (239,178) $(10,750,065) (1,164,552) $(21,858,583)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,034,341 $ 17,020,574 854,412 $ 14,531,361
Shares issued in connection with reinvestment of distributions... 688,809 9,238,884 308,538 4,961,416
---------- ------------ ---------- ------------
1,723,150 26,259,458 1,162,950 19,492,777
Shares repurchased............................................... (1,675,941) (28,047,548) (1,309,880) (22,330,821)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... 47,209 $ (1,788,090) (146,930) $ (2,838,044)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,924,783 $ 34,438,694 521,049 $ 8,987,637
Shares issued in connection with reinvestment of distributions... 25,931 366,391 10,546 175,598
---------- ------------ ---------- ------------
1,950,714 34,805,085 531,595 9,163,235
Shares repurchased............................................... (1,914,043) (34,788,806) (485,979) (8,473,821)
---------- ------------ ---------- ------------
Net increase..................................................... 36,671 $ 16,279 45,616 $ 689,414
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
FS-155
<PAGE> 716
GT GLOBAL WORLDWIDE GROWTH FUND
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $9,076 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2723 per share (representing an approximate total of
$2,266,869). The total amount of taxes paid by the Fund to such countries was
approximately $.0331 per share (representing an approximate total of $275,397).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,856,473 as a capital gain dividend for the fiscal year ended December 31,
1997.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 5.14%
of ordinary income dividends paid (including short-term capital gain
distributions, if any) by the Fund as income qualifying for the dividends
received deduction for corporations for the fiscal year ended December 31, 1997.
FS-156
<PAGE> 717
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (39.7%)
Insight Enterprises, Inc.-/- ............................... US 19,800 $ 792,000 2.2
RETAILERS-OTHER
DM Management Co.-/- ....................................... US 20,500 735,437 2.1
RETAILERS-APPAREL
Service Experts, Inc.-/- ................................... US 20,100 693,450 2.0
CONSUMER SERVICES
Lason Holdings, Inc.-/- .................................... US 12,500 681,250 1.9
CONSUMER SERVICES
Iron Mountain, Inc.-/- ..................................... US 14,700 657,825 1.9
BUSINESS & PUBLIC SERVICES
American Disposal Services, Inc.-/- ........................ US 14,000 656,250 1.9
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- .................................. US 18,900 588,263 1.7
CONSUMER SERVICES
Personnel Group of America, Inc.-/- ........................ US 27,300 546,000 1.5
BUSINESS & PUBLIC SERVICES
Eastern Environmental Services, Inc.-/- .................... US 15,400 523,600 1.5
CONSUMER SERVICES
Central Parking Corp. ...................................... US 10,400 473,200 1.3
CONSUMER SERVICES
Comfort Systems USA, Inc.-/- ............................... US 20,200 472,175 1.3
BUSINESS & PUBLIC SERVICES
99 Cents Only Stores-/- .................................... US 11,100 460,650 1.3
RETAILERS-OTHER
ITT Educational Services, Inc.-/- .......................... US 12,400 399,900 1.1
CONSUMER SERVICES
United Rentals, Inc.-/- .................................... US 9,300 390,600 1.1
BUSINESS & PUBLIC SERVICES
Hagler Bailly, Inc.-/- ..................................... US 14,900 385,538 1.1
BUSINESS & PUBLIC SERVICES
Expeditors International of Washington, Inc. ............... US 8,400 369,600 1.0
TRANSPORTATION - SHIPPING
Superior Services, Inc.-/- ................................. US 12,100 363,756 1.0
CONSUMER SERVICES
Cornell Corrections, Inc.-/- ............................... US 16,300 342,300 1.0
BUSINESS & PUBLIC SERVICES
Fairfield Communities, Inc.-/- ............................. US 17,800 341,537 1.0
LEISURE & TOURISM
ResortQuest International, Inc.-/- ......................... US 20,400 332,775 0.9
LEISURE & TOURISM
United Road Services, Inc.-/- .............................. US 15,800 302,175 0.9
CONSUMER SERVICES
Execustay Corp.-/- ......................................... US 21,900 257,325 0.7
LEISURE & TOURISM
Championship Auto Racing Teams, Inc.-/- .................... US 13,900 253,675 0.7
LEISURE & TOURISM
Cox Radio, Inc.-/- ......................................... US 5,700 246,525 0.7
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-157
<PAGE> 718
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Duane Reade, Inc.-/- ....................................... US 8,100 $ 243,000 0.7
RETAILERS-OTHER
Lamar Advertising Co.-/- ................................... US 6,500 233,188 0.7
BROADCASTING & PUBLISHING
Ambassadors International, Inc.-/- ......................... US 7,300 221,281 0.6
LEISURE & TOURISM
CompX International, Inc.-/- ............................... US 10,200 220,575 0.6
BUSINESS & PUBLIC SERVICES
Industrial Distribution Group, Inc.-/- ..................... US 13,200 204,600 0.6
WHOLESALE & INTERNATIONAL TRADE
e.spire Communications, Inc.-/- ............................ US 8,700 196,294 0.6
TELEPHONE NETWORKS
CORT Business Services Corp.-/- ............................ US 5,900 185,850 0.5
BUSINESS & PUBLIC SERVICES
Vistana, Inc.-/- ........................................... US 9,500 174,563 0.5
LEISURE & TOURISM
Jevic Transportation, Inc.-/- .............................. US 15,200 172,900 0.5
TRANSPORTATION - SHIPPING
Metzler Group, Inc.-/- ..................................... US 4,500 164,813 0.5
BUSINESS & PUBLIC SERVICES
Restoration Hardware, Inc.-/- .............................. US 6,100 153,263 0.4
RETAILERS-OTHER
Blue Rhino Corp.-/- ........................................ US 8,200 143,500 0.4
RETAILERS-OTHER
Sunglass Hut International, Inc.-/- ........................ US 12,700 140,494 0.4
RETAILERS-APPAREL
Cavanaughs Hospitality Corp.-/- ............................ US 9,700 126,706 0.4
LEISURE & TOURISM
Waste Connections, Inc.-/- ................................. US 6,200 123,225 0.3
CONSUMER SERVICES
ACSYS, Inc.-/- ............................................. US 6,400 88,000 0.2
BUSINESS & PUBLIC SERVICES
-----------
14,058,058
-----------
Technology (16.6%)
Software AG Systems, Inc.-/- ............................... US 21,200 620,100 1.8
SOFTWARE
Metro Information Services, Inc.-/- ........................ US 12,400 485,150 1.4
COMPUTERS & PERIPHERALS
Atlantic Data Services, Inc.-/- ............................ US 24,000 460,500 1.3
COMPUTERS & PERIPHERALS
Computer Management Sciences, Inc.-/- ...................... US 16,200 384,750 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. ..................................... US 13,900 363,138 1.0
INSTRUMENTATION & TEST
Data Processing Resources Corp.-/- ......................... US 11,000 341,687 1.0
COMPUTERS & PERIPHERALS
AnswerThink Consulting Group, Inc.-/- ...................... US 15,800 339,700 1.0
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-158
<PAGE> 719
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Platinum Technology, Inc.-/- ............................... US 9,800 $ 279,913 0.8
SOFTWARE
MAPICS, Inc.-/- ............................................ US 13,300 261,844 0.7
SOFTWARE
Platinum Software Corp.-/- ................................. US 10,100 246,188 0.7
SOFTWARE
Excel Switching Corp.-/- ................................... US 9,400 233,825 0.7
TELECOM TECHNOLOGY
Cotelligent Group, Inc.-/- ................................. US 9,700 226,737 0.6
COMPUTERS & PERIPHERALS
Concord Communications, Inc.-/- ............................ US 8,200 209,612 0.6
SOFTWARE
Analysts International Corp. ............................... US 6,850 194,369 0.6
COMPUTERS & PERIPHERALS
SPR, Inc.-/- ............................................... US 6,000 186,750 0.5
COMPUTERS & PERIPHERALS
Fundtech Ltd.-/- {\/} ...................................... ISRL 8,525 160,909 0.5
SOFTWARE
JDA Software Group, Inc.-/- ................................ US 3,300 144,375 0.4
SOFTWARE
Documentum, Inc.-/- ........................................ US 2,900 139,200 0.4
SOFTWARE
BrightStar Information Technology Group, Inc.-/- ........... US 9,500 131,812 0.4
COMPUTERS & PERIPHERALS
Aspen Technology, Inc.-/- .................................. US 2,300 116,150 0.3
SOFTWARE
Pericom Semiconductor Corp.-/- ............................. US 15,400 105,875 0.3
SEMICONDUCTORS
Amkor Technology, Inc.-/- .................................. US 10,800 100,912 0.3
SEMICONDUCTORS
Walker Interactive Systems, Inc.-/- ........................ US 3,700 54,575 0.2
SOFTWARE
-----------
5,788,071
-----------
Health Care (15.7%)
ESC Medical Systems Ltd.-/- {\/} ........................... ISRL 15,000 506,250 1.4
MEDICAL TECHNOLOGY & SUPPLIES
ADAC Laboratories-/- ....................................... US 19,200 432,000 1.2
HEALTH CARE SERVICES
SEQUUS Pharmaceuticals, Inc.-/- ............................ US 36,300 412,913 1.2
PHARMACEUTICALS
PhyCor, Inc.-/- ............................................ US 24,800 410,750 1.2
HEALTH CARE SERVICES
Vertex Pharmaceuticals, Inc.-/- ............................ US 16,300 366,750 1.0
PHARMACEUTICALS
AmeriPath, Inc.-/- ......................................... US 30,900 365,006 1.0
HEALTH CARE SERVICES
Assisted Living Concepts, Inc.-/- .......................... US 19,600 338,100 1.0
HEALTH CARE SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-159
<PAGE> 720
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
CryoLife, Inc.-/- .......................................... US 21,400 $ 337,050 1.0
BIOTECHNOLOGY
Gilead Sciences, Inc.-/- ................................... US 10,200 327,037 0.9
BIOTECHNOLOGY
AXYS Pharmaceuticals, Inc.-/- .............................. US 44,100 314,212 0.9
PHARMACEUTICALS
Scios, Inc.-/- ............................................. US 35,200 312,400 0.9
HEALTH CARE SERVICES
COR Therapeutics, Inc.-/- .................................. US 22,500 312,188 0.9
BIOTECHNOLOGY
Total Renal Care Holdings, Inc.-/- ......................... US 8,300 286,350 0.8
HEALTH CARE SERVICES
American Dental Partners, Inc.-/- .......................... US 16,800 235,200 0.7
HEALTH CARE SERVICES
Barr Laboratories, Inc.-/- ................................. US 5,900 234,525 0.7
PHARMACEUTICALS
Symphonix Devices, Inc.-/- ................................. US 15,200 174,800 0.5
HEALTH CARE SERVICES
Physician Reliance Network, Inc.-/- ........................ US 6,200 70,913 0.2
MEDICAL TECHNOLOGY & SUPPLIES
Depotech Corp.-/- .......................................... US 42,200 65,937 0.2
PHARMACEUTICALS
-----------
5,502,381
-----------
Finance (7.4%)
Metris Cos., Inc.-/- ....................................... US 6,700 427,125 1.2
CONSUMER FINANCE
Affiliated Managers Group, Inc.-/- ......................... US 10,600 393,525 1.1
INVESTMENT MANAGEMENT
Reinsurance Group of America, Inc. Non-voting-/- ........... US 7,300 374,581 1.1
INSURANCE-LIFE
LaSalle Partners, Inc.-/- .................................. US 7,300 324,850 0.9
REAL ESTATE
Correctional Properties Trust-/- ........................... US 15,800 319,950 0.9
REAL ESTATE INVESTMENT TRUST
Annuity and Life Re (Holdings) Ltd.-/- ..................... US 11,000 243,375 0.7
INSURANCE-LIFE
Stirling Cooke Brown Holdings Ltd. ......................... US 8,000 225,000 0.6
INSURANCE - PROPERTY-CASUALTY
AmeriCredit Corp.-/- ....................................... US 5,200 185,575 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. ........................... US 6,600 150,975 0.4
CONSUMER FINANCE
-----------
2,644,956
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-160
<PAGE> 721
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (5.5%)
Newfield Exploration Co.-/- ................................ US 29,600 $ 736,300 2.1
OIL
Petsec Energy Ltd. - ADR-/- {\/} ........................... AUSL 14,600 236,337 0.7
OIL
Cross Timbers Oil Co. ...................................... US 10,800 205,875 0.6
OIL
Dril-Quip, Inc.-/- ......................................... US 7,800 204,750 0.6
ENERGY EQUIPMENT & SERVICES
Mallon Resources Corp.-/- .................................. US 16,800 201,600 0.6
OIL
Varco International, Inc.-/- ............................... US 9,600 190,200 0.5
ENERGY EQUIPMENT & SERVICES
Hanover Compressor Co.-/- .................................. US 5,000 135,313 0.4
ENERGY EQUIPMENT & SERVICES
-----------
1,910,375
-----------
Materials/Basic Industry (4.9%)
OM Group, Inc. ............................................. US 12,600 519,750 1.5
METALS - NON-FERROUS
Hawk Corp. "A"-/- .......................................... US 21,100 371,888 1.1
METALS - NON-FERROUS
Gibraltar Steel Corp.-/- ................................... US 16,100 330,050 0.9
METALS - STEEL
Cambrex Corp. .............................................. US 10,400 273,000 0.8
CHEMICALS
CombiChem, Inc.-/- ......................................... US 33,000 228,937 0.6
CHEMICALS
-----------
1,723,625
-----------
Capital Goods (4.8%)
General Cable Corp. ........................................ US 28,700 828,712 2.4
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................. US 14,800 436,600 1.2
OFFICE EQUIPMENT
LMI Aerospace, Inc.-/- ..................................... US 14,500 150,438 0.4
AEROSPACE/DEFENSE
Gradall Industries, Inc.-/- ................................ US 10,200 149,175 0.4
MACHINERY & ENGINEERING
Global Industries Ltd.-/- .................................. US 8,100 136,687 0.4
CONSTRUCTION
-----------
1,701,612
-----------
Consumer Durables (1.4%)
Tower Automotive, Inc.-/- .................................. US 7,800 334,425 0.9
AUTO PARTS
U.S. Home Corp.-/- ......................................... US 4,100 169,125 0.5
HOUSING
-----------
503,550
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-161
<PAGE> 722
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (0.7%)
Mail-Well, Inc.-/- ......................................... US 11,600 $ 251,575 0.7
OTHER CONSUMER GOODS
Racing Champions Corp.-/- .................................. US 700 8,181 --
TOYS
-----------
259,756
----------- -----
TOTAL EQUITY INVESTMENTS (cost $31,159,540) .................. 34,092,384 96.7
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co., due
July 1, 1998, for an effective yield of 5.70%,
collateralized by $2,560,000 U.S. Treasury Bills, 5.875%
due 1/31/99 (market value of collateral is $2,627,200,
including accrued interest). (cost $2,573,000) ........... 2,573,000 7.3
----------- -----
TOTAL INVESTMENTS (cost $33,732,540) * ...................... 36,665,384 104.0
Other Assets and Liabilities ................................. (1,410,524) (4.0)
----------- -----
NET ASSETS ................................................... $35,254,860 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $33,817,496 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,542,875
Unrealized depreciation: (1,694,987)
-------------
Net unrealized appreciation: $ 2,847,888
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-162
<PAGE> 723
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (49.2%)
Outdoor Systems, Inc.-/- .................................. US 1,203,780 $ 33,705,837 7.0
BUSINESS & PUBLIC SERVICES
Clear Channel Communications, Inc.-/- ..................... US 268,443 29,293,842 6.1
BROADCASTING & PUBLISHING
Snyder Communications, Inc.-/- ............................ US 614,600 27,042,400 5.6
BUSINESS & PUBLIC SERVICES
Hilton Hotels Corp. ....................................... US 709,800 20,229,300 4.2
LEISURE & TOURISM
Chancellor Media Corp.-/- ................................. US 340,500 16,907,953 3.5
BROADCASTING & PUBLISHING
Premier Parks, Inc.-/- .................................... US 221,800 14,777,425 3.1
LEISURE & TOURISM
ServiceMaster Co. ......................................... US 320,200 12,187,613 2.5
CONSUMER SERVICES
Cablevision Systems Corp. "A"-/- .......................... US 125,000 10,437,500 2.2
CABLE TELEVISION
Keane, Inc.-/- ............................................ US 182,100 10,197,600 2.1
BUSINESS & PUBLIC SERVICES
Central Parking Corp. ..................................... US 221,800 10,091,900 2.1
CONSUMER SERVICES
Young & Rubicam, Inc.-/- .................................. US 308,200 9,862,400 2.0
BUSINESS & PUBLIC SERVICES
Cambridge Technology Partners, Inc.-/- .................... US 164,500 8,985,813 1.9
BUSINESS & PUBLIC SERVICES
Univision Communications, Inc.-/- ......................... US 239,600 8,925,100 1.9
BROADCASTING & PUBLISHING
Lamar Advertising Co.-/- .................................. US 217,100 7,788,463 1.6
BUSINESS & PUBLIC SERVICES
Personnel Group of America, Inc.-/- ....................... US 366,700 7,334,000 1.5
BUSINESS & PUBLIC SERVICES
Jacor Communications, Inc.-/- ............................. US 96,300 5,681,700 1.2
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 86,400 3,515,400 0.7
BUSINESS & PUBLIC SERVICES
------------
236,964,246
------------
Technology (14.6%)
Sterling Commerce, Inc.-/- ................................ US 327,700 15,893,450 3.3
SOFTWARE
Software AG Systems, Inc.-/- .............................. US 400,000 11,700,000 2.4
SOFTWARE
Aspen Technology, Inc.-/- ................................. US 190,500 9,620,250 2.0
SOFTWARE
Platinum Technology, Inc.-/- .............................. US 314,000 8,968,625 1.9
SOFTWARE
SunGard Data Systems, Inc.-/- ............................. US 229,000 8,787,875 1.8
SOFTWARE
Peoplesoft, Inc.-/- ....................................... US 177,500 8,342,500 1.7
SOFTWARE
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-163
<PAGE> 724
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Ciena Corp.-/- ............................................ US 104,000 $ 7,241,000 1.5
TELECOM TECHNOLOGY
------------
70,553,700
------------
Finance (13.0%)
Golden State Bancorp, Inc.-/- ............................. US 381,300 11,343,675 2.4
SAVINGS & LOANS
C.I.T. Group, Inc. "A"-/- ................................. US 266,800 10,005,000 2.1
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 9,376,406 1.9
INSURANCE - PROPERTY-CASUALTY
GreenPoint Financial Corp. ................................ US 249,200 9,376,150 1.9
SAVINGS & LOANS
Capital One Financial Corp. ............................... US 68,200 8,469,588 1.8
CONSUMER FINANCE
Ace Ltd. .................................................. US 183,100 7,140,900 1.5
INSURANCE - PROPERTY-CASUALTY
Heller Financial, Inc.-/- ................................. US 226,600 6,798,000 1.4
OTHER FINANCIAL
------------
62,509,719
------------
Health Care (8.0%)
Forest Laboratories, Inc. "A"-/- .......................... US 268,000 9,581,000 2.0
PHARMACEUTICALS
Wellpoint Health Networks-/- .............................. US 118,000 8,732,000 1.8
HEALTH CARE SERVICES
ALZA Corp.-/- ............................................. US 176,300 7,624,975 1.6
PHARMACEUTICALS
HBO & Co. ................................................. US 206,200 7,268,550 1.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 68,100 5,533,125 1.1
HEALTH CARE SERVICES
------------
38,739,650
------------
Consumer Non-Durables (6.7%)
U.S. Foodservice-/- ....................................... US 553,400 19,403,588 4.0
FOOD
Suiza Foods Corp.-/- ...................................... US 170,500 10,176,719 2.1
FOOD
International Home Foods, Inc.-/- ......................... US 135,400 3,080,350 0.6
FOOD
------------
32,660,657
------------
Materials/Basic Industry (5.4%)
International Specialty Products, Inc.-/- ................. US 668,200 12,445,225 2.6
CHEMICALS
Millenium Chemicals, Inc. ................................. US 215,600 7,303,450 1.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-164
<PAGE> 725
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Crompton & Knowles Corp. .................................. US 250,700 $ 6,314,506 1.3
CHEMICALS
------------
26,063,181
------------
Energy (3.1%)
J. Ray McDermott S.A.-/- .................................. US 239,900 9,955,850 2.1
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 75,300 5,059,219 1.0
ENERGY SOURCES
------------
15,015,069
------------
Capital Goods (2.5%)
U.S. Filter Corp.-/- ...................................... US 422,250 11,849,391 2.5
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $397,646,938) ................ 494,355,613 102.5
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Golden State Bancorp. Litigation Warrants-/- (cost
$2,296,744) .............................................. US 381,300 2,025,656 0.4
SAVINGS & LOANS
------------ -----
TOTAL INVESTMENTS (cost $399,943,682) * .................... 496,381,269 102.9
Other Assets and Liabilities ................................ (14,212,467) (2.9)
------------ -----
NET ASSETS .................................................. $482,168,802 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
* For Federal income tax purposes, cost is $401,270,613 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 99,557,388
Unrealized depreciation: (4,446,732)
-------------
Net unrealized appreciation: $ 95,110,656
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-165
<PAGE> 726
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (33.1%)
Exel Ltd. ................................................. US 10,900 $ 848,156 2.9
INSURANCE - PROPERTY-CASUALTY
Chase Manhattan Corp. ..................................... US 10,150 766,325 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 12,150 736,594 2.5
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 7,875 721,055 2.4
INSURANCE - MULTI-LINE
Fleet Financial Group, Inc. ............................... US 8,600 718,100 2.4
BANKS-SUPER REGIONAL
SLM Holding Corp. ......................................... US 14,612 715,988 2.4
OTHER FINANCIAL
First Chicago NBD Corp. ................................... US 8,000 709,000 2.4
BANKS-REGIONAL
Mellon Bank Corp. ......................................... US 9,700 675,363 2.3
BANKS-REGIONAL
Household International, Inc. ............................. US 13,500 671,625 2.3
CONSUMER FINANCE
BankAmerica Corp. ......................................... US 7,550 652,603 2.2
BANKS-MONEY CENTER
GreenPoint Financial Corp. ................................ US 16,000 602,000 2.0
SAVINGS & LOANS
NationsBank Corp. ......................................... US 7,700 589,050 2.0
BANKS-REGIONAL
Starwood Hotels & Resorts ................................. US 8,583 414,666 1.4
REAL ESTATE INVESTMENT TRUST
Citicorp .................................................. US 2,400 358,200 1.2
BANKS-MONEY CENTER
Crescent Real Estate Equities Co. ......................... US 10,000 336,250 1.1
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 9,025 283,159 1.0
REAL ESTATE INVESTMENT TRUST
------------
9,798,134
------------
Energy (17.1%)
Texas Utilities Co. ....................................... US 17,900 745,088 2.5
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................... US 9,200 704,950 2.4
OIL
Unocal Corp. .............................................. US 19,300 689,975 2.3
OIL
Atlantic Richfield Co. (ARCO) ............................. US 8,100 632,813 2.1
OIL
Anadarko Petroleum Corp. .................................. US 9,200 618,125 2.1
ENERGY SOURCES
McDermott International, Inc. ............................. US 16,600 571,663 1.9
ENERGY EQUIPMENT & SERVICES
Pinnacle West Capital Corp. ............................... US 9,625 433,125 1.5
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-166
<PAGE> 727
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Carolina Power & Light Co. ................................ US 9,000 $ 390,375 1.3
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 7,825 295,883 1.0
ELECTRICAL & GAS UTILITIES
------------
5,081,997
------------
Services (12.9%)
Bell Atlantic Corp. ....................................... US 18,400 839,500 2.8
TELEPHONE - REGIONAL/LOCAL
Comcast Corp. 'A' ......................................... US 17,500 710,391 2.4
CABLE TELEVISION
Time Warner, Inc. ......................................... US 8,000 683,500 2.3
BROADCASTING & PUBLISHING
Federated Department Stores, Inc.-/- ...................... US 11,500 618,844 2.1
RETAILERS-APPAREL
The Limited, Inc. ......................................... US 14,825 491,078 1.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 10,000 470,000 1.6
TELEPHONE - REGIONAL/LOCAL
------------
3,813,313
------------
Materials/Basic Industry (12.4%)
E.I. du Pont de Nemours & Company ......................... US 9,200 686,550 2.3
CHEMICALS
Owens Corning ............................................. US 16,200 661,163 2.2
BUILDING MATERIALS & COMPONENTS
Millenium Chemicals, Inc. ................................. US 18,500 626,688 2.1
CHEMICALS
Stone Container Corp. ..................................... US 38,600 603,125 2.0
PAPER/PACKAGING
Imperial Chemical Industries PLC - ADR{\/} ................ US 7,700 496,650 1.7
CHEMICALS
Crompton & Knowles Corp. .................................. US 13,500 340,031 1.2
CHEMICALS
International Paper Co. ................................... US 6,000 258,000 0.9
PAPER/PACKAGING
------------
3,672,207
------------
Consumer Durables (7.1%)
Ford Motor Co. ............................................ US 12,500 737,500 2.5
AUTOMOBILES
Lennar Corp. .............................................. US 18,500 545,750 1.9
HOUSING
General Motors Corp. ...................................... US 6,600 440,963 1.5
AUTOMOBILES
Meritor Automotive, Inc. .................................. US 15,000 360,000 1.2
AUTO PARTS
------------
2,084,213
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-167
<PAGE> 728
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (5.2%)
International Business Machines Corp. ..................... US 7,500 $ 861,094 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp. ..................................... US 24,200 686,675 2.3
COMPUTERS & PERIPHERALS
------------
1,547,769
------------
Consumer Non-Durables (4.0%)
Philip Morris Cos., Inc. .................................. US 17,050 671,344 2.3
TOBACCO
RJR Nabisco Holdings Corp. ................................ US 21,275 505,281 1.7
TOBACCO
------------
1,176,625
------------
Capital Goods (3.7%)
U.S. Filter Corp.-/- ...................................... US 20,625 578,789 2.0
ENVIRONMENTAL
U.S.A.Waste Services, Inc. ................................ US 14,300 500,500 1.7
ENVIRONMENTAL
------------
1,079,289
------------
Health Care (1.6%)
Pharmacia & Upjohn, Inc. .................................. US 10,500 484,309 1.6
PHARMACEUTICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $26,403,641) ................. 28,737,856 97.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%
collateralized by $460,000 U.S. Treasury Bills, 5.875% due
1/31/99 (market value of collateral is $472,075, including
accrued interest). (cost $459,000) ....................... 459,000 1.5
------------ -----
TOTAL INVESTMENTS (cost $26,862,641) * ..................... 29,196,856 98.6
Other Assets and Liabilities ................................ 400,530 1.4
------------ -----
NET ASSETS .................................................. $ 29,597,386 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $26,900,718 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,898,607
Unrealized depreciation: (602,469)
-------------
Net unrealized appreciation: $ 2,296,138
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-168
<PAGE> 729
STATEMENTS OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------
SMALL CAP
EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
-------------- ----------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $33,732,540; $399,943,682;
and $26,862,641, respectively) (Note 1).............................. $36,665,384 4$96,381,269 $29,196,856
U.S. currency......................................................... 86 644 240
Dividends receivable.................................................. 588 80,604 42,424
Interest receivable................................................... 407 -- 73
Receivable for Fund shares sold....................................... 522,566 442,351 70,096
Receivable for securities sold........................................ 447,737 1,391,606 857,174
Receivable from A I M Advisors, Inc. (Note 2)......................... 75,985 -- 68,265
Unamortized organizational costs (Note 1)............................. 40,679 -- 40,679
-------------- ----------- --------------
Total assets........................................................ 37,753,432 498,296,474 30,275,807
-------------- ----------- --------------
Liabilities:
Payable for custodian fees............................................ 778 84,299 5,455
Payable for Directors' and Trustees' fees and expenses (Note 2)....... 6,703 4,385 6,602
Payable for fund accounting fees (Note 2)............................. 1,532 10,018 658
Payable for Fund shares repurchased (Note 2).......................... 938,102 6,431,497 83,620
Payable for investment management and administration fees (Note 2).... 80,799 273,092 75,127
Payable for loan outstanding (Note 1)................................. -- 6,652,000 --
Payable for printing and postage expenses............................. 37,978 13,626 37,498
Payable for professional fees......................................... 19,013 13,728 17,735
Payable for registration and filing fees.............................. 22,587 13,414 17,486
Payable for securities purchased...................................... 1,355,332 2,006,275 399,574
Payable for service and distribution expenses (Note 2)................ 18,805 254,651 18,640
Payable for transfer agent fees (Note 2).............................. 13,369 339,800 11,132
Other accrued expenses................................................ 3,474 30,887 4,794
-------------- ----------- --------------
Total liabilities................................................... 2,498,472 16,127,672 678,321
Minority interest (Notes 1 & 2)....................................... 100 -- 100
-------------- ----------- --------------
Net assets.............................................................. $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
Class A:
Net asset value and redemption price per share ($12,620,070 DIVIDED BY
746,689; $238,023,863 DIVIDED BY 10,119,708; and $8,669,479 DIVIDED BY
471,856 shares outstanding, respectively).............................. $ 16.90 $ 23.52 $ 18.37
-------------- ----------- --------------
-------------- ----------- --------------
Maximum offering price per share (100/94.5 of $16.90; 100/94.5 of
$23.52; and 100/94.5 of $18.37, respectively) *........................ $ 17.88 $ 24.89 $ 19.44
-------------- ----------- --------------
-------------- ----------- --------------
Class B:+
Net asset value and offering price per share $20,177,075 DIVIDED BY
1,216,622; $243,093,084 DIVIDED BY 10,727,676; and $20,174,796 DIVIDED
BY 1,114,911 shares outstanding, respectively)......................... $ 16.58 $ 22.66 $ 18.10
-------------- ----------- --------------
-------------- ----------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share $2,457,715 DIVIDED BY 144,152; $1,051,855 DIVIDED BY 44,488; and
$753,111 DIVIDED BY 40,640 shares outstanding, respectively)........... $ 17.05 $ 23.64 $ 18.53
-------------- ----------- --------------
-------------- ----------- --------------
Net assets consist of:
Paid in capital (Note 4).............................................. $27,650,613 3$45,007,969 $25,439,934
Accumulated net investment loss....................................... (310,132) (3,756,379) (21,933)
Accumulated net realized gain on investments.......................... 4,981,535 44,479,625 1,845,170
Net unrealized appreciation of investments............................ 2,932,844 96,437,587 2,334,215
-------------- ----------- --------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
<FN>
- ----------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-169
<PAGE> 730
STATEMENTS OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
--------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
----------------- ----------- -----------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income............................................................... $ 23,964 $ 687,891 $ 266,753
Interest income............................................................... 16,300 113,913 22,266
Securities lending income..................................................... 8,274 154,690 484
----------------- ----------- -----------------
Total investment income..................................................... 48,538 956,494 289,503
----------------- ----------- -----------------
Expenses:
Investment management and administration fees (Note 2)........................ 122,481 1,788,752 104,395
Amortization of organization costs (Note 1)................................... 8,779 -- 8,779
Custodian Fees................................................................ 13,190 59,368 5,430
Directors' and Trustees' fees and expenses (Note 2)........................... 9,576 7,964 9,050
Fund accounting fees (Note 2)................................................. 4,564 66,756 3,698
Printing and postage expenses................................................. 27,925 100,124 25,340
Professional fees............................................................. 34,443 65,372 28,236
Registration and filing fees (Note 1)......................................... 26,130 61,087 27,150
Service and distribution expenses: (Note 2)
Class A..................................................................... 20,616 432,588 15,364
Class B..................................................................... 99,273 1,226,897 96,391
Transfer agent fees (Note 2).................................................. 62,450 728,344 55,400
Other expenses................................................................ 6,244 204,822 2,014
----------------- ----------- -----------------
Total expenses before reductions and reimbursements......................... 435,671 4,742,074 381,247
----------------- ----------- -----------------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)...................... (75,985) -- (68,265)
Expense reductions (Note 5)............................................... (1,016) (29,201) (1,546)
----------------- ----------- -----------------
Total net expenses.......................................................... 358,670 4,712,873 311,436
----------------- ----------- -----------------
Net investment loss............................................................. (310,132) (3,756,379) (21,933)
----------------- ----------- -----------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments.............................................. 3,724,962 28,358,903 1,443,280
Net change in unrealized appreciation of investments.......................... 2,036,645 30,955,839 333,471
----------------- ----------- -----------------
Net realized and unrealized gain on investments................................. 5,761,607 59,314,742 1,776,751
----------------- ----------- -----------------
Net increase in net assets resulting from operations............................ $5,451,475 $55,558,363 $1,754,818
----------------- ----------- -----------------
----------------- ----------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-170
<PAGE> 731
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
--------------------------- ---------------------------- --------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED
1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
Operations:
Net investment income
(loss)................ $ (310,132 ) $ (449,560 ) $ (3,756,379 ) $ (6,767,300 ) $ (21,933 ) $ 22,242
Net realized gain on
investments and
foreign currency
transactions.......... 3,724,962 2,524,251 28,358,903 91,288,360 1,443,280 1,352,859
Net change in
unrealized
appreciation
(depreciation) of
investments........... 2,036,645 1,674,235 30,955,839 (23,043,968 ) 333,471 2,016,032
------------ ------------- ------------- ------------- ------------ ------------
Net increase in net
assets resulting
from operations..... 5,451,475 3,748,926 55,558,363 61,477,092 1,754,818 3,391,133
------------ ------------- ------------- ------------- ------------ ------------
Class A:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (12,256 )
From net realized gain
on investments........ -- (213,287 ) -- (27,861,047 ) -- (482,262 )
Class B:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- --
From net realized gain
on investments........ -- (410,555 ) -- (29,550,073 ) -- (1,128,861 )
Advisor Class:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (1,610 )
From net realized gain
on investments........ -- (32,021 ) -- (120,835 ) -- (30,657 )
------------ ------------- ------------- ------------- ------------ ------------
Total
distributions....... -- (655,863 ) -- (57,531,955 ) -- (1,655,646 )
------------ ------------- ------------- ------------- ------------ ------------
Capital share
transactions: (Note 4)
Increase from capital
shares sold and
reinvested............ 23,061,481 60,411,522 380,523,601 783,255,935 11,647,193 33,884,259
Decrease from capital
shares repurchased.... (26,968,839 ) (49,371,158 ) (466,195,324 ) (954,921,988 ) (8,629,240 ) (19,018,130 )
------------ ------------- ------------- ------------- ------------ ------------
Net increase
(decrease) from
capital share
transactions........ (3,907,358 ) 11,040,364 (85,671,723 ) (171,666,053 ) 3,017,953 14,866,129
------------ ------------- ------------- ------------- ------------ ------------
Total increase (decrease)
in net assets........... 1,544,117 14,133,427 (30,113,360 ) (167,720,916 ) 4,772,771 16,601,616
Net assets:
Beginning of period.... 33,710,743 19,577,316 512,282,162 680,003,078 24,824,615 8,222,999
------------ ------------- ------------- ------------- ------------ ------------
End of period *....... $35,254,860 $ 33,710,743 $482,168,802 $512,282,162 $29,597,386 $24,824,615
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
* Includes
undistributed/accumulated
net investment
income (loss) of........ $ (310,132 ) $ -- $ (3,756,379 ) $ -- $ (21,933 ) $ --
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-171
<PAGE> 732
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
CLASS A
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.27 $ 12.52 $11.80 $11.43
----------- -------- ------- --------
Income from investment operations:
Net investment income (loss).......... (0.11) * * * * (0.18) * * * (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.74 2.20 1.69 0.33
----------- -------- ------- --------
Net increase from investment
operations......................... 2.63 2.02 1.64 0.37
----------- -------- ------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- ------- --------
Total distributions................. -- (0.27) (0.92) --
----------- -------- ------- --------
Net asset value, end of period.......... $ 16.90 $ 14.27 $12.52 $11.80
----------- -------- ------- --------
----------- -------- ------- --------
Total investment return (c)............. 18.43% (b) 16.23% 13.81% 3.24% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $12,620 $10,896 $8,448 $1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.47)% (a) (1.40)% (0.38)% 1.68% (a)
Without expense reductions and/or
reimbursement........................ (1.93)% (a) (2.00)% (1.47)% (20.52)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.74% (a) 1.92% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.20% (a) 2.52% 3.09% 24.20% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-172
<PAGE> 733
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
-----------------------------------------------------------
CLASS B
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 12.42 $ 11.78 $ 11.43
----------- -------- -------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.17) * * * * (0.26) * * * (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.69 2.17 1.70 0.33
----------- -------- -------- -----------------
Net increase from investment
operations......................... 2.52 1.91 1.56 0.35
----------- -------- -------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- -------- -----------------
Total distributions................. -- (0.27) (0.92) --
----------- -------- -------- -----------------
Net asset value, end of period.......... $ 16.58 $ 14.06 $ 12.42 $ 11.78
----------- -------- -------- -----------------
----------- -------- -------- -----------------
Total investment return (c)............. 17.99% (b) 15.47% 13.14% 3.06% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,177 $21,222 $10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (2.12)% (a) (2.05)% (1.03)% 1.03% (a)
Without expense reductions and/or
reimbursement........................ (2.58)% (a) (2.65)% (2.12)% (21.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.39% (a) 2.57% 2.65% 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.85% (a) 3.17% 3.74% 24.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-173
<PAGE> 734
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
ADVISOR CLASS
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
---------- ------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.39 $12.58 $ 11.81 $ 11.43
---------- ------- -------- --------
Income from investment operations:
Net investment income (loss).......... (0.08) * * * * (0.14) * * * --* * 0.05*
Net realized and unrealized gain on
investments.......................... 2.74 2.22 1.69 0.33
---------- ------- -------- --------
Net increase from investment
operations......................... 2.66 2.08 1.69 0.38
---------- ------- -------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
---------- ------- -------- --------
Total distributions................. -- (0.27) (0.92) --
---------- ------- -------- --------
Net asset value, end of period.......... $17.05 $14.39 $ 12.58 $ 11.81
---------- ------- -------- --------
---------- ------- -------- --------
Total investment return (c)............. 18.49% (b) 16.63% 14.22% 3.32% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $2,458 $1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.12)% (a) (1.05)% (0.03)% 2.03% (a)
Without expense reductions and/or
reimbursement........................ (1.58)% (a) (1.65)% (1.12)% (20.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.39% (a) 1.57% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.85% (a) 2.17% 2.74% 23.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-174
<PAGE> 735
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------------------------------------------
CLASS A+
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ---------------------------------------------------------------------
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
----------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss).......... (0.14) (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 2.65 3.00 2.96 3.93 2.55 1.56
----------- --------- --------- --------- --------- ---------
Net increase from investment
operations......................... 2.51 2.80 2.99 4.17 2.59 1.35
----------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income............ -- -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- --------- ---------
Total distributions................. -- (2.56) (1.29) (2.79) (2.07) (1.30)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 23.52 $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total investment return (c)............. 11.95%(b) 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $238,024 $255,674 $343,427 $396,291 $196,937 $116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.20)%(a) (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.21)%(a) (1.01)% 0.07% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.59%(a) 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.60%(a) 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-175
<PAGE> 736
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
------------------------------------------------------------------------------
CLASS B++
------------------------------------------------------------------------------
SIX MONTHS APRIL 1,
ENDED 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ----------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $15.90
----------- --------- --------- --------- -------- ------------
Income from investment operations:
Net investment income (loss).......... (0.21) (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.56 2.93 2.91 3.87 2.55 2.78
----------- --------- --------- --------- -------- ------------
Net increase from investment
operations......................... 2.35 2.59 2.80 3.97 2.46 2.49
----------- --------- --------- --------- -------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.12) -- --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Total distributions................. -- (2.56) (1.29) (2.70) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Net asset value, end of period.......... $ 22.66 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $17.09
----------- --------- --------- --------- -------- ------------
----------- --------- --------- --------- -------- ------------
Total investment return (c)............. 11.57%(b) 13.35% 14.82% 22.42% 15.06% 16.1% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $243,093 $255,468 $334,590 $348,435 $80,060 $1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.85)%(a) (1.55)% (0.53)% 0.59% (0.48)% (1.3)% (a)
Without expense reductions............ (1.86)%(a) (1.66)% (0.58)% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.24%(a) 2.02% 2.01% 2.11% 2.23% 2.2% (a)
Without expense reductions............ 2.25%(a) 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-176
<PAGE> 737
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------
ADVISOR CLASS+++
--------------------------------------------------
JUNE 1,
SIX MONTHS 1995
ENDED YEAR ENDED DECEMBER TO
JUNE 30, 31, DECEMBER
1998 -------------------- 31,
(UNAUDITED) (D) 1997 1996 1995
----------- ------- ------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.10 $20.76 $19.05 $20.61
----------- ------- ------- -------
Income from investment operations:
Net investment income (loss).......... (0.10) (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 2.64 3.05 2.91 1.09
----------- ------- ------- -------
Net increase from investment
operations......................... 2.54 2.90 3.00 1.30
----------- ------- ------- -------
Distributions to shareholders:
From net investment income............ -- -- -- (0.28)
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58)
----------- ------- ------- -------
Total distributions................. -- (2.56) (1.29) (2.86)
----------- ------- ------- -------
Net asset value, end of period.......... $ 23.64 $21.10 $20.76 $19.05
----------- ------- ------- -------
----------- ------- ------- -------
Total investment return (c)............. 12.04% (b) 14.54% 15.72% 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,052 $1,140 $1,986 $1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.85)% (a) 0.55% 0.47% 1.59%(a)
Without expense reductions............ (0.86)% (a) (0.66)% 0.42% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.24% (a) 1.02% 1.01% 1.11%(a)
Without expense reductions............ 1.25% (a) 1.13% 1.06% N/A
Portfolio turnover rate++++............. 171% (a) 190% 253% 71%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-177
<PAGE> 738
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
CLASS A
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.25 $14.65 $12.76 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.03* * * * 0.09* * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 1.09 3.87 1.94 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.12 3.96 1.93 1.33
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- --
From net realized gain on
investments.......................... -- (1.33) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.36) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.37 $17.25 $14.65 $ 12.76
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.49% (b) 27.23% 15.12% 11.64% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $8,669 $7,668 $2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.28% (a) 0.56% (0.10)% 1.10% (a)
Without expense reductions and/or
reimbursement........................ (0.21)% (a) (0.42)% (3.61)% (47.44)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.73% (a) 1.99% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.22% (a) 2.97% 5.51% 50.54% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-178
<PAGE> 739
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
------------------------------------------------------------
CLASS B
------------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.04 $ 14.54 $12.75 $ 11.43
----------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... (0.03) * * * * (0.01) * * * (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 1.09 3.83 1.93 1.31
----------- -------- ------- ----------------
Net increase from investment
operations......................... 1.06 3.82 1.83 1.32
----------- -------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- -- -- --
From net realized gain on
investments.......................... -- (1.32) (0.04) --
----------- -------- ------- ----------------
Total distributions................. -- (1.32) (0.04) --
----------- -------- ------- ----------------
Net asset value, end of period.......... $ 18.10 $ 17.04 $14.54 $ 12.75
----------- -------- ------- ----------------
----------- -------- ------- ----------------
Total investment return (c)............. 6.16% (b) 26.44% 14.35% 11.55% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,175 $16,717 $5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.37)% (a) (0.09)% (0.75)% 0.45% (a)
Without expense reductions and/or
reimbursement........................ (0.86)% (a) (1.07)% (4.26)% (48.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.38% (a) 2.64% 2.65%(a) 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.87% (a) 3.62% 6.16% 51.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-179
<PAGE> 740
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
ADVISOR CLASS
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.37 $14.72 $12.77 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.05* * * * 0.15* * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 1.11 3.91 1.96 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.16 4.06 1.99 1.34
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.34) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.41) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.53 $17.37 $14.72 $ 12.77
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.68% (b) 27.78% 15.58% 11.72% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 753 $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.63% (a) 0.91% 0.25% 1.45% (a)
Without expense reductions and/or
reimbursement........................ 0.14% (a) (0.07)% (3.26)% (47.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.38% (a) 1.64% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.87% (a) 2.62% 5.16% 50.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-180
<PAGE> 741
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund
(the "Funds" formerly, GT Global America Small Cap Growth Fund, GT Global
America Mid Cap Growth Fund, and GT Global America Value Fund, respectively),
are separate series of AIM Growth Series (the "Trust", formerly G.T. Global
Growth Series). The Trust is a Delaware business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Trust has eight diversified series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The AIM Small Cap Equity Fund and AIM America Value Fund invest substantially
all of their investable assets in Small Cap Portfolio and Value Portfolio
("Portfolios"), respectively. Each Portfolio is organized as a Delaware business
trust and is registered under the 1940 Act as a diversified, open-end management
investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the AIM Small Cap Equity Fund, the AIM America Value
Fund, and their respective Portfolios have been presented on a consolidated
basis, and represent all activities of both the respective Funds and Portfolios.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its respective fund or INVESCO (NY), Inc. (the
"Sub-adviser"), which has a nominal ($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Sub-adviser to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Sub-adviser deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued at amortized cost, adjusted for market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the AIM Mid Cap Growth Fund and
each of the two Portfolios), it is the Fund's or Portfolio's policy to always
receive, as collateral, United States government securities or other high
quality debt securities of which the value, including accrued interest, is at
least equal to the amount to be repaid to the Fund or Portfolio under each
agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-181
<PAGE> 742
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
JUNE 30, 1998 PERIOD ENDED JUNE
-------------------------------- 30, 1998
AGGREGATE VALUE CASH -----------------
AIM ON LOANS COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
Small Cap Equity Fund................... $ 1,441,406 $ 1,470,234 $ 8,274
Mid Cap Growth Fund..................... 42,313,661 42,984,542 154,690
America Value Fund...................... -- -- 484
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. The cash collateral is invested in a securities lending
trust which consists of a portfolio of high quality short duration securities
whose average effective duration is restricted to 120 days or less.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the AIM Small Cap Equity Fund, the AIM America Value Fund,
and their respective Portfolios in connection with their organization, their
initial registration with the Securities and Exchange Commission and with
various states and the initial public offering of their shares aggregated
$63,500 for each Fund and $25,000 for each Portfolio. These expenses are being
amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-182
<PAGE> 743
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds advised and/or administered by
the Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Funds and certain other Funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. Each of these three funds is limited to borrowing up to 33 1/3% of
the value of each Fund's total assets. On June 30, 1998, AIM Mid Cap Growth Fund
had $6,652,000 in loans outstanding.
For the period ended June 30, 1998, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for AIM
Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund was
$513,375, $11,735,546 and $87,889 with a weighted average interest rate of
6.36%, 6.28%, and 6.24%, respectively. Interest expense for AIM Small Cap Equity
Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund for the period ended
June 30, 1998 was $3,627, $198,306, and $137, respectively, and is included in
"Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Funds' and Portfolios'
investment manager and administrator, and INVESCO (NY), Inc., (formerly,
Chancellor LGT Asset Management, Inc.) is the Funds' and Portfolios' investment
sub-adviser and/or sub-administrator. As of the close of business on May 29,
1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of Chancellor LGT Asset Management, Inc. ("Chancellor LGT"),
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included Chancellor LGT and
certain other affiliates. As a result of this transaction, Chancellor LGT was
renamed INVESCO (NY), Inc., and is now an indirect wholly-owned subsidiary of
AMVESCAP PLC. In connection with this transaction, A I M Advisors, Inc., an
indirect wholly-owned subsidiary of AMVESCAP PLC, became the investment manager
and administrator of the Funds and Portfolios and INVESCO (NY), Inc. became the
sub-adviser and sub-administrator of the Funds and Portfolios. A I M
Distributors, Inc. ("AIM Distributors") became the Funds' distributor. Finally,
the Trust was reorganized from a Massachusetts business trust into a Delaware
business trust, and each Portfolio was reorganized from a New York Trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
AIM Small Cap Equity Fund and AIM America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. AIM Mid Cap
Growth Fund pays investment management and administration fees to the Manager at
the annualized rate of 0.725% on the first $500 million of average daily net
assets on the Fund; 0.70% on the next $500 million; 0.675% on the next $500
million and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
or Portfolio's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Funds' distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Funds' distributor. The Funds offer
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors collects the sales charges imposed on sales of
Class A shares, and reallows a portion of such charges to dealers through which
the sales are made. For the period ended June 30, 1998, AIM Distributors and GT
Global retained the following sales charges: $287 and $1,833, respectively, for
the AIM Small Cap Equity Fund, $1,705 and $12,353, respectively, for the AIM Mid
Cap Growth Fund, and $162 and $1,487, respectively, for the AIM America Value
Fund. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No
FS-183
<PAGE> 744
CDSC's for Class A were collected for the period ended June 30, 1998. AIM
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. For the period ended June 30, 1998, AIM Distributors and GT
Global collected such CDSCs in the amount of: $5,915 and $65,285, respectively,
for the AIM Small Cap Equity Fund, $79,877 and $589,554, respectively, for the
AIM Mid Cap Growth Fund, and $6,047 and $32,112, respectively, for the AIM
America Value Fund. In addition, AIM Distributors makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Funds' Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Funds' reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund's were permitted to pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Funds' Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and were permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Funds'
Class A shares, less any amounts paid by the Funds as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global was reimbursed under the Class A Plan would
have been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Funds were
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for GT Global's
expenditures incurred in servicing and maintaining shareholder accounts, and
were permitted to pay GT Global a distribution fee at the annualized rate of up
to 0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continued in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Funds' Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Funds compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Funds. Under the Class A Plan, the funds
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of each of the Fund's Class A shares.
Pursuant to the Funds' Class B Plan, the Funds compensate AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Class A Plan and the Class B Plan (together, the "Plans") are designed to
compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A and Class B shares of a
Fund. Payments also can be directed by AIM Distributors to Financial
Institutions who have entered into service agreements with respect to Class A
and Class B shares of a Fund and who provide continuing personal services to
their customers who own Class A and Class B shares of a Fund. The service fees
payable to selected Financial Institutions are calculated at the annual rate of
0.25% of the average daily net asset value of those Fund shares that are held in
such Institution's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans.
The Manager and AIM Distributors have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class Shares, respectively.
This undertaking may be changed or eliminated in the future. If necessary, this
limitation will be effected by waivers by the Manager of investment management
and administration fees, waivers by AIM Distributors of payments under the Class
A Plan and/or Class B Plan and/or reimbursements by the Manager or AIM
Distributors of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Funds. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Funds for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its
FS-184
<PAGE> 745
Trustees who is not an employee, officer or director of the Manager, AIM
Distributors or GT Services $500 per year plus $150 for each meeting of the
board or any committee thereof attended by the Trustee.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases of investment securities by the
AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund, and AIM America Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $34,489,676, $425,421,321 and $21,307,726, respectively. Sales of
investment securities by the AIM Small Cap Equity Portfolio, AIM Mid Cap Growth
Fund, and AIM America Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $38,854,404, $503,976,639 and
$18,275,286, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
CAPITAL SHARES-AIM SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 766,677 $ 12,379,784 2,067,494 $ 28,341,345
Shares issued in connection with
reinvestment of distributions......... -- -- 14,194 195,720
------------ -------------- ------------ ---------------
766,677 12,379,784 2,081,688 28,537,065
Shares repurchased...................... (783,355) (12,602,269) (1,992,960) (27,546,271)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (16,678) $ (222,485) 88,728 $ 990,794
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 649,669 $ 10,068,580 2,192,656 $ 29,216,057
Shares issued in connection with
reinvestment of distributions......... -- -- 26,438 359,234
------------ -------------- ------------ ---------------
649,669 10,068,580 2,219,094 29,575,291
Shares repurchased...................... (942,259) (14,277,803) (1,570,899) (20,624,826)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (292,590) $ (4,209,223) 648,195 $ 8,950,465
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 39,133 $ 613,117 156,123 $ 2,292,127
Shares issued in connection with
reinvestment of distributions......... -- -- 507 7,039
------------ -------------- ------------ ---------------
39,133 613,117 156,630 2,299,166
Shares repurchased...................... (5,668) (88,767) (80,540) (1,200,061)
------------ -------------- ------------ ---------------
Net increase............................ 33,465 $ 524,350 76,090 $ 1,099,105
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-185
<PAGE> 746
CAPITAL SHARES-AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,237,471 $ 293,037,123 24,801,099 $ 522,081,212
Shares issued in connection with
reinvestment of distributions......... -- -- 1,170,749 23,490,213
------------ -------------- ------------ ---------------
13,237,471 293,037,123 25,971,848 545,571,425
Shares repurchased...................... (15,286,842) (338,921,081) (30,338,852) (637,412,658)
------------ -------------- ------------ ---------------
Net decrease............................ (2,049,371) $ (45,883,958) (4,367,004) $ (91,841,233)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,361,394 $ 70,538,881 9,218,434 $ 190,231,954
Shares issued in connection with
reinvestment of distributions......... -- -- 1,240,395 24,063,873
------------ -------------- ------------ ---------------
3,361,394 70,538,881 10,458,829 214,295,827
Shares repurchased...................... (5,214,434) (110,304,526) (14,376,532) (293,260,545)
------------ -------------- ------------ ---------------
Net decrease............................ (1,853,040) $ (39,765,645) (3,917,703) $ (78,964,718)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 796,165 $ 16,947,597 1,056,271 $ 23,267,932
Shares issued in connection with
reinvestment of distributions......... -- -- 5,993 120,751
------------ -------------- ------------ ---------------
796,165 16,947,597 1,062,264 23,388,683
Shares repurchased...................... (805,702) (16,969,717) (1,103,923) (24,248,785)
------------ -------------- ------------ ---------------
Net decrease............................ (9,537) $ (22,120) (41,659) $ (860,102)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
CAPITAL SHARES-AIM AMERICA VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 233,708 $ 4,201,126 781,797 $ 13,117,280
Shares issued in connection with
reinvestment of distributions......... -- -- 26,859 454,725
------------ -------------- ------------ ---------------
233,708 4,201,126 808,656 13,572,005
Shares repurchased...................... (206,495) (3,733,422) (536,657) (9,148,725)
------------ -------------- ------------ ---------------
Net increase............................ 27,213 $ 467,704 271,999 $ 4,423,280
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 402,934 $ 7,126,394 1,148,582 $ 19,043,834
Shares issued in connection with
reinvestment of distributions......... -- -- 60,093 1,004,744
------------ -------------- ------------ ---------------
402,934 7,126,394 1,208,675 20,048,578
Shares repurchased...................... (269,058) (4,850,260) (606,167) (9,803,021)
------------ -------------- ------------ ---------------
Net increase............................ 133,876 $ 2,276,134 602,508 $ 10,245,557
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 17,744 $ 319,673 14,203 $ 230,962
Shares issued in connection with
reinvestment of distributions......... -- -- 1,920 32,714
------------ -------------- ------------ ---------------
17,744 319,673 16,123 263,676
Shares repurchased...................... (2,387) (45,558) (3,834) (66,384)
------------ -------------- ------------ ---------------
Net increase............................ 15,357 $ 274,115 12,289 $ 197,292
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of a Fund's or Portfolio's expenses. For the period ended June 30, 1998,
the expenses of AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund and AIM
America Value Portfolio were reduced by $1,016, $29,201 and $1,546 respectively,
under these arrangements.
6. SUBSEQUENT EVENT
Effective September 8, 1998, INVESCO (NY), Inc. (the "Sub-adviser") will resign
as (i) sub-advisor and sub-administrator to the Value Portfolio, the Small Cap
Portfolio (together the "Portfolios") and AIM Mid Cap Growth Fund; and (ii)
sub-administrator to AIM America Value Fund and AIM Small Cap Equity Fund. A I M
Advisors, Inc. will continue to serve as the manager and administrator for the
above-named funds and portfolios.
FS-186
<PAGE> 747
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Small Cap Growth Fund - Consolidated, GT Global America Mid Cap
Growth Fund, and GT Global America Value Fund - Consolidated, three of the funds
organized as a series of GT Global Growth Series, including the portfolios of
investments, as of December 31, 1997, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated herein. These financial statements and the financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and the 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, 1997, 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of the
GT Global America Small Cap Growth Fund - Consolidated, GT Global America Mid
Cap Growth Fund, and GT Global America Value Fund - Consolidated, as of December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-187
<PAGE> 748
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accommodations, Inc.-/- ...................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-188
<PAGE> 749
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.3%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.1
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.3
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-189
<PAGE> 750
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (13.2%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.4
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.3
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.1
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 1.0
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-190
<PAGE> 751
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.4%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.8
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.2
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.4%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.7
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-191
<PAGE> 752
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
AUTOMOBILES
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 97.0
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-192
<PAGE> 753
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 99.6
Other Assets and Liabilities ................................ 131,240 0.4
------------ -----
NET ASSETS .................................................. $ 33,710,743 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-193
<PAGE> 754
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.5%)
Cendant Corp.-/- .......................................... US 924,232 $ 31,770,471 6.2
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................ US 571,700 20,867,050 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 477,325 18,317,347 3.6
BUSINESS & PUBLIC SERVICES
Signature Resorts, Inc.-/- ................................ US 789,900 17,279,063 3.4
LEISURE & TOURISM
Hilton Hotels Corp. ....................................... US 502,100 14,937,475 2.9
LEISURE & TOURISM
U.S. Office Products Co.-/- ............................... US 734,650 14,417,506 2.8
CONSUMER SERVICES
Caribiner International, Inc.-/- .......................... US 320,500 14,262,250 2.8
CONSUMER SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 264,900 13,774,800 2.7
BUSINESS & PUBLIC SERVICES
Mirage Resorts, Inc.-/- ................................... US 381,900 8,688,225 1.7
LEISURE & TOURISM
Nextel Communications, Inc. "A"-/- ........................ US 303,300 7,885,800 1.5
WIRELESS COMMUNICATIONS
Valassis Communications, Inc.-/- .......................... US 209,400 7,747,800 1.5
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 140,200 7,097,625 1.4
CONSUMER SERVICES
Service Corporation International ......................... US 137,500 5,078,906 1.0
CONSUMER SERVICES
Wolverine World Wide, Inc. ................................ US 201,600 4,561,200 0.9
RETAILERS-APPAREL
------------
186,685,518
------------
Finance (14.6%)
Conseco, Inc. ............................................. US 348,200 15,821,338 3.1
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................ US 154,100 11,181,881 2.2
BANKS-REGIONAL
CMAC Investment Corp. ..................................... US 149,700 9,038,138 1.8
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................ US 252,800 8,911,200 1.7
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 7,636,688 1.5
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................ US 228,400 7,365,900 1.4
CONSUMER FINANCE
Consolidated Capital Corp.-/- ............................. US 323,500 6,571,094 1.3
INVESTMENT MANAGEMENT
Student Loan Marketing Association ........................ US 42,800 5,954,550 1.2
OTHER FINANCIAL
Ace Ltd. .................................................. US 20,100 1,939,650 0.4
INSURANCE - PROPERTY-CASUALTY
------------
74,420,439
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-194
<PAGE> 755
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (11.1%)
AmeriSource Health Corp. "A"-/- ........................... US 214,600 $ 12,607,750 2.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 114,600 12,398,288 2.4
HEALTH CARE SERVICES
HBO & Co. ................................................. US 203,800 9,782,400 1.9
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- .......................... US 246,100 9,413,325 1.8
HEALTH CARE SERVICES
Covance, Inc.-/- .......................................... US 337,000 6,697,875 1.3
HEALTH CARE SERVICES
Guidant Corp. ............................................. US 97,400 6,063,150 1.2
MEDICAL TECHNOLOGY & SUPPLIES
------------
56,962,788
------------
Technology (11.1%)
PeopleSoft, Inc.-/- ....................................... US 380,600 14,843,400 2.9
SOFTWARE
Sterling Commerce, Inc.-/- ................................ US 365,200 14,037,375 2.7
SOFTWARE
Ciena Corp.-/- ............................................ US 186,700 11,412,038 2.2
TELECOM TECHNOLOGY
CBT Group PLC - ADR-/- {\/} ............................... IRE 110,800 9,099,450 1.8
COMPUTERS & PERIPHERALS
Pegasystems, Inc.-/- ...................................... US 371,300 7,495,619 1.5
SOFTWARE
------------
56,887,882
------------
Materials/Basic Industry (9.7%)
Crompton & Knowles Corp. .................................. US 529,200 14,023,800 2.7
CHEMICALS
International Specialty Products, Inc.-/- ................. US 834,000 12,457,875 2.4
CHEMICALS
Sealed Air Corp.-/- ....................................... US 201,000 12,411,750 2.4
PLASTICS & RUBBER
J. Ray McDermott S.A.-/- .................................. US 263,900 11,347,700 2.2
BUILDING MATERIALS & COMPONENTS
------------
50,241,125
------------
Energy (8.6%)
Cooper Cameron Corp.-/- ................................... US 170,500 10,400,500 2.0
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ........................................ US 120,600 8,675,663 1.7
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 138,900 8,429,494 1.7
OIL
Smith International, Inc.-/- .............................. US 135,600 8,322,450 1.6
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-195
<PAGE> 756
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Santa Fe International Corp. .............................. US 198,200 $ 8,064,263 1.6
ENERGY EQUIPMENT & SERVICES
------------
43,892,370
------------
Consumer Durables (4.1%)
Avis Rent A Car, Inc.-/- .................................. US 326,900 10,440,369 2.0
AUTOMOBILES
Hertz Corp. "A" ........................................... US 152,500 6,138,125 1.2
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 235,000 4,817,500 0.9
AUTOMOBILES
------------
21,395,994
------------
Multi-Industry/Miscellaneous (2.4%)
Corrections Corporation of America-/- ..................... US 324,500 12,026,781 2.4
------------
MISCELLANEOUS
Consumer Non-Durables (1.3%)
International Home Foods, Inc.-/- ......................... US 240,400 6,731,200 1.3
------------
FOOD
Capital Goods (1.3%)
U.S. Filter Corp.-/- ...................................... US 213,100 6,379,681 1.3
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $450,142,030) ................ 515,623,778 100.7
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,985,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $21,004,684,
including accrued interest).
(cost $20,589,000) ...................................... 20,589,000 4.0
------------ -----
TOTAL INVESTMENTS (cost $470,731,030) * .................... 536,212,778 104.7
Other Assets and Liabilities ................................ (23,930,616) (4.7)
------------ -----
NET ASSETS .................................................. $512,282,162 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $472,057,961 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,285,341
Unrealized depreciation: (8,130,524)
-------------
Net unrealized appreciation: $ 64,154,817
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-196
<PAGE> 757
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-197
<PAGE> 758
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-198
<PAGE> 759
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-199
<PAGE> 760
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (208,051) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,824,615 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-200
<PAGE> 761
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
-------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304; $470,731,030;
and $23,031,922, respectively) (Note 1)............................ $33,579,503 $536,212,778 $25,032,666
U.S. currency....................................................... 927 295 988
Dividends receivable................................................ 10,766 125,429 42,920
Interest receivable................................................. 142 3,317 177
Receivable for Fund shares sold..................................... 358,830 628,959 306,827
Receivable for securities sold...................................... 887,683 -- 90,237
Unamortized organizational costs (Note 1)........................... 49,458 -- 49,458
-------------- ------------- --------------
Total assets...................................................... 34,887,309 536,970,778 25,523,273
-------------- ------------- --------------
Liabilities:
Payable for custodian fees.......................................... 2,924 25,081 2,892
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,310 5,062 5,725
Payable for fund accounting fees (Note 2)........................... 1,488 9,945 652
Payable for Fund shares repurchased................................. 716,716 3,845,129 356,809
Payable for investment management and administration fees (Note
2)................................................................. 19,707 306,242 417
Payable for printing and postage expenses........................... 16,077 31,815 16,948
Payable for professional fees....................................... 15,217 27,546 19,018
Payable for registration and filing fees............................ 15,960 3,900 8,146
Payable for securities purchased.................................... 348,610 19,887,085 263,514
Payable for service and distribution expenses (Note 2).............. 21,124 285,634 15,365
Payable for transfer agent fees (Note 2)............................ 11,763 231,778 5,430
Other accrued expenses.............................................. 1,570 29,399 3,642
-------------- ------------- --------------
Total liabilities................................................. 1,176,466 24,688,616 698,558
Minority interest (Notes 1 & 2)..................................... 100 -- 100
-------------- ------------- --------------
Net assets............................................................ $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
Class A:
Net asset value and redemption price per share ($10,896,107 DIVIDED BY
763,367;
$255,674,204 DIVIDED BY 12,169,079; and $7,668,100 DIVIDED BY 444,643
shares outstanding, respectively) ................................... $ 14.27 $ 21.01 $ 17.25
-------------- ------------- --------------
-------------- ------------- --------------
Maximum offering price per share (100/95.25 of $14.27; 100/95.25 of
$21.01; and 100/95.25 of $17.25, respectively) *..................... $ 14.98 $ 22.06 $ 18.11
-------------- ------------- --------------
-------------- ------------- --------------
Class B:+
Net asset value and offering price per share $21,222,157 DIVIDED BY
1,509,212; $255,468,031 DIVIDED BY 12,580,716; and $16,717,458
DIVIDED BY 981,035 shares outstanding, respectively)................. $ 14.06 $ 20.31 $ 17.04
-------------- ------------- --------------
-------------- ------------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share ($1,592,479 DIVIDED BY 110,687; $1,139,927 DIVIDED BY 54,025;
and $439,057 DIVIDED BY 25,283 shares outstanding, respectively)..... $ 14.39 $ 21.10 $ 17.37
-------------- ------------- --------------
-------------- ------------- --------------
Net assets consist of:
Paid in capital (Note 4)............................................ $31,557,971 $430,679,692 $22,421,981
Accumulated net realized gain on investments........................ 1,256,573 16,120,722 401,890
Net unrealized appreciation of investments.......................... 896,199 65,481,748 2,000,744
-------------- ------------- --------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-201
<PAGE> 762
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
------------- ------------ -------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income.............................................. $ 35,957 $2,095,256 $ 357,943
Interest income.............................................. 95,213 519,576 46,139
------------- ------------ -------------
Total investment income.................................... 131,170 2,614,832 404,082
------------- ------------ -------------
Expenses:
Investment management and administration fees (Note 2)....... 184,004 3,999,732 113,543
Amortization of organization costs (Note 1).................. 17,702 -- 17,702
Custodian Fees............................................... 21,876 137,385 9,431
Directors' and Trustees' fees and expenses (Note 2).......... 14,813 12,580 12,042
Fund accounting fees (Note 2)................................ 6,379 142,274 3,938
Printing and postage expenses................................ 61,435 102,242 51,829
Professional fees............................................ 63,468 72,533 71,745
Registration and filing fees................................. 72,360 73,688 65,399
Service and distribution expenses: (Note 2)
Class A.................................................... 33,776 958,593 17,701
Class B.................................................... 148,043 2,781,908 102,587
Transfer agent fees (Note 2)................................. 102,790 1,545,314 59,946
Other expenses (Note 1)...................................... 5,430 156,232 9,271
------------- ------------ -------------
Total expenses before reductions and reimbursement......... 732,076 9,982,481 535,134
------------- ------------ -------------
Expenses reimbursed by Chancellor LGT Asset Management,
Inc. (Note 2)........................................... (131,297) -- (151,962)
Expense reductions (Notes 1 & 5)......................... (20,049) (600,349) (1,332)
------------- ------------ -------------
Total net expenses......................................... 580,730 9,382,132 381,840
------------- ------------ -------------
Net investment income (loss)................................... (449,560) (6,767,300) 22,242
------------- ------------ -------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments............................. 2,524,251 91,288,360 1,352,859
Net change in unrealized appreciation (depreciation) of
investments................................................. 1,674,235 (23,043,968) 2,016,032
------------- ------------ -------------
Net realized and unrealized gain on investments................ 4,198,486 68,244,392 3,368,891
------------- ------------ -------------
Net increase in net assets resulting from operations........... $ 3,748,926 $61,477,092 $ 3,391,133
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-202
<PAGE> 763
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
AMERICA SMALL CAP AMERICA MID CAP AMERICA VALUE
GROWTH FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
------------------------ ------------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER DECEMBER DECEMBER YEAR ENDED DECEMBER DECEMBER
31, 31, 31, DECEMBER 31, 31, 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $(449,560) $(110,516) $(6,767,300) $ (1,367,346) $ 22,242 $ (30,160)
Net realized gain on investments and
foreign currency transactions........ 2,524,251 1,264,689 91,288,360 24,339,369 1,352,859 733,904
Net change in unrealized appreciation
(depreciation) of investments........ 1,674,235 (782,829) (23,043,968) 76,318,599 2,016,032 (69,965)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting
from operations.................... 3,748,926 371,344 61,477,092 99,290,622 3,391,133 633,779
----------- ----------- ----------- ------------ ----------- -----------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (12,256) --
From net realized gain on
investments.......................... (213,287) (564,752) (27,861,047) (21,518,831) (482,262) (7,007)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (410,555) (727,944) (29,550,073) (20,232,121) (1,128,861) (14,950)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (1,610) --
From net realized gain on
investments.......................... (32,021) (28,106) (120,835) (167,680) (30,657) (443)
----------- ----------- ----------- ------------ ----------- -----------
Total distributions................. (655,863) (1,320,802) (57,531,955) (41,918,632) (1,655,646) (22,400)
----------- ----------- ----------- ------------ ----------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 60,411,522 43,976,336 783,255,935 2,122,781,710 33,884,259 11,770,124
Decrease from capital shares
repurchased.......................... (49,371,158) (27,455,528) (954,921,988) (2,246,270,951) (19,018,130) (6,364,460)
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) from capital
share transactions................. 11,040,364 16,520,808 (171,666,053) (123,489,241) 14,866,129 5,405,664
----------- ----------- ----------- ------------ ----------- -----------
Total increase (decrease) in net
assets................................. 14,133,427 15,571,350 (167,720,916) (66,117,251) 16,601,616 6,017,043
Net assets:
Beginning of year..................... 19,577,316 4,005,966 680,003,078 746,120,329 8,222,999 2,205,956
----------- ----------- ----------- ------------ ----------- -----------
End of year *........................ 3$3,710,743 1$9,577,316 $512,282,162 $680,003,078 2$4,824,615 $8,222,999
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
* Includes undistributed/accumulated
net investment income (loss) of...... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-203
<PAGE> 764
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.52 $ 11.80 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.18) ** (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.20 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.02 1.64 0.37
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.27 $ 12.52 $ 11.80
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.23 % 13.81 % 3.24 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 10,896 $ 8,448 $ 1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.40)% (0.38)% 1.68 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.00)% (1.47)% (20.52)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.92 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.52 % 3.09 % 24.20 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-204
<PAGE> 765
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.42 $ 11.78 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.26) ** (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.17 1.70 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 1.91 1.56 0.35
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.06 $ 12.42 $ 11.78
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 15.47 % 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,222 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (2.05)% (1.03)% 1.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.65)% (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.57 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.17 % 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-205
<PAGE> 766
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.58 $ 11.81 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.14) ** --** 0.05*
Net realized and unrealized gain on
investments.......................... 2.22 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.08 1.69 0.38
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.39 $ 12.58 $ 11.81
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.63 % 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.05)% (0.03)% 2.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.57 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.17 % 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-206
<PAGE> 767
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 3.00 2.96 3.93 2.55 1.56
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.80 2.99 4.17 2.59 1.35
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.56) (1.29) (2.79) (2.07) (1.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,674 $ 343,427 $ 396,291 $ 196,937 $ 116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.01)% 0.07% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-207
<PAGE> 768
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-------------------------------------------------------------
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 15.90
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.93 2.91 3.87 2.55 2.78
---------- ---------- ---------- ---------- -------------
Net increase from investment
operations......................... 2.59 2.80 3.97 2.46 2.49
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.12) -- --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Total distributions................. (2.56) (1.29) (2.70) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 13.35% 14.82% 22.42% 15.06% 16.1%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,468 $ 334,590 $ 348,435 $ 80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.55)% (0.53)% 0.59% (0.48)% (1.3)%(a)
Without expense reductions............ (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.02% 2.01% 2.11% 2.23% 2.2%(a)
Without expense reductions............ 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-208
<PAGE> 769
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-----------------------------------------
ADVISOR CLASS+++
-----------------------------------------
JUNE 1, 1995
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.76 $ 19.05 $ 20.61
------------ ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 3.05 2.91 1.09
------------ ------------ -------------
Net increase from investment
operations......................... 2.90 3.00 1.30
------------ ------------ -------------
Distributions to shareholders:
From net investment income............ -- -- (0.28)
From net realized gain on
investments.......................... (2.56) (1.29) (2.58)
------------ ------------ -------------
Total distributions................. (2.56) (1.29) (2.86)
------------ ------------ -------------
Net asset value, end of period.......... $ 21.10 $ 20.76 $ 19.05
------------ ------------ -------------
------------ ------------ -------------
Total investment return (c)............. 14.54 % 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,140 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.55)% 0.47 % 1.59%(a)
Without expense reductions............ (0.66)% 0.42 % N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.02 % 1.01 % 1.11%(a)
Without expense reductions............ 1.13 % 1.06 % N/A
Portfolio turnover rate++++............. 190 % 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-209
<PAGE> 770
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.65 $ 12.76 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.09 * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 3.87 1.94 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 3.96 1.93 1.33
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... (1.33) (0.04) --
------------ ------------ --------------
Total distributions................. (1.36) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.25 $ 14.65 $ 12.76
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.23 % 15.12 % 11.64 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.56 % (0.10)% 1.10 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.42)% (3.61)% (47.44)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.99 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97 % 5.51 % 50.54 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-210
<PAGE> 771
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.54 $ 12.75 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 3.83 1.93 1.31
------------ ------------ --------------
Net increase from investment
operations......................... 3.82 1.83 1.32
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ -- -- --
From net realized gain on
investments.......................... (1.32) (0.04) --
------------ ------------ --------------
Total distributions................. (1.32) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.04 $ 14.54 $ 12.75
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 26.44 % 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (0.09)% (0.75)% 0.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.07)% (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.64 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.62 % 6.16 % 51.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-211
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GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.72 $ 12.77 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.15 * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 3.91 1.96 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 4.06 1.99 1.34
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.34) (0.04) --
------------ ------------ --------------
Total distributions................. (1.41) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.37 $ 14.72 $ 12.77
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.78 % 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.91 % 0.25 % 1.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.07)% (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.64 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.62 % 5.16 % 50.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-212
<PAGE> 773
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund,
and GT Global America Value Fund ("Funds"), are separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1997, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-213
<PAGE> 774
GT GLOBAL AMERICA FUNDS
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 YEAR ENDED
-------------------------------- DECEMBER 31, 1997
AGGREGATE VALUE CASH -----------------
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Small Cap Growth Fund........... $ 1,812,494 $ 1,869,550 $ 17,489
America Mid Cap Growth Fund............. 45,019,438 45,567,400 516,083
America Value Fund...................... 794,531 810,000 896
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the
Portfolios' custodian fees.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-214
<PAGE> 775
GT GLOBAL AMERICA FUNDS
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Funds and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Funds' total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for GT
Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, and
GT Global America Value Fund was $101,429, $6,068,763, and $284,000 with a
weighted average interest rate of 6.34%, 6.33%, and 6.31%, respectively.
Interest expense for GT Global America Small Cap Growth Fund, GT Global America
Mid Cap Growth Fund, and GT Global America Value Fund for the year ended
December 31, 1997 was $125, $125,935, and $50, respectively, included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. GT Global America Small Cap Growth Fund and GT Global
America Value Fund each pays the Manager administration fees at the annualized
rate of 0.25% of such Fund's average daily net assets. Each Portfolio pays
investment management and administration fees to the Manager at the annualized
rate of 0.475% on the first $500 million of average daily net assets of the
Portfolio; 0.45% on the next $500 million; 0.425% on the next $500 million; and
0.40% on amounts thereafter. GT Global America Mid Cap Growth Fund pays
investment management and administration fees to the Manager at the annualized
rate of 0.725% on the first $500 million of average daily net assets on the
Fund; 0.70% on the next $500 million; 0.675% on the next $500 million and 0.65%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's or Portfolio's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained the
following sales charges: $5,417 for the GT Global America Small Cap Growth Fund,
$38,700 for the GT Global America Mid Cap Growth Fund, and $5,770 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $23,780 for the year ended December 31, 1997 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected such CDSCs
in the amount of: $60,107 for the GT Global America Small Cap Growth Fund,
$2,316,997 for the GT Global America Mid Cap Growth Fund, and $55,700 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the
FS-215
<PAGE> 776
GT GLOBAL AMERICA FUNDS
Class A Plan, a Fund may pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and may pay GT Global a distribution fee at the annualized rate of up
to 0.35% of the average daily net assets of the Fund's Class A shares, less any
amounts paid by the Fund as the aforementioned service fee, for GT Global's
expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the
average daily net assets of the Fund's Class A, Class B, Advisor Class Shares,
respectively. This undertaking may be changed or eliminated in the future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1997, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,037,388,895, $66,820,422 and $25,951,699, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,221,752,474, $55,910,483 and
$13,967,002, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
FS-216
<PAGE> 777
GT GLOBAL AMERICA FUNDS
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,067,494 $ 28,341,345 1,491,083 $ 20,216,595
Shares issued in connection with
reinvestment of distributions......... 14,194 195,720 39,998 505,573
------------ -------------- ------------ ---------------
2,081,688 28,537,065 1,531,081 20,722,168
Shares repurchased...................... (1,992,960) (27,546,271) (1,019,989) (13,880,892)
------------ -------------- ------------ ---------------
Net increase............................ 88,728 $ 990,794 511,092 $ 6,841,276
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,192,656 $ 29,216,057 1,665,796 $ 22,115,741
Shares issued in connection with
reinvestment of distributions......... 26,438 359,234 52,848 663,246
------------ -------------- ------------ ---------------
2,219,094 29,575,291 1,718,644 22,778,987
Shares repurchased...................... (1,570,899) (20,624,826) (1,029,367) (13,501,795)
------------ -------------- ------------ ---------------
Net increase............................ 648,195 $ 8,950,465 689,277 $ 9,277,192
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 156,123 $ 2,292,127 33,521 $ 447,953
Shares issued in connection with
reinvestment of distributions......... 507 7,039 2,144 27,228
------------ -------------- ------------ ---------------
156,630 2,299,166 35,665 475,181
Shares repurchased...................... (80,540) (1,200,061) (5,440) (72,841)
------------ -------------- ------------ ---------------
Net increase............................ 76,090 $ 1,099,105 30,225 $ 402,340
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-217
<PAGE> 778
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 24,801,099 $ 522,081,212 89,962,964 $ 1,853,673,285
Shares issued in connection with
reinvestment of distributions......... 1,170,749 23,490,213 853,598 17,867,701
------------ -------------- ------------ ---------------
25,971,848 545,571,425 90,816,562 1,871,540,986
Shares repurchased...................... (30,338,852) (637,412,658) (95,061,922) (1,956,032,031)
------------ -------------- ------------ ---------------
Net decrease............................ (4,367,004) $ (91,841,233) (4,245,360) $ (84,491,045)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,218,434 $ 190,231,954 11,161,651 $ 224,412,718
Shares issued in connection with
reinvestment of distributions......... 1,240,395 24,063,873 803,575 16,429,676
------------ -------------- ------------ ---------------
10,458,829 214,295,827 11,965,226 240,842,394
Shares repurchased...................... (14,376,532) (293,260,545) (14,026,348) (280,392,879)
------------ -------------- ------------ ---------------
Net decrease............................ (3,917,703) $ (78,964,718) (2,061,122) $ (39,550,485)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,056,271 $ 23,267,932 485,169 $ 10,230,701
Shares issued in connection with
reinvestment of distributions......... 5,993 120,751 8,013 167,629
------------ -------------- ------------ ---------------
1,062,264 23,388,683 493,182 10,398,330
Shares repurchased...................... (1,103,923) (24,248,785) (470,673) (9,846,041)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (41,659) $ (860,102) 22,509 $ 552,289
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-218
<PAGE> 779
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 781,797 $ 13,117,280 392,444 $ 5,443,835
Shares issued in connection with
reinvestment of distributions......... 26,859 454,725 365 5,408
------------ -------------- ------------ ---------------
808,656 13,572,005 392,809 5,449,243
Shares repurchased...................... (536,657) (9,148,725) (288,378) (3,812,666)
------------ -------------- ------------ ---------------
Net increase............................ 271,999 $ 4,423,280 104,431 $ 1,636,577
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,148,582 $ 19,043,834 445,266 $ 6,167,388
Shares issued in connection with
reinvestment of distributions......... 60,093 1,004,744 918 13,509
------------ -------------- ------------ ---------------
1,208,675 20,048,578 446,184 6,180,897
Shares repurchased...................... (606,167) (9,803,021) (166,052) (2,502,350)
------------ -------------- ------------ ---------------
Net increase............................ 602,508 $ 10,245,557 280,132 $ 3,678,547
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,203 $ 230,962 10,181 $ 139,541
Shares issued in connection with
reinvestment of distributions......... 1,920 32,714 30 443
------------ -------------- ------------ ---------------
16,123 263,676 10,211 139,984
Shares repurchased...................... (3,834) (66,384) (3,594) (49,444)
------------ -------------- ------------ ---------------
Net increase............................ 12,289 $ 197,292 6,617 $ 90,540
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1997, the
expenses of Small Cap Growth Portfolio, GT Global America Mid Cap Growth Fund
and Value Portfolio were reduced by $2,560, $84,266 and $436 respectively, under
these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America Mid
Cap Growth Fund designates $9,085,505, and the GT Global America Value Fund
designates $23,905 as capital gains dividends for the fiscal year ended December
31, 1997.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1997:
<TABLE>
<CAPTION>
FUND
- ----------------------------------------------------------------------
<S> <C>
GT Global America Small Cap Growth Fund............................... 3.06%
GT Global America Mid Cap Growth Fund................................. 3.13%
GT Global America Value Fund.......................................... 16.05%
</TABLE>
FS-219
<PAGE> 780
STATEMENT OF
ADDITIONAL INFORMATION
CLASS A AND CLASS B SHARES OF
AIM BASIC VALUE FUND
AIM SMALL CAP GROWTH FUND
(SERIES PORTFOLIOS OF
AIM GROWTH SERIES)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 77046-1173
(713) 626-1919
---------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON TX 77210-4739
OR BY CALLING (800) 347-4246.
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 8, 1998 RELATING TO THE
AIM BASIC VALUE FUND PROSPECTUS AND THE AIM SMALL CAP GROWTH FUND PROSPECTUS,
EACH DATED SEPTEMBER 8, 1998
<PAGE> 781
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
INTRODUCTION................................................ 4
GENERAL INFORMATION ABOUT THE FUNDS......................... 4
The Trust and Its Shares.................................. 4
INVESTMENT OBJECTIVES AND POLICIES.......................... 5
Investment Objectives..................................... 5
Investments in Other Investment Companies................. 5
Depositary Receipts....................................... 5
Warrants or Rights........................................ 6
Lending of Portfolio Securities........................... 6
Commercial Bank Obligations............................... 6
Repurchase Agreements..................................... 6
Borrowing, Reverse Repurchase Agreement and "Roll"
Transactions........................................... 7
Temporary Defensive Strategies............................ 7
OPTIONS AND FUTURES......................................... 7
Special Risks of Options and Futures...................... 7
Writing Call Options...................................... 8
Writing Put Options....................................... 9
Purchasing Put Options.................................... 9
Purchasing Call Options................................... 9
Index Options............................................. 10
Interest Rate and Stock Index Futures Contracts........... 11
Options on Futures Contracts.............................. 13
Limitations on Use of Futures, and Options on Futures..... 13
Cover..................................................... 13
RISK FACTORS................................................ 14
Illiquid Securities....................................... 14
Debt Securities........................................... 15
INVESTMENT LIMITATIONS...................................... 15
EXECUTION OF PORTFOLIO TRANSACTIONS......................... 16
Portfolio Trading and Turnover............................ 17
MANAGEMENT.................................................. 18
Trustees and Executive Officers........................... 18
Investment Management and Administrative Services......... 20
Expenses of the Funds and the Portfolios.................. 21
THE DISTRIBUTION PLANS...................................... 21
The Class A Plan.......................................... 21
The Class B Plan.......................................... 21
Both Plans................................................ 22
THE DISTRIBUTOR............................................. 24
NET ASSET VALUE DETERMINATION............................... 25
HOW TO PURCHASE AND REDEEM SHARES........................... 26
PROGRAMS AND SERVICES FOR SHAREHOLDERS...................... 27
DIVIDEND ORDER.............................................. 27
</TABLE>
2
<PAGE> 782
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
TAXES....................................................... 27
Taxation of Funds......................................... 27
Taxation of the Portfolios................................ 28
Taxation of the Fund's Shareholders....................... 28
MISCELLANEOUS INFORMATION................................... 29
Custodian................................................. 29
Transfer Agency and Accounting Agency Services............ 29
Independent Accountants................................... 29
Shareholder Liability..................................... 30
Names..................................................... 30
Control Persons and Principal Holders of Securities....... 30
INVESTMENT RESULTS.......................................... 31
Total Return Quotations................................... 31
Performance Information................................... 32
APPENDIX.................................................... 34
Description of Bond Ratings............................... 34
Description of Commercial Paper Ratings................... 35
Absence of Rating......................................... 35
FINANCIAL STATEMENTS........................................ FS
</TABLE>
3
<PAGE> 783
INTRODUCTION
This Statement of Additional Information relates to the Class A and Class B
shares of AIM Small Cap Growth Fund, formerly AIM Small Cap Equity Fund ("Small
Cap Fund") and AIM Basic Value Fund, formerly AIM America Value Fund ("Basic
Value Fund") (individually, a "Fund," and collectively, the "Funds"). Each Fund
is a diversified series of AIM Growth Series (the "Trust"), a registered
open-end management investment company. The Small Cap Fund and Basic Value Fund
invest all of their investable assets in the Small Cap Portfolio and Value
Portfolio (individually, a "Portfolio," and collectively, the "Portfolios"),
respectively.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for the Portfolios and for the Funds.
The Trust is a series mutual fund. The rules and regulations of the Securities
and Exchange Commission (the "SEC") require all mutual funds to furnish
prospective investors certain information concerning the activities of the fund
being considered for investment. This information for Small Cap Fund is included
in a Prospectus dated September 8, 1998, and for Basic Value Fund is included in
a separated Prospectus dated September 8, 1998. Additional copies of the
Prospectuses and 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, TX 77210-4739
or by calling (800) 347-4246. Investors must receive a Prospectus before they
invest.
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 Prospectus; and, in order to avoid repetition, reference will be
made to sections of the Prospectus. Additionally, the Prospectus and this
Statement of Additional Information omit certain information contained in the
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items omitted from the Prospectus and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Global Growth Series, which
was organized as a Massachusetts business trust on February 19, 1985. The Trust
was reorganized on May 29, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of the following portfolios: each of the Funds, AIM New
Pacific Growth Fund, AIM Europe Growth Fund, AIM Japan Growth Fund, AIM
International Growth Fund, AIM Worldwide Growth Fund and AIM Mid Cap Equity Fund
formerly known as AIM Mid Cap Growth Fund. Each of these funds has three
separate classes: Class A, Class B and Advisor Class shares. All historical
financial and other information contained in this Statement of Additional
Information for periods prior to May 7, 1998, is that of the series of G.T.
Global Growth Series (renamed AIM Growth Series).
This Statement of Additional Information relates solely to the Class A and B
shares of the Funds.
The term "majority of the outstanding shares" of the Trust, of a particular
Fund or of a particular class of a Fund or of a particular Portfolio means,
respectively, the vote of the lesser of (a) 67% or more of the shares of the
Trust, such Fund or such class present at a meeting of the Trust's shareholders,
if the holders of more than 50% of the outstanding shares of the Trust, such
Fund or such class are present or represented by proxy, or (b) more than 50% of
the outstanding shares of the Trust, such Fund or such class.
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees with respect to the class of such Fund and, upon liquidation of the
Fund, to participate proportionately in the net assets of the Fund allocable to
such class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion
and exchange rights as set forth in the Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
Shareholders of the Funds do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Funds voting
together for election of trustees may elect all of the members of the Board of
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
4
<PAGE> 784
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES
The investment objective of each Fund is long-term capital appreciation. The
Small Cap Fund and Basic Value Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Small Cap Portfolio
and Value Portfolio, respectively, each of which is a subtrust (a "series") of
Growth Portfolio, a New York Common Law Trust registered as an open-end
management investment company with an investment objective that is identical to
that of its corresponding Fund. Whenever the phrase "all of the Fund's
investable assets" is used herein and in the Prospectus, it means that the only
investment securities that will be held by a Fund will be its interest in its
corresponding Portfolio. A Fund may withdraw its investment in its corresponding
Portfolio at any time, if the Board of Trustees of the Trust determines that it
is in the best interests of the Fund and its shareholders to do so. Upon any
such withdrawal, a Fund's assets would be invested in accordance with the
investment policies described below and in the Prospectus with respect to its
corresponding Portfolio.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Portfolios may invest in the securities of closed-end investment companies
(including investment vehicles or companies advised by AIM or its affiliates
("Affiliated Funds")) within the limits of the Investment Company Act of 1940,
as amended (the "1940 Act"). These limitations currently provide that, in
general, each Portfolio may purchase shares of a closed-end investment company
unless (a) such a purchase would cause a Portfolio to own more than 3% of the
total outstanding voting stock of the investment company or (b) such a purchase
would cause a Portfolio to have more than 5% of its assets invested in the
investment company or more than 10% of its assets invested in an aggregate of
all such investment companies. Investment in investment companies may involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Portfolios do not intend to invest in such vehicles or funds
unless AIM determines that the potential benefits of such investments justify
the payment of any applicable premiums. The return on such securities will be
reduced by operating expenses of such companies including payments to the
investment managers of those investment companies. With respect to investments
in Affiliated Funds, AIM waives its advisory fee to the extent that such fees
are based on assets of a Fund invested in Affiliated Funds.
DEPOSITARY RECEIPTS
Each Portfolio may invest up to 10% of its total assets in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs") American
Depositary Shares ("ADSs"), Global Depositary Receipts ("GDRs") and European
Depositary Receipts ("EDRs") or other securities convertible into securities of
eligible European or Far Eastern issuers. These securities may not necessarily
be denominated in the same currency as the securities for which they may be
exchanged. ADRs and ADSs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust
companies and evidence ownership of either foreign or domestic securities. GDRs
are similar to EDRs and are designed for use in several international financial
markets. Generally, ADRs and ADSs in registered form are designed for use in
United States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of a Portfolio's investment policies,
its investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in
the equity securities representing securities of foreign issuers into which they
may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored."
While ADRs issued under these two types of facilities are in some respects
similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants. A
depository may establish an unsponsored facility without participation by (or
even necessarily the acquiescence of) the issuer of the deposited securities,
although typically the depository requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facilities. The depository usually charges
fees upon the deposit and withdrawal of the deposited securities, the conversion
of dividends into U.S. dollars, the disposition of non-cash distributions, and
the performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs
5
<PAGE> 785
(such as deposit and withdrawal fees). Under the terms of most sponsored
arrangements, depositories agree to distribute notices of shareholder meetings
and voting instructions, and to provide shareholder communications and other
information to the ADR holders at the request of the issuer of the deposited
securities. The Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Portfolio in connection with other
securities or separately and provide the Portfolio with the right to purchase at
a later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to subscribe for other securities or
commodities. Warrants do not carry with them the right to dividends or voting
rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the issuer. As a
result, warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Portfolio may make
secured loans of its portfolio securities amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans continuously be
secured by collateral at least equal at all times to the value of the securities
lent, plus any accrued interest, "marked to market" on a daily basis. The
Portfolios may pay reasonable administrative and custodial fees in connection
with the loans of their securities. While the securities loans are outstanding,
the Portfolios will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. Each Portfolio will
have a right to call each loan at any time and obtain the securities within the
stated settlement period. The Portfolios will not have the right to vote equity
securities while they are being lent, but may call in a loan in anticipation of
any important vote. Loans will only be made to firms deemed by AIM to be of good
standing and will not be made unless, in the judgment of AIM, the consideration
to be earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Portfolio's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks are obligations of
the issuing bank and may be general obligations of the parent bank. Such
obligations, however, may be limited by the terms of a specific obligation and
by government regulation. Although a Portfolio typically will acquire
obligations issued and supported by the credit of U.S. banks having total assets
at the time of purchase of $1 billion or more, this $1 billion figure is not an
investment policy or restriction of any Portfolio. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investment in securities, including possible decline in
the market value of the underlying securities and delays and costs to the
Portfolio if the other party to the repurchase agreement becomes bankrupt, the
Portfolios intend to enter into repurchase agreements only with banks and
dealers believed by AIM to present minimal credit risks in accordance with
guidelines approved by Growth Portfolio's Board of Trustees. AIM will review and
monitor the creditworthiness of such institutions under the general supervision
of Growth Portfolio's Board.
Each Portfolio will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings, there may be restrictions on the
Portfolio's ability to sell the collateral and the Portfolio could suffer a
loss. However, with respect to financial institutions whose bankruptcy or
liquidation proceedings are subject to the U.S. Bankruptcy Code, the Portfolios
intend to comply with provisions under the U.S. Bankruptcy Code that would allow
them to immediately to resell the collateral. A Portfolio will not enter into a
repurchase agreement with a maturity of
6
<PAGE> 786
more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Portfolio's borrowings will not exceed 33 1/3% of its total assets, i.e.,
each Portfolio's total assets at all times will equal at least 300% of the
amount of outstanding borrowings. If market fluctuations in the value of a
Portfolio's portfolio holdings or other factors cause the ratio of the
Portfolio's total assets to outstanding borrowings to fall below 300%, within
three days (excluding Sundays and holidays) of such event the Portfolio may be
required to sell portfolio securities to restore the 300% asset coverage, even
though from an investment standpoint such sales might be disadvantageous. Each
Portfolio also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. Any borrowing by a Portfolio
may cause greater fluctuation in the value of its corresponding Fund's shares
than would be the case if the Portfolio did not borrow.
Each Portfolio's fundamental investment limitations permit the Portfolio to
borrow money for leveraging purposes. Each Portfolio, however, currently is
prohibited, pursuant to a non-fundamental investment policy, from borrowing
money in order to purchase securities. Nevertheless, this policy may be changed
in the future by Growth Portfolio's Board of Trustees. If a Portfolio employs
leverage in the future, it would be subject to certain additional risks. Use of
leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in a Portfolio's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, a Portfolio's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, a Portfolio's earnings or net asset value would
decline faster than would otherwise be the case.
Each Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Portfolio transfers
possession of a security to another party, such as a bank or broker/dealer in
return for cash, and agrees to repurchase the security in the future at an
agreed upon price, which includes an interest component. Each Portfolio also may
engage in "roll" borrowing transactions which involve its sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Portfolio may receive a fee) to purchase similar, but
not identical, securities at a future date. Each Portfolio will segregate with a
custodian, liquid assets in an amount sufficient to cover its obligations under
"roll" transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Portfolios may invest include the
following: government securities; high grade commercial paper; bank certificates
of deposit; bankers' acceptances; and repurchase agreements related to any of
the foregoing. High grade commercial paper refers to commercial paper rated P-1
by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"), at the time of investment
or, if unrated, deemed by AIM to be of comparable quality.
OPTIONS AND FUTURES
SPECIAL RISKS OF OPTIONS AND FUTURES
The use of options and futures contracts involves special considerations and
risks, as described below. Risks pertaining to particular instruments are
described in the sections that follow.
(1) Successful use of most of these instruments depends upon AIM's
ability to predict movements of the overall securities markets, which
requires different skills than predicting changes in the prices of
individual securities. While AIM is experienced in the use of these
instruments, there can be no assurance that any particular strategy adopted
will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used
in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
7
<PAGE> 787
(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. For example, if a
Portfolio entered into a short hedge because AIM projected a decline in the
price of a security in the Portfolio's securities portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Portfolio could
suffer a loss. In either such case, the Portfolio would have been in a
better position had it not hedged at all.
(4) As described below, a Portfolio 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 (i.e., instruments other than purchased options). If the Portfolio
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 Portfolio'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 Portfolio sell a portfolio security at a disadvantageous
time. The Portfolio's ability to close out a position in an instrument
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to a Portfolio.
WRITING CALL OPTIONS
A Portfolio may write (sell) call options on securities and indices. Call
options generally will be written on securities that, in the opinion of AIM, are
not expected to make any major price moves in the near future but that, over the
long term, are deemed to be attractive investments for the Portfolio.
A call option gives the holder (buyer) the right to purchase a security 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 the writer of a call option continues, he or she may be assigned an exercise
notice, requiring him or her to deliver the underlying security against payment
of the exercise price. This obligation terminates upon the expiration of the
call option, or such earlier time at which the writer effects a closing purchase
transaction by purchasing an option identical to that previously sold.
Portfolio securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each
Portfolio's investment objective. When writing a call option, a Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, and retains the
risk of loss should the price of the security decline. Unlike one who owns
securities not subject to an option, a Portfolio has no control over when it may
be required to sell the underlying securities, since most options may be
exercised at any time prior to the option's expiration. If a call option that a
Portfolio has written expires, the Portfolio 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 during the option period. If the call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security, which will be increased or offset by the premium received.
Neither Portfolio considers a security covered by a call option to be "pledged"
as that term is used in the Portfolio's policy that limits the pledging or
mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security appreciates to a price
higher than the exercise price of the call option, it can be expected that the
option will be exercised and a Portfolio will be obligated to sell the security
at less than its market value.
The premium that a Portfolio receives for writing a call option is deemed to
constitute the market value of an option. The premium a Portfolio will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment
and the length of the option period. In determining whether a particular call
option should be written, AIM will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security from being called, or
to permit the sale of the underlying security. Furthermore, effecting a closing
transaction
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will permit a Portfolio to write another call option on the underlying security
with either a different exercise price or expiration date or both.
Each Portfolio will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or indices at the time the options
are written. From time to time, a Portfolio may purchase an underlying security
for delivery in accordance with the exercise of an option, rather than
delivering such security from its portfolio. In such cases, additional costs
will be incurred.
A Portfolio will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Portfolio.
WRITING PUT OPTIONS
The Portfolios may write put options on securities and indices. A put option
gives the purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security at the exercise price at any time
until (American style) or on (European style) the expiration date. The operation
of put options in other respects, including their related risks and rewards, is
substantially identical to that of call options.
A Portfolio generally would write put options in circumstances where AIM
wishes to purchase the underlying security for the Portfolio's portfolio at a
price lower than the current market price of the security. In such event, the
Portfolio 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.
Since the Portfolio also would receive interest on debt securities maintained to
cover the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security depreciates to a price
lower than the exercise price of the put option, it can be expected that the put
option will be exercised and a Portfolio will be obligated to purchase the
security at greater than its market value.
PURCHASING PUT OPTIONS
Each Portfolio may purchase put options on securities and indices. As the
holder of a put option, a Portfolio would have the right to sell the underlying
security at the exercise price at any time until (American style) or on
(European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
A Portfolio may purchase a put option on an underlying security ("protective
put") owned by the Portfolio in order to protect against an anticipated decline
in the value of the security. Such hedge protection is provided only during the
life of the put option when the Portfolio, as the holder of the put option, is
able to sell the underlying security at the put exercise price regardless of any
decline in the underlying security's market price. The premium paid for the put
option and any transaction costs would reduce any profit otherwise available for
distribution when the security eventually is sold.
A Portfolio also may purchase put options at a time when the Portfolio does
not own the underlying security. By purchasing put options on a security it does
not own, a Portfolio seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Portfolio will
lose its entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Portfolio may purchase call options on securities and indices. As the
holder of a call option, a Portfolio would have the right to purchase the
underlying security at the exercise price at any time until (American style) or
on
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(European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such option, exercise such options or permit such
options to expire.
Call options may be purchased by a Portfolio for the purpose of acquiring the
underlying security for its portfolio. Utilized in this fashion, the purchase of
call options would enable a Portfolio to acquire the security at the exercise
price of the call option plus the premium paid. At times, the net cost of
acquiring the security in this manner may be less than the cost of acquiring the
security directly. This technique also may be useful to the Portfolios in
purchasing a large block of securities that would be more difficult to acquire
by direct market purchases. As long as it holds such a call option, rather than
the underlying security itself, a Portfolio is partially protected from any
unexpected decline in the market price of the underlying security 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 Portfolio also may purchase call options on underlying securities it owns
to avoid realizing losses that would result in a reduction of its current
return. For example, where a Portfolio has written a call option on an
underlying security having a current market value below the price at which it
purchased the security, an increase in the market price could result in the
exercise of the call option written by the Portfolio and the realization of a
loss on the underlying security. Accordingly, the Portfolio could purchase a
call option on the same underlying security, which could be exercised to fulfill
the Portfolio's delivery obligations under its written call (if it is
exercised). This strategy could allow the Portfolio to avoid selling the
portfolio security at a time when it has an unrealized loss; however, the
Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Portfolio's total assets at the time of purchase.
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 Portfolio will not purchase an OTC option unless AIM 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.
The staff of the SEC considers purchased OTC options to be illiquid
securities. A Portfolio may also sell OTC options and, in connection therewith,
set aside assets or cover its obligations with respect to OTC options written by
the Portfolio. The assets used as cover for OTC options written by a Portfolio
will be considered illiquid unless the OTC options are sold to qualified dealers
who agree that the Portfolio 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.
A Portfolio's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. A Portfolio intends to
purchase or write only those exchange-listed options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although a
Portfolio will enter into OTC options only with contra parties that are expected
to be capable of entering into closing transactions with the Portfolio, there is
no assurance that the Portfolio 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 contra party, the Portfolio might be unable to close out an OTC option
position at any time prior to its expiration.
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. When a Portfolio writes
a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the Portfolio an amount of cash if the closing level of the index
upon which the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple (the
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"multiplier"), which determines the total dollar value for each point of such
difference. When a Portfolio buys a call on an index, it pays a premium and has
the same rights as to such call as are indicated above. When a Portfolio buys a
put on an index, it pays a premium and has the right, prior to the expiration
date, to require the seller of the put, upon the Portfolio's exercise of the
put, to deliver to the Portfolio an amount of cash if the closing level of the
index upon which the put is based is less than the exercise price of the put,
which amount of cash is determined by the multiplier, as described above for
calls. When a Portfolio writes a put on an index, it receives a premium and the
purchaser has the right, prior to the expiration date, to require the Portfolio
to deliver to it an amount of cash equal to the difference between the closing
level of the index and the exercise price times the multiplier, if the closing
level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Portfolio writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Portfolio 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, a Portfolio 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 vary
from the value of the index.
Even if a Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Portfolio as the call writer,
will not know that it has been assigned until the next business day at the
earliest. The time lag between exercise and notice of assignment poses no risk
for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Portfolio purchases an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Portfolio will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
INTEREST RATE AND STOCK INDEX FUTURES CONTRACTS
A Portfolio may enter into interest rate or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates or stock price levels in order to establish more
definitely the effective return on securities held or intended to be acquired by
the Portfolio. A Portfolio's hedging may include sales of Futures as an offset
against the effect of expected increases in interest rates, or decreases in
stock prices, and purchases of Futures as an offset against the effect of
expected declines in interest rates, or increases in stock prices.
The Portfolios only will enter into Futures Contracts that are traded 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 by the Commodity Futures Trading
Commission ("CFTC").
Although techniques other than sales and purchases of Futures Contracts could
be used to reduce a Portfolio's exposure to interest rate and stock market
fluctuations, the Portfolio may be able to hedge its exposure more effectively
and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument for a
specified price at a designated date, time and place. A stock index Futures
Contract 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 at
which the Futures Contract is originally struck; 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 Futures Contract is outstanding.
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Although Futures Contracts typically require future delivery of and payment
for financial instruments, Futures Contracts usually are closed out before the
delivery date. Closing out an open Futures Contract sale or purchase is effected
by entering into an offsetting Futures Contract purchase or sale, respectively,
for the same aggregate amount of the identical financial instrument and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if it is less, the Portfolio
realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that a Portfolio will be able
to enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Portfolio is not able to enter into an
offsetting transaction, the Portfolio will continue to be required to maintain
the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one September stock index Futures Contract on an
exchange may be fulfilled at any time before delivery under the Futures Contract
is required (i.e., on a specified date in September, the "delivery month") by
the purchase of the same September stock index Futures Contract on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Portfolio.
Each Portfolio's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities that a Portfolio owns, or Futures Contracts
will be purchased to protect a Portfolio against an increase in the price of
securities it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Portfolio in order to initiate Futures trading and to maintain
the Portfolio's open positions in Futures Contracts. A margin deposit made when
the Futures Contract is entered into ("initial margin") is intended to ensure
the Portfolio's performance under the Futures Contract. The margin required for
a particular Futures Contract is set by the exchange on which the Futures
Contract 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 the Portfolio entered into the Futures
Contract will be made on a daily basis as the price of the underlying security
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest rates and in stock market movements, which in turn are affected by
fiscal and monetary policies and national and international political and
economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities in the Portfolio's portfolio being
hedged. The degree of imperfection of correlation depends upon circumstances
such as variations in speculative market demand for Futures and for securities,
including technical influences in Futures trading; and differences between the
financial instruments being hedged and the instruments underlying the standard
Futures Contracts available for trading. A decision of whether, when and how to
hedge involves skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or interest
rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in
Futures Contract and options on Futures Contract prices during a single trading
day. The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices occasionally have moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
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If a Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Portfolio would continue to
be subject to market risk with respect to the position. In addition, except in
the case of purchased options, the Portfolio 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.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities, 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, 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 is exercised on the last trading day 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
level of the securities or index upon which the Futures Contract is based on the
expiration date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities or indices.
If a Portfolio writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES AND OPTIONS ON FUTURES
To the extent that a Portfolio enters into Futures Contracts and options on
Futures Contracts, in each case other than for bona fide hedging purposes (as
defined by the CFTC), the aggregate initial margin and premiums required to
establish these positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized losses on
any contracts the Portfolio has entered into. In general, a call option on a
Futures Contract is "in-the-money" if the value of the underlying Futures
Contract exceeds the strike, i.e., exercise, price of the call; a put option on
a Futures Contract is "in-the-money" if the value of the underlying Futures
Contract is exceeded by the strike price of the put. This guideline may be
modified by Growth Portfolio's Board of Trustees without a shareholder vote.
This limitation does not limit the percentage of a Portfolio's assets at risk to
5%.
COVER
Transactions using Futures Contracts and options (other than options purchased
by a Portfolio) expose the Portfolio to an obligation to another party. A
Portfolio will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities or other options or Futures
Contracts, or (2) cash, receivables and short-term debt
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securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Portfolio will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash or liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Futures Contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of a Portfolio's
assets are used for cover or otherwise set aside, it could affect portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
RISK FACTORS
ILLIQUID SECURITIES
A Portfolio may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if a Portfolio cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Portfolio values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities eligible
for trading on U.S. securities exchanges or in the OTC markets. Moreover,
restricted securities, which may be illiquid for purposes of this limitation,
often sell, if at all, at a price lower than similar securities that are not
subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained
in the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Portfolio may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Portfolio, however, could affect adversely the marketability of such portfolio
securities and the Portfolio might be unable to dispose of such securities
promptly or at favorable prices.
With respect to liquidity determinations generally, Growth Portfolio's Board
of Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. That Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to AIM in accordance with procedures approved by
that Board of Trustees. AIM takes into account a number of factors in reaching
liquidity decisions, including: (i) the frequency of trading in the security;
(ii) the number of dealers who make quotes for the security; (iii) the number of
dealers who have undertaken to make a market in the security; (iv) the number of
other potential purchasers; and (v) the nature of the security and how trading
is effected (e.g., the time needed to sell the security, how offers are
solicited, and the mechanics of transfer). AIM monitors the liquidity of
securities in each Portfolio's securities portfolio and periodically reports
such determinations to Growth Portfolio's Board of Trustees. If the liquidity
percentage restriction of a Portfolio is satisfied at the time of investment, a
later increase in the percentage of illiquid securities held by the Portfolio
resulting from a change in market value or assets will not constitute a
violation of that restriction. If as a result of a change in market value or
assets, the percentage of illiquid securities held by a Portfolio increases
above the applicable limit, AIM will take
14
<PAGE> 794
appropriate steps to bring the aggregate amount of illiquid assets back within
the prescribed limitations as soon as reasonably practicable, taking into
account the effect of any disposition on that Portfolio.
DEBT SECURITIES
Each Portfolio is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, AIM reviews and monitors the
creditworthiness of each issuer and issue and analyzes interest rate trends and
specific developments that may affect individual issuers, in addition to relying
on ratings assigned by S&P, Moody's or another nationally recognized statistical
rating organization ("NRSRO") as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher grade debt securities. Each Portfolio is also permitted to purchase debt
securities that are not rated by S&P, Moody's or another NRSRO but that AIM
determines to be of comparable quality to that of rated securities in which the
Portfolio may invest. Such securities are included in the computation of any
percentage limitations applicable to the comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a
Portfolio has acquired the security. AIM will consider such an event in
determining whether a Portfolio should continue to hold the security but is not
required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Description of Debt Ratings' herein.
INVESTMENT LIMITATIONS
The Small Cap Fund and Basic Value Fund each has the following fundamental
investment policy to enable it to invest in the Small Cap Portfolio and Value
Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other investment policies and limitations of each Fund and its
corresponding Portfolio are identical. Therefore, although the following
discusses certain investment policies and limitations of each Portfolio and
Growth Portfolio's Board of Trustees, it applies equally to each Fund and the
Trust's Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that may not be changed without approval by the affirmative vote of a
majority of the outstanding shares of the Portfolio. Neither Portfolio may:
(1) Purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation,
and except that a Portfolio may exercise rights under agreements relating
to such securities, including the right to enforce security interests and
to hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but a Portfolio may
purchase, sell or enter into financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments;
(3) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of a Portfolio's total
assets (including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that a
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes;
(4) Make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
limitation, the acquisition of bonds, debentures, other debt securities or
instruments, or participations or other interests therein and investments
in government obligations, commercial paper, certificates of deposit,
bankers' acceptances or similar instruments will not be considered the
making of a loan;
15
<PAGE> 795
(5) Purchase securities of any one issuer if, as a result, more than
5% of a Portfolio's total assets would be invested in securities of that
issuer or a Portfolio would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of a Portfolio's
total assets may be invested without regard to this limitation, and except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or to securities
issued by other investment companies;
(6) Engage in the business of underwriting securities of other
issuers, except to the extent that a Portfolio might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities; or
(7) Purchase any security if, as a result of that purchase, 25% or
more of a Portfolio's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The following investment limitations of each Portfolio are not fundamental
policies and may be changed by vote of Growth Portfolio's Board of Trustees
without shareholder approval. Neither Portfolio may:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the
Portfolio has valued the securities and includes, among other things,
repurchase agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets;
(3) Enter into a futures contract or an option on a futures contract,
in each case other than for bona fide hedging purposes (as defined by the
CFTC), if the aggregate initial margin and premiums required to establish
all of these positions (excluding the amount by which options are
"in-the-money") exceeds 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Portfolio has entered into;
(4) Purchase securities of other investment companies, except to the
extent permitted by the 1940 Act, in the open market at no more than
customary commission rates. This limitation does not apply to securities
received or acquired as dividends, through offers of exchange, or as a
result of reorganization, consolidation, or merger;
(5) Purchase securities on margin, provided that a Portfolio may
obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that a Portfolio
may make margin deposits in connection with its use of financial options
and futures, forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Portfolio's investment policies or restrictions. A
Portfolio may exchange securities, exercise conversion or subscription rights,
warrants, or other rights to purchase common stock or other equity securities
and may hold, except to the extent limited by the 1940 Act, any such securities
so acquired without regard to the Portfolio's investment policies and
limitations. The original cost of the securities so acquired will be included in
any subsequent determination of a Portfolio's compliance with the investment
percentage limitations referred to above and in the Prospectus.
Investors should refer to each Fund's prospectus for further information with
respect to that particular Fund's investment objective, which may not be changed
without the approval of its shareholders, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by Growth Portfolio's Board of Trustees, AIM
is responsible for the execution of the Portfolios' securities transactions and
the selection of brokers/dealers who execute such transactions on behalf of the
16
<PAGE> 796
Portfolios. In executing transactions, AIM seeks the best net results for each
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although AIM
generally seeks reasonably competitive commission rates and spreads, payment of
the lowest commission or spread is not necessarily consistent with the best net
results. While the Portfolios may engage in soft dollar arrangements for
research services, as described below, the Portfolios have no obligation to deal
with any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of the Portfolios, AIM may select brokers to
execute the Portfolios' securities transactions on the basis of the research
services they provide to AIM for its use in managing the Portfolios and its
other advisory accounts. Such services may include furnishing analyses, reports
and information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts,
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such broker are in addition to, and not in lieu of, the services
required to be performed by AIM under the applicable investment management and
administration contract. A commission paid to such broker may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that AIM determines in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of AIM to the Portfolios and its other clients and that the total
commissions paid by each Fund will be reasonable in relation to the benefits
received by the Portfolios over the long term. Research services may also be
received from dealers who execute Portfolio transactions in OTC markets.
AIM may allocate brokerage transactions to broker/dealers who have entered
into arrangements under which the broker/dealer allocates a portion of the
commissions paid by the Portfolio toward payment of its expenses, such as
custodian fees.
Investment decisions for each Portfolio and for other investment accounts
managed by AIM are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts, including one or more Portfolios. In such cases,
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Portfolio is concerned, in other cases AIM
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Portfolios.
Under a policy adopted by Growth Portfolio's Board of Trustees, and subject to
the policy of obtaining the best net results, AIM may consider a broker/dealer's
sale of the shares of the Funds and the other funds for which AIM serves as
investment manager and/or administrator in selecting broker/dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Funds and such other funds.
Each Portfolio contemplates that, consistent with the policy of obtaining the
best net results, brokerage transactions may be conducted through certain
companies that are affiliated with AIM. Growth Portfolio's Board of Trustees has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to such affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations.
The Portfolios 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 Portfolio, provided the conditions of an exemptive order
received by the Funds from the SEC are met. In addition, a Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolios
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.
For the fiscal years ended December 31, 1997 and December 31, 1996, and for
the fiscal period October 18, 1995 (commencement of operations) to December 31,
1995, the Small Cap Portfolio paid aggregate brokerage commissions of $91,971,
$54,241 and $3,317, respectively. For the fiscal years ended December 31, 1997
and December 31, 1996, and for the fiscal period October 18, 1995 (commencement
of operations) to December 31, 1995, the Value Portfolio paid aggregate
brokerage commissions of $22,202, $37,380 and $1,032, respectively.
PORTFOLIO TRADING AND TURNOVER
Although the Portfolios generally do not intend to trade for short-term
profits, the securities held by a Portfolio will be sold whenever AIM believes
it is appropriate to do so, without regard to the length of time a particular
security may have
17
<PAGE> 797
been held. Portfolio turnover rate is calculated by dividing the lesser of sales
or purchases of portfolio securities by each Portfolio's average month-end
portfolio value, excluding short-term investments. The portfolio turnover rate
will not be a limiting factor when AIM deems portfolio changes appropriate.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that a Portfolio will bear directly and may result
in the realization of net capital gains that are taxable when distributed to
each corresponding Fund's shareholders. For the fiscal years ended December 31,
1997 and December 31, 1996, the Small Cap Portfolio's and Value Portfolio's
portfolio turnover rates were 233% and 150%, and 93% and 256%, respectively.
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless otherwise
indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH REGISTRANT PRINCIPAL OCCUPATION WITH REGISTRANT
--------------------- ------------------------------ ------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (51) Trustee, Chairman of the Board Director, President and Chief Executive
and President Officer, A I M Management Group Inc.;
Director and President, A I M Advisors,
Inc.; Director and Senior Vice
President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management
Company; Director, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------
C. DEREK ANDERSON (57) Trustee President, Plantagenet Capital
220 Sansome Street Management, LLC (an investment
Suite 400 partnership); Chief Executive Officer,
San Francisco, CA 94104 Plantagenet Holdings, Ltd. (an
investment banking firm); Director,
Anderson Capital Management, Inc. since
1988; Director, PremiumWear, Inc.
(formerly Munsingwear, Inc.) (a casual
apparel company); Director, "R" Homes,
Inc. and various other companies; and
Trustee, each of the other investment
companies registered under the 1940 Act
that is sub-advised or sub-administered
by the Sub-advisor.
- ----------------------------------------------------------------------------------------------------
FRANK S. BAYLEY (59) Trustee Partner, law firm of Baker & McKenzie;
Two Embarcadero Center Director and Chairman, C.D. Stimson
Suite 2400 Company (a private investment company);
San Francisco, CA 94111 and Trustee, each of the other
investment companies registered under
the 1940 Act that is sub-advised or
sub-administered by the Sub-advisor.
- ----------------------------------------------------------------------------------------------------
ARTHUR C. PATTERSON (54) Trustee Managing Partner, Accel Partners (a
428 University Avenue venture capital firm); Director,
Palo Alto, CA 94301 Viasoft and PageMart, Inc. (both public
software companies) and several other
privately held software and
communications companies; and Trustee,
each of the other investment companies
registered under the 1940 Act that is
sub-advised or sub-administered by the
Sub-advisor.
- ----------------------------------------------------------------------------------------------------
RUTH H. QUIGLEY (63) Trustee Private investor; President, Quigley
1055 California Street Friedlander & Co., Inc. (a financial
San Francisco, CA 94108 advisory services firm) from 1984 to
1986; and Director, each of the other
investment companies registered under
the 1940 Act that is sub-advised or
sub-administered by the Sub-advisor.
- ----------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM Advisors, Inc.
as defined in the 1940 Act.
18
<PAGE> 798
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
NAME, ADDRESS AND AGE POSITIONS HELD WITH REGISTRANT PRINCIPAL OCCUPATION WITH REGISTRANT
--------------------- ------------------------------ ------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
+JOHN J. ARTHUR (53) Vice President Director, Senior Vice President and
Treasurer, A I M Advisors, Inc.; Vice
President and Treasurer, A I M
Management Group Inc., A I M Capital
Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc., and
Fund Management Company.
- ----------------------------------------------------------------------------------------------------
KENNETH W. CHANCEY (53) Vice President and Principal Senior Vice President -- Mutual Fund
50 California Street Accounting Officer Accounting, the Sub-advisor since 1997;
San Francisco, CA 94111 Vice President -- Mutual Fund
Accounting, the Sub-advisor from 1992
to 1997.
- ----------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance
Officer, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M
Distributors, Inc., A I M Fund
Services, Inc. and Fund Management
Company.
- ----------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Vice President Director and President, A I M Capital
Management, Inc.; Director and Senior
Vice President, A I M Management Group
Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------
HELGE K. LEE (52) Vice President and Secretary Chief Legal and Compliance
50 California Street Officer -- North America, the
San Francisco, CA 94111 Sub-advisor since October 1997;
Secretary and Chief Legal and
Compliance Officer, INVESCO (NY) Asset
Management, Inc., INVESCO (NY), Inc.,
GT Global Investor Services, Inc. and
G.T. Insurance since August 1997;
Secretary and Chief Legal and
Compliance Officer, GT Global from
August 1997 to April 1998; Executive
Vice President of the Asset Management
Division of Liechtenstein Global Trust
AG, from October 1996 to May 1998;
Senior Vice President, General Counsel
and Secretary of INVESCO (NY) Asset
Management, Inc., INVESCO (NY), Inc.,
GT Global, GT Global Investor Services,
Inc. and G.T. Insurance from May 1994
to October 1996; and Senior Vice
President, General Counsel and
Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each
of the Strong Funds from October 1991
to May 1994.
- ----------------------------------------------------------------------------------------------------
+CAROL F. RELIHAN (43) Vice President Director, Senior Vice President,
General Counsel and Secretary, A I M
Advisors, Inc.; Vice President, General
Counsel and Secretary, A I M Management
Group, Inc.; Director, Vice President
and General Counsel, Fund Management
Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and
Vice President, A I M Capital
Management, Inc. and A I M
Distributors, Inc.
- ----------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President and Assistant Vice President and Fund Controller,
Treasurer A I M Advisors, Inc.; and Assistant
Vice President and Assistant Treasurer,
Fund Management Company.
- ----------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
+ Mr. Arthur and Ms. Relihan are married to each other.
19
<PAGE> 799
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and the
Funds and recommending firms to serve as independent auditors of the Trust. All
of the Trust's Trustees also serve as directors or trustees of some or all of
the other investment companies managed, administered or advised by AIM. All of
the Trust's executive officers hold similar offices with some or all of the
other investment companies managed, administered or advised by AIM. Each Trustee
who is not a director, officer or employee of AIM or any affiliated company is
paid aggregate fees of $5,000 a year, plus $300 per Fund for each meeting of the
Board attended, and reimbursed travel and other expenses incurred in connection
with attendance at such meetings. Other Trustees and Officers receive no
compensation or expense reimbursements from the Trust. For the fiscal year ended
December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who
are not directors, officers or employees of AIM or any affiliated company,
received total compensation of $6,425, $6,681, $5,450 and $6,068, respectively,
from the Trust for their services as Trustees. For the year ended December 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
directors, officers or employees of AIM or any other affiliated company,
received total compensation of $103,654, $106,556, $89,700 and $98,038,
respectively, from the investment companies managed or administered by AIM for
which he or she served as a Trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of June 26,
1998, the Officers and Trustees and their families as a group owned in the
aggregate beneficially or of record less than 1% of the shares of the Basic
Value Fund and less than 1% of the shares of the Small Cap Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM serves as each Portfolio's investment manager and administrator under an
investment management and administration contract between Growth Portfolio and
AIM ("Portfolio Management Contract"). AIM serves as administrator to each Fund
under an administration contract between the Trust and AIM ("Administration
Contract").
The Administration Contracts will not be deemed advisory contracts, as defined
under the 1940 Act. As investment managers and administrators, AIM makes all
investment decisions for each Portfolio and, as administrator, administers each
Portfolio's and Fund's affairs. Among other things, AIM furnishes the services
and pays the compensation and travel expenses of persons who perform the
executive, administrative, clerical and bookkeeping functions of the Portfolios
and the Funds and provide suitable office space and necessary small office
equipment and utilities.
The Portfolio Management Contracts may be renewed with respect to a Portfolio
for one-year terms, provided that any such renewal has been specifically
approved at least annually by: (i) the Portfolio's Board of Trustees or the
vote of a majority of the Portfolio's outstanding voting securities (as defined
in the 1940 Act), and (ii) a majority of the Portfolio's Trustees who are not
parties to the Portfolio Management Contracts or "interested persons" of any
such party (as defined in the 1940 Act), cast in person at a meeting called for
the specific purpose of voting on such approval. The Portfolio Management
Contracts provide that with respect to each Portfolio, and the Administration
Contracts provide that with respect to each Fund, either the Trust, the
Portfolio or AIM may terminate the contract without penalty upon sixty days'
written notice to the other party. The Portfolio Management Contracts terminate
automatically in the event of their assignment (as defined in the 1940 Act).
For the fiscal period October 18, 1995 (commencement of operations) to
December 31, 1995, the Small Cap Portfolio and the Value Portfolio paid fees of
$1,293 and $622, respectively, to INVESCO (NY), Inc. (former Sub-advisor to the
Portfolios and the Funds). For the same period, the Small Cap Fund and Basic
Value Fund paid administration fees of $755 and $349, respectively, to INVESCO
(NY), Inc. For the fiscal period October 18, 1995 (commencement of operations)
to December 31, 1995, INVESCO (NY), Inc. reimbursed the Small Cap Portfolio and
Value Portfolio for their respective investment management and administration
fees in the amounts of $1,293 and $622, respectively; for the same period, the
Small Cap Fund and Basic Value Fund reimbursed administration fees in the
amounts of $755 and $349, respectively. Accordingly, INVESCO (NY), Inc.
reimbursed each Fund and its respective Portfolio investment management and
administration fees in the aggregate amounts of $2,048 and $971, respectively.
For the fiscal years ended December 31, 1997 and December 31, 1996, the Small
Cap Portfolio and the Value Portfolio paid fees of $120,544 and $73,312; and
$74,372 and $27,487, respectively, to INVESCO (NY), Inc. For the same periods,
the Small Cap Fund and Basic Value Fund paid administration fees of $63,460 and
$39,004; and $39,171 and $14,722, respectively, to INVESCO (NY), Inc. For the
fiscal years ended December 31, 1997 and December 31, 1996, INVESCO (NY), Inc.
reimbursed the Small Cap Portfolio and Value Portfolio for their respective
investment management and administration fees in the amounts of $67,837 and
$73,312; and $74,372 and $27,487, respectively; for the same periods, INVESCO
(NY), Inc. reimbursed the Small Cap Fund and Basic Value Fund for their
respective administration fees in the amounts of $63,460 and $39,004; and
$39,171 and $14,722, respectively. Accordingly, INVESCO (NY), Inc.
20
<PAGE> 800
reimbursed each Fund and its corresponding Portfolio investment management and
administration fees in the aggregate amounts of $131,297 and $112,316; and
$113,543 and $42,209, respectively.
For the fiscal period October 18, 1995 (commencement of operations) to
December 31, 1995, INVESCO (NY), Inc., pursuant to a voluntary expense
undertaking to limit expenses to the maximum annual level of 2.00% and 2.65%,
respectively, of average daily net assets of the Class A shares and Class B
shares of the Funds, reimbursed the Small Cap Fund and Basic Value Fund for
expenses in the additional amounts of $65,079 and $66,907, respectively.
For the fiscal years ended December 31, 1997 and December 31, 1996, INVESCO
(NY), Inc., pursuant to its voluntary expense undertaking, reimbursed the Small
Cap Fund and Basic Value Fund for expenses in the additional amounts of $0 and
$58,269; and $38,419 and $164,683, respectively.
EXPENSES OF THE FUNDS AND THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by AIM, AIM
Distributors and other agents. These expenses include, in addition to the
advisory, distribution, transfer agency, pricing and accounting agency and
brokerage fees discussed above, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses, and expenses of reports and prospectuses sent to
existing investors. The allocation of general Trust expense and expenses shared
by the Funds with one another, are made on a basis deemed fair and equitable,
which may be based on the relative net assets of the Funds or the nature of the
services performed and relative applicability to each Fund. Similarly, the
allocation of general Growth Portfolio expenses, and expenses shared by the
Portfolios with each other, are made on a basis deemed fair and equitable and
may be based on the relative net assets of the Portfolios or the nature of the
services performed and relative applicability to each Portfolio. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, that are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses.
THE DISTRIBUTION PLANS
THE CLASS A PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act relating to the Class A shares of the Funds (the "Class A Plan").
The Class A Plan provides that the Class A shares pay 0.35% 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
Class A shares. Of such amounts, each Fund pays a service fee of 0.25% of the
average daily net assets attributable to Class A shares to selected dealers and
other institutions which furnish continuing personal shareholder services to
their customer who purchase and own Class A shares. Activities appropriate for
financing under the Class A 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 Plan.
THE CLASS B PLAN
The Trust has also adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to Class B shares of the Funds (the "Class B Plan",
and collectively with the Class A 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. Amounts paid in accordance with the Class B Plan may be
used to finance any activity primarily intended to result in the sale of Class B
shares, including but not limited to printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class B Plan. AIM Distributors may transfer and sell its
rights to payments under the Class B Plan in order to finance distribution
expenditures in respect of Class B shares.
21
<PAGE> 801
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
the 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 the Funds; performing
sub-accounting; establishing and maintaining shareholder accounts and records;
processing customer purchase and redemption transactions; providing periodic
statements showing a shareholder's account balance and the integration of such
statements with those of other transactions and balances in the shareholder's
other accounts serviced by the bank; forwarding applicable prospectuses, proxy
statements, reports and notices to bank clients who hold Fund shares; and such
other administrative services as the Funds 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.
Under a Shareholder Service Agreement, each Fund agrees to pay periodically
fees to selected dealers and other institutions who render the foregoing
services to their customers. The fees payable under a Shareholder Service
Agreement generally will be calculated at the end of each payment period for
each business day of the 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 each 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 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.
Prior to June 1, 1998, the Trust had adopted a different Rule 12b-1 plan, that
operated as a "reimbursement-type" plan (the "Prior Plan"). The information
provided below relates to payments made under the Prior Plan, which provided for
payments to GT Global Inc., the distributor of the Funds at the time the Prior
Plan was in effect.
For the fiscal year ended December 31, 1997, each Fund paid the following
amounts under the Prior Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
-----------------
CLASS A CLASS B CLASS A CLASS B
------- -------- ------- -------
<S> <C> <C> <C> <C>
Small Cap Fund................................. $33,776 $148,043 0.35% 1.00%
Basic Value Fund............................... $17,701 $102,587 0.35% 1.00%
</TABLE>
22
<PAGE> 802
Actual fees by category paid by the Fund with regard to the Class A shares
during the year ended December 31, 1997 follows:
<TABLE>
<CAPTION>
SMALL CAP BASIC VALUE
FUND FUND
--------- -----------
<S> <C> <C>
CLASS A
Compensation to Underwriters to partially offset other
marketing expenses..................................... $ 9,650 $ 5,057
Compensation to Dealers including finder's fees........... $24,126 $12,644
</TABLE>
Actual fees by category paid by the Fund with regard to the Class B Shares
during the year ended December 31, 1997 as follows:
<TABLE>
<CAPTION>
SMALL CAP BASIC VALUE
FUND FUND
---------- -----------
<S> <C> <C>
CLASS B
Compensation to Underwriters to partially offset upfront
dealer commissions and other marketing costs........... $111,032 $76,940
Compensation to Dealers................................... $ 37,011 $25,647
</TABLE>
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 Directors
reviews these reports in connection with their decisions with respect to the
Plans.
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 ("Qualified 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 each Fund and their
respective shareholders.
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.
Unless terminated earlier in accordance with their terms, the Plans continue
in effect until May 29, 1999 and each year thereafter, as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
The Plans may be terminated by the vote of a majority of the Qualified
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 Qualified
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 Qualified Trustees is committed to the discretion of the
Qualified Trustees. In the event the Class A Plan is amended in a manner which
the Board of Trustees determines would materially increase the charges
paid under the Class A Plan, the Class B shares of the Funds will no longer
convert into Class A shares of the same 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 Plan, on the one hand, and the
Class B Plan, on the other hand, are: (i) the Class A Plan allows payment to AIM
Distributors or to dealers or financial institutions of up to 0.35% of average
daily net assets of the Class A shares of each Fund, as compared to 1.00% of
such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the
Class B shares to continue to make payments to AIM Distributors following
termination of the Class B shares Distribution Agreement with respect to Class B
shares sold by or attributable to the distribution efforts of AIM Distributors
and its predecessor, GT Global, Inc. unless there has been a complete
termination of the
23
<PAGE> 803
Class B Plan (as defined in such Plan) and (iii) the Class B
Plan expressly authorizes AIM Distributors to assign, transfer or pledge its
rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of the
Funds' shares is set forth in the Prospectus under the headings "How to Purchase
Shares" and "Terms and Conditions of Purchase of the AIM Funds." Master
Distribution Agreements with AIM Distributors relating to the Class A and Class
B shares of the Funds were approved by the Board of Trustees on May 7, 1998.
Both such Master Distribution Agreements are hereinafter collectively referred
to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing 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 Fund), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Fund's shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
AIM Distributors expects to pay sales commissions from its own resources to
dealers and institutions who sell Class B 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 will
require a number of years to recoup from Class B Plan payments the sales
commissions paid to dealers and institutions in connection with sales of Class B
shares. In the future, if multiple distributors serve 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.
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 and its predecessor; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all payments by the Fund of asset based distribution fees
and service fees to AIM Distributors. Termination of the Class B Plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
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 GT Global,
Inc., the Trust's distributor prior to June 1, 1998, for the fiscal year ended
December 31, 1997.
<TABLE>
<CAPTION>
1997
------------------
SALES AMOUNT
CHARGES RETAINED
------- --------
<S> <C> <C>
Small Cap Fund.............................................. $24,222 $5,417
Basic Value Fund............................................ $11,413 $5,770
</TABLE>
The following chart reflects the contingent deferred sales charges paid by
Class A and Class B shareholders for the fiscal year ended December 31, 1997,
for Class A and Class B shares:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Small Cap Fund........................................... $60,107 $28,162 $112
Basic Value Fund......................................... $55,700 $ 5,608 $ 0
</TABLE>
24
<PAGE> 804
NET ASSET VALUE DETERMINATION
The net asset value per share of each Fund and Portfolio is normally
determined daily as of the close of trading of the New York Stock Exchange
("NYSE") (generally 4:00 p.m. Eastern time) on each business day of the Fund and
Portfolio. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern
time) on a particular day, the net asset value of a Fund or Portfolio is
determined as of the close of the NYSE on such day. Net asset value per share is
determined by dividing the value of a Portfolio'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 or a Portfolio's net asset
value per share is made in accordance with generally accepted accounting
principles.
Each equity security is valued at its last sales price on the exchange where
the security is principally traded or, lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices on
that day. Each security traded in the over-the-counter market (but not including
securities reported on the NASDAQ National Market System) is valued at the mean
between the last bid and asked prices based upon quotes furnished by market
makers for such securities. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a last
sales price, at the mean between the closing bid and asked prices on that day.
Debt securities 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, 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 Portfolio's or the
Fund's Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued on the basis of amortized cost. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the NYSE.
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 NYSE. The values of such securities used
in computing the net asset value of each Fund's or Portfolio's shares are
determined at 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 such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's or Portfolio'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 Portfolio's or the Fund's Board
of Trustees.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchases of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares 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 expenses associated with unsolicited orders placed directly with
AIM Distributors by persons who, because of their relationship with the Funds or
with AIM and its 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 set forth in the Funds' Prospectuses. In
addition, the Funds offer programs such as Right of Accumulation and Letter of
Intent, which are described in the prospectuses, and are designed to permit
investors to aggregate purchases of different funds, or separate purchases over
time, in order to qualify for a lower sales charge rate. See "Terms and
Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales Charges"
in the prospectuses.
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
25
<PAGE> 805
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 AIM 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
AIM 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 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.
Class B shares purchased before June 1, 1998 are subject to the following
waivers from the contingent deferred sales charge otherwise due upon redemption
in addition to the waivers provided for redemptions of currently issued Class B
shares as described in the Prospectus: (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 AIM 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
AIM 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.
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment adviser, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds
for shares of the other AIM Funds is set forth in the prospectuses under the
heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 A I M
Fund Services, Inc. ("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.
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the 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.
26
<PAGE> 806
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Funds provide certain services for shareholders and certain investment or
redemption programs. See "Exchange Privilege" and "How to Redeem Shares" in the
Prospectus. All inquiries concerning these programs should be made directly to
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, toll free
at (800) 959-4246.
DIVIDEND ORDER
Dividends may be paid to someone other than the registered owner, or sent to
an address other than the address of record. (Please note that signature
guarantees are required to effect this option.) An investor also may direct that
his or her dividends be invested in one of the other AIM Funds and there is no
sales charge for these investments; initial investment minimums apply. See
"Dividends, Distributions and Tax Matters -- Dividends and Distributions" in the
Prospectus. To effect this option, please contact your authorized dealer. For
more information concerning AIM Funds other than the Funds, please obtain a
current prospectus by contacting your authorized dealer, by writing to A I M
Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, or by calling
toll free (800) 959-4246.
TAXES
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax
purposes. To continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income and net short-term capital gain) and must
meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities,
or other income (including gains from options or Futures) derived with respect
to its business of investing in securities ("Income Requirement"); and (2) the
Diversification Requirements. Each Fund, as an investor in its corresponding
Portfolio, is deemed to own a proportionate share of the Portfolio's assets, and
to earn a proportionate share of the Portfolio's income, for purposes of
determining whether the Fund satisfies all of the requirements described above
to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Fund of
hedging transactions engaged in by its corresponding Portfolio.
TAXATION OF THE PORTFOLIOS
The Portfolios and their Relationship to the Funds. Each Portfolio is treated
as a separate partnership for federal income tax purposes and is not a "publicly
traded partnership." As a result, each Portfolio is not subject to federal
income tax; instead, each Fund, as an investor in its corresponding Portfolio,
is required to take into account in determining its federal income tax liability
its share of the Portfolio's income, gains, losses, deductions and credits,
without regard to whether it has received any cash distributions from the
Portfolio. Each Portfolio also is not subject to New York income or franchise
tax.
Because, as noted above, each Fund is deemed to own a proportionate share of
its corresponding Portfolio's assets, and to earn a proportionate share of its
corresponding Portfolio's income, for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, each Portfolio intends to
conduct its operations so that its corresponding Fund will be able to continue
to satisfy all those requirements.
Distributions to each Fund from its corresponding Portfolio (whether pursuant
to a partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. Each Fund's basis for its interest in its corresponding
Portfolio generally will equal the amount of cash and the basis of any property
the Fund invests in the Portfolio, increased by the Fund's share of the
Portfolio's net income and gains and
27
<PAGE> 807
decreased by (a) the amount of cash and the basis of any property the Portfolio
distributes to the Fund and (b) the Fund's share of the Portfolio's losses.
Options and Futures Transactions. The Portfolios' use of hedging transactions,
such as selling (writing) and purchasing options and Futures, involves complex
rules that will determine, for federal income tax purposes, the amount,
character and timing of recognition of the gains and losses a Portfolio realizes
in connection therewith. Gains from options and Futures derived by a Portfolio
with respect to its business of investing in securities will qualify as
permissible income under the Income Requirement for its corresponding Fund.
Futures that are subject to section 1256 of the Code (other than those that
are part of a "mixed straddle") ("Section 1256 Contracts") and that are held by
a Portfolio at the end of its taxable year generally will be deemed to have been
sold at that time at market value for federal income tax purposes. Sixty percent
of any net gain or loss recognized on these deemed sales, and 60% of any net
realized gain or loss from any actual sales of Section 1256 Contracts, will be
treated as long-term capital gain or loss, and the balance will be treated as
short-term capital gain or loss. That 60% portion will qualify for the reduced
maximum tax rates on noncorporate taxpayers' net capital gain (i.e., the excess
of net long-term capital gain over net short-term capital loss) enacted by the
Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in the 15% marginal tax
bracket) for gain recognized on capital assets held for more than 18
months -- instead of the 28% rate in effect before that legislation, which now
applies to gain on capital assets held for more than one year but not more than
18 months. However, technical corrections legislation passed by the House of
Representatives late in 1997 would clarify that the lower rates apply.
If a Portfolio has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted
basis -- and enters into a "constructive sale" of the same or substantially
similar property, the Portfolio will be treated as having made an actual sale
thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract or Futures Contract entered into by a Portfolio or a related
person with respect to the same or substantially similar property. In addition,
if the appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and distributions declared by a Fund in, and payable to shareholders
of record as of a date in, October, November or December of any year will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year if the distributions are paid by the Fund during the
following January. Accordingly, those distributions will be taxed to
shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisers for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
28
<PAGE> 808
MISCELLANEOUS INFORMATION
AIM was organized in 1976, and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. 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, 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
independent investment management groups that have a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110,
acts as custodian of the Portfolios' assets.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
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 Transfer Agency and Service
Agreement became effective on September 8, 1998. AIM also serves as each Fund's
pricing and accounting agent. For the fiscal years ended December 31, 1997 and
December 31, 1996, and the period October 18, 1995 (commencement of operations)
to December 31, 1995, the Small Cap Fund and Basic Value Fund paid accounting
services fees of $6,379, $3,900 and $76; and $3,938, $1,472 and $36,
respectively.
INDEPENDENT ACCOUNTANTS
The Trust's, the Funds' and the Portfolios' independent accountants are
PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP conducts annual audits of
the Funds and the Portfolios, assists in the preparation of the Funds' and the
Portfolios' federal and state income tax returns and consults with the Trust and
the Funds and Growth Portfolio and the Portfolios as to matters of accounting,
regulatory filings and federal and state income taxation.
The audited financial statements of the Trust and Growth Portfolio included in
this Statement of Additional Information have been examined by
PricewaterhouseCoopers LLP as stated in their opinion appearing herein and are
included in reliance upon such opinion given upon the authority of that firm as
experts in accounting and auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
of liability extended to shareholders of private, for-profit corporations. There
is a remote possibility, however, that under certain circumstances shareholders
of the Trust may be held personally liable for the Trust's obligations. However,
the Trust's Agreement and Declaration of Trust 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 a trustee. If a shareholder is held personally liable for the
obligations of the Trust, the Trust Agreement provides that the shareholder
shall be entitled out of the assets belonging to the applicable Fund (or
allocable to the applicable Class), to be held harmless from and indemnified
against all loss and expense arising from such liability in accordance with the
Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring
financial loss on account of such liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM Basic Value Fund operated under the name of GT
Global America Value Fund, and AIM Small Cap Equity Fund operated under the name
of GT Global America Small Cap Growth Fund.
29
<PAGE> 809
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of August 10, 1998, the Trustees and officers of the Trust, as a group,
owned less than 1% of the outstanding shares of any class of the Trust.
To the best knowledge of the Trust, the names and addresses of the holders of
5% or more of the outstanding shares of any class of each Fund's equity
securities as of August 10, 1998, and the percentage of the outstanding shares
held by such holders are set forth below.
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
---- ------------------------- -------- ------------
<S> <C> <C> <C>
Small Cap Fund -- Advisor Class Donaldson Lufkin Jenrette Securities 6.66% -0-
Corp. Inc.
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Small Cap Fund -- Class A MLPF&S for the Sole Benefit of its 9.34% -0-
Customers, Security #97Hx3
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Small Cap Fund -- Class B MLPF&S for the Sole Benefit of its 5.32% -0-
Customers, Security #97Hx5
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Basic Value Fund -- Advisor Class INVESCO (NY) Asset Management Inc. 7.12% -0-
1166 Avenue of the Americas
New York, New York 10036-2708
Attn: Julio Garcia
Basic Value Fund -- Class B MLPF&S for the Sole Benefit of its 5.96% -0-
Customers, Security #97Hx6
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
30
<PAGE> 810
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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).
</TABLE>
The standardized returns for the Class A and Class B shares of the Small Cap
Fund and Basic Value Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP AMERICA VALUE AMERICA VALUE
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
------ --------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Fiscal year ended December 31, 1997.... 9.82% 10.47% 20.26% 21.44%
October 18, 1995 (commencement of
operations) through December 31,
1997................................. 12.25% 13.29% 21.82% 23.18%
</TABLE>
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:
P(1+U)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
The average annual non-standardized returns for the Class A and Class B shares
of the Small Cap Fund and Basic Value Fund, stated as average annualized total
returns for the periods shown, were:
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP AMERICA VALUE AMERICA VALUE
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
------ --------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Fiscal year ended December 31, 1997..... 16.23% 15.47% 27.23% 26.44%
October 18, 1995 (commencement of
operations) through December 31,
1997.................................. 15.19% 14.46% 25.01% 24.23%
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the end of the stated period.
</TABLE>
31
<PAGE> 811
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Class B shares of the Small Cap Fund and Basic Value Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP AMERICA VALUE AMERICA VALUE
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
------ --------- --------- ------------- -------------
<S> <C> <C> <C> <C>
October 18, 1995 (commencement of
operations) through December 31,
1997................................. 36.55% 34.65% 63.52% 61.28%
</TABLE>
The aggregate non-standardized returns (taking sales charges into account) for
the Class A and Class B shares of the Small Cap Fund and Basic Value Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
SMALL CAP SMALL CAP AMERICA VALUE AMERICA VALUE
FUND FUND FUND FUND
PERIOD (CLASS A) (CLASS B) (CLASS A) (CLASS B)
------ --------- --------- ------------- -------------
<S> <C> <C> <C> <C>
October 18, 1995 (commencement of
operations) through December 31,
1997................................. 29.04% 31.65% 54.53% 58.28%
</TABLE>
Each Fund's investment results will vary from time to time depending upon
market conditions, the composition of each Fund's portfolio and operating
expenses of each Fund, so that current or past yield or total return should not
be considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. 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. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
32
<PAGE> 812
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index -- Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associates
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
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
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference 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.
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.
33
<PAGE> 813
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:
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 edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Aa -- Bonds which are rated Aa
are judged to be of high quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities. 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 some time 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.
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") rates
the securities debt of various entities in categories ranging from "AAA" to "D"
according to quality. Investment grade ratings are the first four categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong. AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meets its
financial commitment on the obligation is very strong. A -- An obligation rated
"A" is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories. BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation. BB, B, CCC, CC, C -- Obligations rated "BB," "B,"
"CCC," "CC," and "C" are regarded as having significant speculative
characteristics. "BB" indicates the least degree of speculation and "C" the
highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major
exposures to adverse conditions. BB -- An obligation rated "BB" is less
vulnerable to nonpayment than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation. B -- An obligation rated "B" is more
vulnerable to nonpayment than obligations rated "BB," but the obligor currently
has the capacity to meet its financial commitment on the obligation. Adverse
business, financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the obligation.
CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC -- An obligation rated "CC" is currently highly vulnerable to nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this obligation
are being continued. D -- An obligation rated "D" is in payment default. The "D"
rating category is used when payments on an obligation are not made on the date
due even if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The "D" rating also
will be used upon the filing of a bankruptcy petition or the taking of a similar
action if payments on an obligation are jeopardized.
34
<PAGE> 814
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having
a superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 will be denoted with a plus sign
(+) designation. "A-2" -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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.
35
<PAGE> 815
FINANCIAL STATEMENTS
FS
<PAGE> 816
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (39.7%)
Insight Enterprises, Inc.-/- ............................... US 19,800 $ 792,000 2.2
RETAILERS-OTHER
DM Management Co.-/- ....................................... US 20,500 735,437 2.1
RETAILERS-APPAREL
Service Experts, Inc.-/- ................................... US 20,100 693,450 2.0
CONSUMER SERVICES
Lason Holdings, Inc.-/- .................................... US 12,500 681,250 1.9
CONSUMER SERVICES
Iron Mountain, Inc.-/- ..................................... US 14,700 657,825 1.9
BUSINESS & PUBLIC SERVICES
American Disposal Services, Inc.-/- ........................ US 14,000 656,250 1.9
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- .................................. US 18,900 588,263 1.7
CONSUMER SERVICES
Personnel Group of America, Inc.-/- ........................ US 27,300 546,000 1.5
BUSINESS & PUBLIC SERVICES
Eastern Environmental Services, Inc.-/- .................... US 15,400 523,600 1.5
CONSUMER SERVICES
Central Parking Corp. ...................................... US 10,400 473,200 1.3
CONSUMER SERVICES
Comfort Systems USA, Inc.-/- ............................... US 20,200 472,175 1.3
BUSINESS & PUBLIC SERVICES
99 Cents Only Stores-/- .................................... US 11,100 460,650 1.3
RETAILERS-OTHER
ITT Educational Services, Inc.-/- .......................... US 12,400 399,900 1.1
CONSUMER SERVICES
United Rentals, Inc.-/- .................................... US 9,300 390,600 1.1
BUSINESS & PUBLIC SERVICES
Hagler Bailly, Inc.-/- ..................................... US 14,900 385,538 1.1
BUSINESS & PUBLIC SERVICES
Expeditors International of Washington, Inc. ............... US 8,400 369,600 1.0
TRANSPORTATION - SHIPPING
Superior Services, Inc.-/- ................................. US 12,100 363,756 1.0
CONSUMER SERVICES
Cornell Corrections, Inc.-/- ............................... US 16,300 342,300 1.0
BUSINESS & PUBLIC SERVICES
Fairfield Communities, Inc.-/- ............................. US 17,800 341,537 1.0
LEISURE & TOURISM
ResortQuest International, Inc.-/- ......................... US 20,400 332,775 0.9
LEISURE & TOURISM
United Road Services, Inc.-/- .............................. US 15,800 302,175 0.9
CONSUMER SERVICES
Execustay Corp.-/- ......................................... US 21,900 257,325 0.7
LEISURE & TOURISM
Championship Auto Racing Teams, Inc.-/- .................... US 13,900 253,675 0.7
LEISURE & TOURISM
Cox Radio, Inc.-/- ......................................... US 5,700 246,525 0.7
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-1
<PAGE> 817
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Duane Reade, Inc.-/- ....................................... US 8,100 $ 243,000 0.7
RETAILERS-OTHER
Lamar Advertising Co.-/- ................................... US 6,500 233,188 0.7
BROADCASTING & PUBLISHING
Ambassadors International, Inc.-/- ......................... US 7,300 221,281 0.6
LEISURE & TOURISM
CompX International, Inc.-/- ............................... US 10,200 220,575 0.6
BUSINESS & PUBLIC SERVICES
Industrial Distribution Group, Inc.-/- ..................... US 13,200 204,600 0.6
WHOLESALE & INTERNATIONAL TRADE
e.spire Communications, Inc.-/- ............................ US 8,700 196,294 0.6
TELEPHONE NETWORKS
CORT Business Services Corp.-/- ............................ US 5,900 185,850 0.5
BUSINESS & PUBLIC SERVICES
Vistana, Inc.-/- ........................................... US 9,500 174,563 0.5
LEISURE & TOURISM
Jevic Transportation, Inc.-/- .............................. US 15,200 172,900 0.5
TRANSPORTATION - SHIPPING
Metzler Group, Inc.-/- ..................................... US 4,500 164,813 0.5
BUSINESS & PUBLIC SERVICES
Restoration Hardware, Inc.-/- .............................. US 6,100 153,263 0.4
RETAILERS-OTHER
Blue Rhino Corp.-/- ........................................ US 8,200 143,500 0.4
RETAILERS-OTHER
Sunglass Hut International, Inc.-/- ........................ US 12,700 140,494 0.4
RETAILERS-APPAREL
Cavanaughs Hospitality Corp.-/- ............................ US 9,700 126,706 0.4
LEISURE & TOURISM
Waste Connections, Inc.-/- ................................. US 6,200 123,225 0.3
CONSUMER SERVICES
ACSYS, Inc.-/- ............................................. US 6,400 88,000 0.2
BUSINESS & PUBLIC SERVICES
-----------
14,058,058
-----------
Technology (16.6%)
Software AG Systems, Inc.-/- ............................... US 21,200 620,100 1.8
SOFTWARE
Metro Information Services, Inc.-/- ........................ US 12,400 485,150 1.4
COMPUTERS & PERIPHERALS
Atlantic Data Services, Inc.-/- ............................ US 24,000 460,500 1.3
COMPUTERS & PERIPHERALS
Computer Management Sciences, Inc.-/- ...................... US 16,200 384,750 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. ..................................... US 13,900 363,138 1.0
INSTRUMENTATION & TEST
Data Processing Resources Corp.-/- ......................... US 11,000 341,687 1.0
COMPUTERS & PERIPHERALS
AnswerThink Consulting Group, Inc.-/- ...................... US 15,800 339,700 1.0
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-2
<PAGE> 818
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Platinum Technology, Inc.-/- ............................... US 9,800 $ 279,913 0.8
SOFTWARE
MAPICS, Inc.-/- ............................................ US 13,300 261,844 0.7
SOFTWARE
Platinum Software Corp.-/- ................................. US 10,100 246,188 0.7
SOFTWARE
Excel Switching Corp.-/- ................................... US 9,400 233,825 0.7
TELECOM TECHNOLOGY
Cotelligent Group, Inc.-/- ................................. US 9,700 226,737 0.6
COMPUTERS & PERIPHERALS
Concord Communications, Inc.-/- ............................ US 8,200 209,612 0.6
SOFTWARE
Analysts International Corp. ............................... US 6,850 194,369 0.6
COMPUTERS & PERIPHERALS
SPR, Inc.-/- ............................................... US 6,000 186,750 0.5
COMPUTERS & PERIPHERALS
Fundtech Ltd.-/- {\/} ...................................... ISRL 8,525 160,909 0.5
SOFTWARE
JDA Software Group, Inc.-/- ................................ US 3,300 144,375 0.4
SOFTWARE
Documentum, Inc.-/- ........................................ US 2,900 139,200 0.4
SOFTWARE
BrightStar Information Technology Group, Inc.-/- ........... US 9,500 131,812 0.4
COMPUTERS & PERIPHERALS
Aspen Technology, Inc.-/- .................................. US 2,300 116,150 0.3
SOFTWARE
Pericom Semiconductor Corp.-/- ............................. US 15,400 105,875 0.3
SEMICONDUCTORS
Amkor Technology, Inc.-/- .................................. US 10,800 100,912 0.3
SEMICONDUCTORS
Walker Interactive Systems, Inc.-/- ........................ US 3,700 54,575 0.2
SOFTWARE
-----------
5,788,071
-----------
Health Care (15.7%)
ESC Medical Systems Ltd.-/- {\/} ........................... ISRL 15,000 506,250 1.4
MEDICAL TECHNOLOGY & SUPPLIES
ADAC Laboratories-/- ....................................... US 19,200 432,000 1.2
HEALTH CARE SERVICES
SEQUUS Pharmaceuticals, Inc.-/- ............................ US 36,300 412,913 1.2
PHARMACEUTICALS
PhyCor, Inc.-/- ............................................ US 24,800 410,750 1.2
HEALTH CARE SERVICES
Vertex Pharmaceuticals, Inc.-/- ............................ US 16,300 366,750 1.0
PHARMACEUTICALS
AmeriPath, Inc.-/- ......................................... US 30,900 365,006 1.0
HEALTH CARE SERVICES
Assisted Living Concepts, Inc.-/- .......................... US 19,600 338,100 1.0
HEALTH CARE SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-3
<PAGE> 819
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
CryoLife, Inc.-/- .......................................... US 21,400 $ 337,050 1.0
BIOTECHNOLOGY
Gilead Sciences, Inc.-/- ................................... US 10,200 327,037 0.9
BIOTECHNOLOGY
AXYS Pharmaceuticals, Inc.-/- .............................. US 44,100 314,212 0.9
PHARMACEUTICALS
Scios, Inc.-/- ............................................. US 35,200 312,400 0.9
HEALTH CARE SERVICES
COR Therapeutics, Inc.-/- .................................. US 22,500 312,188 0.9
BIOTECHNOLOGY
Total Renal Care Holdings, Inc.-/- ......................... US 8,300 286,350 0.8
HEALTH CARE SERVICES
American Dental Partners, Inc.-/- .......................... US 16,800 235,200 0.7
HEALTH CARE SERVICES
Barr Laboratories, Inc.-/- ................................. US 5,900 234,525 0.7
PHARMACEUTICALS
Symphonix Devices, Inc.-/- ................................. US 15,200 174,800 0.5
HEALTH CARE SERVICES
Physician Reliance Network, Inc.-/- ........................ US 6,200 70,913 0.2
MEDICAL TECHNOLOGY & SUPPLIES
Depotech Corp.-/- .......................................... US 42,200 65,937 0.2
PHARMACEUTICALS
-----------
5,502,381
-----------
Finance (7.4%)
Metris Cos., Inc.-/- ....................................... US 6,700 427,125 1.2
CONSUMER FINANCE
Affiliated Managers Group, Inc.-/- ......................... US 10,600 393,525 1.1
INVESTMENT MANAGEMENT
Reinsurance Group of America, Inc. Non-voting-/- ........... US 7,300 374,581 1.1
INSURANCE-LIFE
LaSalle Partners, Inc.-/- .................................. US 7,300 324,850 0.9
REAL ESTATE
Correctional Properties Trust-/- ........................... US 15,800 319,950 0.9
REAL ESTATE INVESTMENT TRUST
Annuity and Life Re (Holdings) Ltd.-/- ..................... US 11,000 243,375 0.7
INSURANCE-LIFE
Stirling Cooke Brown Holdings Ltd. ......................... US 8,000 225,000 0.6
INSURANCE - PROPERTY-CASUALTY
AmeriCredit Corp.-/- ....................................... US 5,200 185,575 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. ........................... US 6,600 150,975 0.4
CONSUMER FINANCE
-----------
2,644,956
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-4
<PAGE> 820
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (5.5%)
Newfield Exploration Co.-/- ................................ US 29,600 $ 736,300 2.1
OIL
Petsec Energy Ltd. - ADR-/- {\/} ........................... AUSL 14,600 236,337 0.7
OIL
Cross Timbers Oil Co. ...................................... US 10,800 205,875 0.6
OIL
Dril-Quip, Inc.-/- ......................................... US 7,800 204,750 0.6
ENERGY EQUIPMENT & SERVICES
Mallon Resources Corp.-/- .................................. US 16,800 201,600 0.6
OIL
Varco International, Inc.-/- ............................... US 9,600 190,200 0.5
ENERGY EQUIPMENT & SERVICES
Hanover Compressor Co.-/- .................................. US 5,000 135,313 0.4
ENERGY EQUIPMENT & SERVICES
-----------
1,910,375
-----------
Materials/Basic Industry (4.9%)
OM Group, Inc. ............................................. US 12,600 519,750 1.5
METALS - NON-FERROUS
Hawk Corp. "A"-/- .......................................... US 21,100 371,888 1.1
METALS - NON-FERROUS
Gibraltar Steel Corp.-/- ................................... US 16,100 330,050 0.9
METALS - STEEL
Cambrex Corp. .............................................. US 10,400 273,000 0.8
CHEMICALS
CombiChem, Inc.-/- ......................................... US 33,000 228,937 0.6
CHEMICALS
-----------
1,723,625
-----------
Capital Goods (4.8%)
General Cable Corp. ........................................ US 28,700 828,712 2.4
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................. US 14,800 436,600 1.2
OFFICE EQUIPMENT
LMI Aerospace, Inc.-/- ..................................... US 14,500 150,438 0.4
AEROSPACE/DEFENSE
Gradall Industries, Inc.-/- ................................ US 10,200 149,175 0.4
MACHINERY & ENGINEERING
Global Industries Ltd.-/- .................................. US 8,100 136,687 0.4
CONSTRUCTION
-----------
1,701,612
-----------
Consumer Durables (1.4%)
Tower Automotive, Inc.-/- .................................. US 7,800 334,425 0.9
AUTO PARTS
U.S. Home Corp.-/- ......................................... US 4,100 169,125 0.5
HOUSING
-----------
503,550
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-5
<PAGE> 821
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (0.7%)
Mail-Well, Inc.-/- ......................................... US 11,600 $ 251,575 0.7
OTHER CONSUMER GOODS
Racing Champions Corp.-/- .................................. US 700 8,181 --
TOYS
-----------
259,756
----------- -----
TOTAL EQUITY INVESTMENTS (cost $31,159,540) .................. 34,092,384 96.7
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co., due
July 1, 1998, for an effective yield of 5.70%,
collateralized by $2,560,000 U.S. Treasury Bills, 5.875%
due 1/31/99 (market value of collateral is $2,627,200,
including accrued interest). (cost $2,573,000) ........... 2,573,000 7.3
----------- -----
TOTAL INVESTMENTS (cost $33,732,540) * ...................... 36,665,384 104.0
Other Assets and Liabilities ................................. (1,410,524) (4.0)
----------- -----
NET ASSETS ................................................... $35,254,860 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $33,817,496 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,542,875
Unrealized depreciation: (1,694,987)
-------------
Net unrealized appreciation: $ 2,847,888
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-6
<PAGE> 822
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (49.2%)
Outdoor Systems, Inc.-/- .................................. US 1,203,780 $ 33,705,837 7.0
BUSINESS & PUBLIC SERVICES
Clear Channel Communications, Inc.-/- ..................... US 268,443 29,293,842 6.1
BROADCASTING & PUBLISHING
Snyder Communications, Inc.-/- ............................ US 614,600 27,042,400 5.6
BUSINESS & PUBLIC SERVICES
Hilton Hotels Corp. ....................................... US 709,800 20,229,300 4.2
LEISURE & TOURISM
Chancellor Media Corp.-/- ................................. US 340,500 16,907,953 3.5
BROADCASTING & PUBLISHING
Premier Parks, Inc.-/- .................................... US 221,800 14,777,425 3.1
LEISURE & TOURISM
ServiceMaster Co. ......................................... US 320,200 12,187,613 2.5
CONSUMER SERVICES
Cablevision Systems Corp. "A"-/- .......................... US 125,000 10,437,500 2.2
CABLE TELEVISION
Keane, Inc.-/- ............................................ US 182,100 10,197,600 2.1
BUSINESS & PUBLIC SERVICES
Central Parking Corp. ..................................... US 221,800 10,091,900 2.1
CONSUMER SERVICES
Young & Rubicam, Inc.-/- .................................. US 308,200 9,862,400 2.0
BUSINESS & PUBLIC SERVICES
Cambridge Technology Partners, Inc.-/- .................... US 164,500 8,985,813 1.9
BUSINESS & PUBLIC SERVICES
Univision Communications, Inc.-/- ......................... US 239,600 8,925,100 1.9
BROADCASTING & PUBLISHING
Lamar Advertising Co.-/- .................................. US 217,100 7,788,463 1.6
BUSINESS & PUBLIC SERVICES
Personnel Group of America, Inc.-/- ....................... US 366,700 7,334,000 1.5
BUSINESS & PUBLIC SERVICES
Jacor Communications, Inc.-/- ............................. US 96,300 5,681,700 1.2
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 86,400 3,515,400 0.7
BUSINESS & PUBLIC SERVICES
------------
236,964,246
------------
Technology (14.6%)
Sterling Commerce, Inc.-/- ................................ US 327,700 15,893,450 3.3
SOFTWARE
Software AG Systems, Inc.-/- .............................. US 400,000 11,700,000 2.4
SOFTWARE
Aspen Technology, Inc.-/- ................................. US 190,500 9,620,250 2.0
SOFTWARE
Platinum Technology, Inc.-/- .............................. US 314,000 8,968,625 1.9
SOFTWARE
SunGard Data Systems, Inc.-/- ............................. US 229,000 8,787,875 1.8
SOFTWARE
Peoplesoft, Inc.-/- ....................................... US 177,500 8,342,500 1.7
SOFTWARE
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-7
<PAGE> 823
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Ciena Corp.-/- ............................................ US 104,000 $ 7,241,000 1.5
TELECOM TECHNOLOGY
------------
70,553,700
------------
Finance (13.0%)
Golden State Bancorp, Inc.-/- ............................. US 381,300 11,343,675 2.4
SAVINGS & LOANS
C.I.T. Group, Inc. "A"-/- ................................. US 266,800 10,005,000 2.1
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 9,376,406 1.9
INSURANCE - PROPERTY-CASUALTY
GreenPoint Financial Corp. ................................ US 249,200 9,376,150 1.9
SAVINGS & LOANS
Capital One Financial Corp. ............................... US 68,200 8,469,588 1.8
CONSUMER FINANCE
Ace Ltd. .................................................. US 183,100 7,140,900 1.5
INSURANCE - PROPERTY-CASUALTY
Heller Financial, Inc.-/- ................................. US 226,600 6,798,000 1.4
OTHER FINANCIAL
------------
62,509,719
------------
Health Care (8.0%)
Forest Laboratories, Inc. "A"-/- .......................... US 268,000 9,581,000 2.0
PHARMACEUTICALS
Wellpoint Health Networks-/- .............................. US 118,000 8,732,000 1.8
HEALTH CARE SERVICES
ALZA Corp.-/- ............................................. US 176,300 7,624,975 1.6
PHARMACEUTICALS
HBO & Co. ................................................. US 206,200 7,268,550 1.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 68,100 5,533,125 1.1
HEALTH CARE SERVICES
------------
38,739,650
------------
Consumer Non-Durables (6.7%)
U.S. Foodservice-/- ....................................... US 553,400 19,403,588 4.0
FOOD
Suiza Foods Corp.-/- ...................................... US 170,500 10,176,719 2.1
FOOD
International Home Foods, Inc.-/- ......................... US 135,400 3,080,350 0.6
FOOD
------------
32,660,657
------------
Materials/Basic Industry (5.4%)
International Specialty Products, Inc.-/- ................. US 668,200 12,445,225 2.6
CHEMICALS
Millenium Chemicals, Inc. ................................. US 215,600 7,303,450 1.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-8
<PAGE> 824
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Crompton & Knowles Corp. .................................. US 250,700 $ 6,314,506 1.3
CHEMICALS
------------
26,063,181
------------
Energy (3.1%)
J. Ray McDermott S.A.-/- .................................. US 239,900 9,955,850 2.1
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 75,300 5,059,219 1.0
ENERGY SOURCES
------------
15,015,069
------------
Capital Goods (2.5%)
U.S. Filter Corp.-/- ...................................... US 422,250 11,849,391 2.5
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $397,646,938) ................ 494,355,613 102.5
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Golden State Bancorp. Litigation Warrants-/- (cost
$2,296,744) .............................................. US 381,300 2,025,656 0.4
SAVINGS & LOANS
------------ -----
TOTAL INVESTMENTS (cost $399,943,682) * .................... 496,381,269 102.9
Other Assets and Liabilities ................................ (14,212,467) (2.9)
------------ -----
NET ASSETS .................................................. $482,168,802 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
* For Federal income tax purposes, cost is $401,270,613 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 99,557,388
Unrealized depreciation: (4,446,732)
-------------
Net unrealized appreciation: $ 95,110,656
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-9
<PAGE> 825
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (33.1%)
Exel Ltd. ................................................. US 10,900 $ 848,156 2.9
INSURANCE - PROPERTY-CASUALTY
Chase Manhattan Corp. ..................................... US 10,150 766,325 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 12,150 736,594 2.5
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 7,875 721,055 2.4
INSURANCE - MULTI-LINE
Fleet Financial Group, Inc. ............................... US 8,600 718,100 2.4
BANKS-SUPER REGIONAL
SLM Holding Corp. ......................................... US 14,612 715,988 2.4
OTHER FINANCIAL
First Chicago NBD Corp. ................................... US 8,000 709,000 2.4
BANKS-REGIONAL
Mellon Bank Corp. ......................................... US 9,700 675,363 2.3
BANKS-REGIONAL
Household International, Inc. ............................. US 13,500 671,625 2.3
CONSUMER FINANCE
BankAmerica Corp. ......................................... US 7,550 652,603 2.2
BANKS-MONEY CENTER
GreenPoint Financial Corp. ................................ US 16,000 602,000 2.0
SAVINGS & LOANS
NationsBank Corp. ......................................... US 7,700 589,050 2.0
BANKS-REGIONAL
Starwood Hotels & Resorts ................................. US 8,583 414,666 1.4
REAL ESTATE INVESTMENT TRUST
Citicorp .................................................. US 2,400 358,200 1.2
BANKS-MONEY CENTER
Crescent Real Estate Equities Co. ......................... US 10,000 336,250 1.1
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 9,025 283,159 1.0
REAL ESTATE INVESTMENT TRUST
------------
9,798,134
------------
Energy (17.1%)
Texas Utilities Co. ....................................... US 17,900 745,088 2.5
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................... US 9,200 704,950 2.4
OIL
Unocal Corp. .............................................. US 19,300 689,975 2.3
OIL
Atlantic Richfield Co. (ARCO) ............................. US 8,100 632,813 2.1
OIL
Anadarko Petroleum Corp. .................................. US 9,200 618,125 2.1
ENERGY SOURCES
McDermott International, Inc. ............................. US 16,600 571,663 1.9
ENERGY EQUIPMENT & SERVICES
Pinnacle West Capital Corp. ............................... US 9,625 433,125 1.5
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-10
<PAGE> 826
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Carolina Power & Light Co. ................................ US 9,000 $ 390,375 1.3
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 7,825 295,883 1.0
ELECTRICAL & GAS UTILITIES
------------
5,081,997
------------
Services (12.9%)
Bell Atlantic Corp. ....................................... US 18,400 839,500 2.8
TELEPHONE - REGIONAL/LOCAL
Comcast Corp. 'A' ......................................... US 17,500 710,391 2.4
CABLE TELEVISION
Time Warner, Inc. ......................................... US 8,000 683,500 2.3
BROADCASTING & PUBLISHING
Federated Department Stores, Inc.-/- ...................... US 11,500 618,844 2.1
RETAILERS-APPAREL
The Limited, Inc. ......................................... US 14,825 491,078 1.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 10,000 470,000 1.6
TELEPHONE - REGIONAL/LOCAL
------------
3,813,313
------------
Materials/Basic Industry (12.4%)
E.I. du Pont de Nemours & Company ......................... US 9,200 686,550 2.3
CHEMICALS
Owens Corning ............................................. US 16,200 661,163 2.2
BUILDING MATERIALS & COMPONENTS
Millenium Chemicals, Inc. ................................. US 18,500 626,688 2.1
CHEMICALS
Stone Container Corp. ..................................... US 38,600 603,125 2.0
PAPER/PACKAGING
Imperial Chemical Industries PLC - ADR{\/} ................ US 7,700 496,650 1.7
CHEMICALS
Crompton & Knowles Corp. .................................. US 13,500 340,031 1.2
CHEMICALS
International Paper Co. ................................... US 6,000 258,000 0.9
PAPER/PACKAGING
------------
3,672,207
------------
Consumer Durables (7.1%)
Ford Motor Co. ............................................ US 12,500 737,500 2.5
AUTOMOBILES
Lennar Corp. .............................................. US 18,500 545,750 1.9
HOUSING
General Motors Corp. ...................................... US 6,600 440,963 1.5
AUTOMOBILES
Meritor Automotive, Inc. .................................. US 15,000 360,000 1.2
AUTO PARTS
------------
2,084,213
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-11
<PAGE> 827
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (5.2%)
International Business Machines Corp. ..................... US 7,500 $ 861,094 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp. ..................................... US 24,200 686,675 2.3
COMPUTERS & PERIPHERALS
------------
1,547,769
------------
Consumer Non-Durables (4.0%)
Philip Morris Cos., Inc. .................................. US 17,050 671,344 2.3
TOBACCO
RJR Nabisco Holdings Corp. ................................ US 21,275 505,281 1.7
TOBACCO
------------
1,176,625
------------
Capital Goods (3.7%)
U.S. Filter Corp.-/- ...................................... US 20,625 578,789 2.0
ENVIRONMENTAL
U.S.A.Waste Services, Inc. ................................ US 14,300 500,500 1.7
ENVIRONMENTAL
------------
1,079,289
------------
Health Care (1.6%)
Pharmacia & Upjohn, Inc. .................................. US 10,500 484,309 1.6
PHARMACEUTICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $26,403,641) ................. 28,737,856 97.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%
collateralized by $460,000 U.S. Treasury Bills, 5.875% due
1/31/99 (market value of collateral is $472,075, including
accrued interest). (cost $459,000) ....................... 459,000 1.5
------------ -----
TOTAL INVESTMENTS (cost $26,862,641) * ..................... 29,196,856 98.6
Other Assets and Liabilities ................................ 400,530 1.4
------------ -----
NET ASSETS .................................................. $ 29,597,386 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $26,900,718 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,898,607
Unrealized depreciation: (602,469)
-------------
Net unrealized appreciation: $ 2,296,138
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-12
<PAGE> 828
STATEMENTS OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------
SMALL CAP
EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
-------------- ----------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $33,732,540; $399,943,682;
and $26,862,641, respectively) (Note 1).............................. $36,665,384 4$96,381,269 $29,196,856
U.S. currency......................................................... 86 644 240
Dividends receivable.................................................. 588 80,604 42,424
Interest receivable................................................... 407 -- 73
Receivable for Fund shares sold....................................... 522,566 442,351 70,096
Receivable for securities sold........................................ 447,737 1,391,606 857,174
Receivable from A I M Advisors, Inc. (Note 2)......................... 75,985 -- 68,265
Unamortized organizational costs (Note 1)............................. 40,679 -- 40,679
-------------- ----------- --------------
Total assets........................................................ 37,753,432 498,296,474 30,275,807
-------------- ----------- --------------
Liabilities:
Payable for custodian fees............................................ 778 84,299 5,455
Payable for Directors' and Trustees' fees and expenses (Note 2)....... 6,703 4,385 6,602
Payable for fund accounting fees (Note 2)............................. 1,532 10,018 658
Payable for Fund shares repurchased (Note 2).......................... 938,102 6,431,497 83,620
Payable for investment management and administration fees (Note 2).... 80,799 273,092 75,127
Payable for loan outstanding (Note 1)................................. -- 6,652,000 --
Payable for printing and postage expenses............................. 37,978 13,626 37,498
Payable for professional fees......................................... 19,013 13,728 17,735
Payable for registration and filing fees.............................. 22,587 13,414 17,486
Payable for securities purchased...................................... 1,355,332 2,006,275 399,574
Payable for service and distribution expenses (Note 2)................ 18,805 254,651 18,640
Payable for transfer agent fees (Note 2).............................. 13,369 339,800 11,132
Other accrued expenses................................................ 3,474 30,887 4,794
-------------- ----------- --------------
Total liabilities................................................... 2,498,472 16,127,672 678,321
Minority interest (Notes 1 & 2)....................................... 100 -- 100
-------------- ----------- --------------
Net assets.............................................................. $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
Class A:
Net asset value and redemption price per share ($12,620,070 DIVIDED BY
746,689; $238,023,863 DIVIDED BY 10,119,708; and $8,669,479 DIVIDED BY
471,856 shares outstanding, respectively).............................. $ 16.90 $ 23.52 $ 18.37
-------------- ----------- --------------
-------------- ----------- --------------
Maximum offering price per share (100/94.5 of $16.90; 100/94.5 of
$23.52; and 100/94.5 of $18.37, respectively) *........................ $ 17.88 $ 24.89 $ 19.44
-------------- ----------- --------------
-------------- ----------- --------------
Class B:+
Net asset value and offering price per share $20,177,075 DIVIDED BY
1,216,622; $243,093,084 DIVIDED BY 10,727,676; and $20,174,796 DIVIDED
BY 1,114,911 shares outstanding, respectively)......................... $ 16.58 $ 22.66 $ 18.10
-------------- ----------- --------------
-------------- ----------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share $2,457,715 DIVIDED BY 144,152; $1,051,855 DIVIDED BY 44,488; and
$753,111 DIVIDED BY 40,640 shares outstanding, respectively)........... $ 17.05 $ 23.64 $ 18.53
-------------- ----------- --------------
-------------- ----------- --------------
Net assets consist of:
Paid in capital (Note 4).............................................. $27,650,613 3$45,007,969 $25,439,934
Accumulated net investment loss....................................... (310,132) (3,756,379) (21,933)
Accumulated net realized gain on investments.......................... 4,981,535 44,479,625 1,845,170
Net unrealized appreciation of investments............................ 2,932,844 96,437,587 2,334,215
-------------- ----------- --------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
<FN>
- ----------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-13
<PAGE> 829
STATEMENTS OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
--------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
----------------- ----------- -----------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income............................................................... $ 23,964 $ 687,891 $ 266,753
Interest income............................................................... 16,300 113,913 22,266
Securities lending income..................................................... 8,274 154,690 484
----------------- ----------- -----------------
Total investment income..................................................... 48,538 956,494 289,503
----------------- ----------- -----------------
Expenses:
Investment management and administration fees (Note 2)........................ 122,481 1,788,752 104,395
Amortization of organization costs (Note 1)................................... 8,779 -- 8,779
Custodian Fees................................................................ 13,190 59,368 5,430
Directors' and Trustees' fees and expenses (Note 2)........................... 9,576 7,964 9,050
Fund accounting fees (Note 2)................................................. 4,564 66,756 3,698
Printing and postage expenses................................................. 27,925 100,124 25,340
Professional fees............................................................. 34,443 65,372 28,236
Registration and filing fees (Note 1)......................................... 26,130 61,087 27,150
Service and distribution expenses: (Note 2)
Class A..................................................................... 20,616 432,588 15,364
Class B..................................................................... 99,273 1,226,897 96,391
Transfer agent fees (Note 2).................................................. 62,450 728,344 55,400
Other expenses................................................................ 6,244 204,822 2,014
----------------- ----------- -----------------
Total expenses before reductions and reimbursements......................... 435,671 4,742,074 381,247
----------------- ----------- -----------------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)...................... (75,985) -- (68,265)
Expense reductions (Note 5)............................................... (1,016) (29,201) (1,546)
----------------- ----------- -----------------
Total net expenses.......................................................... 358,670 4,712,873 311,436
----------------- ----------- -----------------
Net investment loss............................................................. (310,132) (3,756,379) (21,933)
----------------- ----------- -----------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments.............................................. 3,724,962 28,358,903 1,443,280
Net change in unrealized appreciation of investments.......................... 2,036,645 30,955,839 333,471
----------------- ----------- -----------------
Net realized and unrealized gain on investments................................. 5,761,607 59,314,742 1,776,751
----------------- ----------- -----------------
Net increase in net assets resulting from operations............................ $5,451,475 $55,558,363 $1,754,818
----------------- ----------- -----------------
----------------- ----------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-14
<PAGE> 830
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
--------------------------- ---------------------------- --------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED
1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
Operations:
Net investment income
(loss)................ $ (310,132 ) $ (449,560 ) $ (3,756,379 ) $ (6,767,300 ) $ (21,933 ) $ 22,242
Net realized gain on
investments and
foreign currency
transactions.......... 3,724,962 2,524,251 28,358,903 91,288,360 1,443,280 1,352,859
Net change in
unrealized
appreciation
(depreciation) of
investments........... 2,036,645 1,674,235 30,955,839 (23,043,968 ) 333,471 2,016,032
------------ ------------- ------------- ------------- ------------ ------------
Net increase in net
assets resulting
from operations..... 5,451,475 3,748,926 55,558,363 61,477,092 1,754,818 3,391,133
------------ ------------- ------------- ------------- ------------ ------------
Class A:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (12,256 )
From net realized gain
on investments........ -- (213,287 ) -- (27,861,047 ) -- (482,262 )
Class B:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- --
From net realized gain
on investments........ -- (410,555 ) -- (29,550,073 ) -- (1,128,861 )
Advisor Class:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (1,610 )
From net realized gain
on investments........ -- (32,021 ) -- (120,835 ) -- (30,657 )
------------ ------------- ------------- ------------- ------------ ------------
Total
distributions....... -- (655,863 ) -- (57,531,955 ) -- (1,655,646 )
------------ ------------- ------------- ------------- ------------ ------------
Capital share
transactions: (Note 4)
Increase from capital
shares sold and
reinvested............ 23,061,481 60,411,522 380,523,601 783,255,935 11,647,193 33,884,259
Decrease from capital
shares repurchased.... (26,968,839 ) (49,371,158 ) (466,195,324 ) (954,921,988 ) (8,629,240 ) (19,018,130 )
------------ ------------- ------------- ------------- ------------ ------------
Net increase
(decrease) from
capital share
transactions........ (3,907,358 ) 11,040,364 (85,671,723 ) (171,666,053 ) 3,017,953 14,866,129
------------ ------------- ------------- ------------- ------------ ------------
Total increase (decrease)
in net assets........... 1,544,117 14,133,427 (30,113,360 ) (167,720,916 ) 4,772,771 16,601,616
Net assets:
Beginning of period.... 33,710,743 19,577,316 512,282,162 680,003,078 24,824,615 8,222,999
------------ ------------- ------------- ------------- ------------ ------------
End of period *....... $35,254,860 $ 33,710,743 $482,168,802 $512,282,162 $29,597,386 $24,824,615
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
* Includes
undistributed/accumulated
net investment
income (loss) of........ $ (310,132 ) $ -- $ (3,756,379 ) $ -- $ (21,933 ) $ --
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-15
<PAGE> 831
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
CLASS A
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.27 $ 12.52 $11.80 $11.43
----------- -------- ------- --------
Income from investment operations:
Net investment income (loss).......... (0.11) * * * * (0.18) * * * (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.74 2.20 1.69 0.33
----------- -------- ------- --------
Net increase from investment
operations......................... 2.63 2.02 1.64 0.37
----------- -------- ------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- ------- --------
Total distributions................. -- (0.27) (0.92) --
----------- -------- ------- --------
Net asset value, end of period.......... $ 16.90 $ 14.27 $12.52 $11.80
----------- -------- ------- --------
----------- -------- ------- --------
Total investment return (c)............. 18.43% (b) 16.23% 13.81% 3.24% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $12,620 $10,896 $8,448 $1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.47)% (a) (1.40)% (0.38)% 1.68% (a)
Without expense reductions and/or
reimbursement........................ (1.93)% (a) (2.00)% (1.47)% (20.52)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.74% (a) 1.92% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.20% (a) 2.52% 3.09% 24.20% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-16
<PAGE> 832
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
-----------------------------------------------------------
CLASS B
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 12.42 $ 11.78 $ 11.43
----------- -------- -------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.17) * * * * (0.26) * * * (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.69 2.17 1.70 0.33
----------- -------- -------- -----------------
Net increase from investment
operations......................... 2.52 1.91 1.56 0.35
----------- -------- -------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- -------- -----------------
Total distributions................. -- (0.27) (0.92) --
----------- -------- -------- -----------------
Net asset value, end of period.......... $ 16.58 $ 14.06 $ 12.42 $ 11.78
----------- -------- -------- -----------------
----------- -------- -------- -----------------
Total investment return (c)............. 17.99% (b) 15.47% 13.14% 3.06% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,177 $21,222 $10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (2.12)% (a) (2.05)% (1.03)% 1.03% (a)
Without expense reductions and/or
reimbursement........................ (2.58)% (a) (2.65)% (2.12)% (21.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.39% (a) 2.57% 2.65% 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.85% (a) 3.17% 3.74% 24.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-17
<PAGE> 833
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
ADVISOR CLASS
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
---------- ------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.39 $12.58 $ 11.81 $ 11.43
---------- ------- -------- --------
Income from investment operations:
Net investment income (loss).......... (0.08) * * * * (0.14) * * * --* * 0.05*
Net realized and unrealized gain on
investments.......................... 2.74 2.22 1.69 0.33
---------- ------- -------- --------
Net increase from investment
operations......................... 2.66 2.08 1.69 0.38
---------- ------- -------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
---------- ------- -------- --------
Total distributions................. -- (0.27) (0.92) --
---------- ------- -------- --------
Net asset value, end of period.......... $17.05 $14.39 $ 12.58 $ 11.81
---------- ------- -------- --------
---------- ------- -------- --------
Total investment return (c)............. 18.49% (b) 16.63% 14.22% 3.32% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $2,458 $1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.12)% (a) (1.05)% (0.03)% 2.03% (a)
Without expense reductions and/or
reimbursement........................ (1.58)% (a) (1.65)% (1.12)% (20.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.39% (a) 1.57% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.85% (a) 2.17% 2.74% 23.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-18
<PAGE> 834
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------------------------------------------
CLASS A+
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ---------------------------------------------------------------------
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
----------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss).......... (0.14) (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 2.65 3.00 2.96 3.93 2.55 1.56
----------- --------- --------- --------- --------- ---------
Net increase from investment
operations......................... 2.51 2.80 2.99 4.17 2.59 1.35
----------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income............ -- -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- --------- ---------
Total distributions................. -- (2.56) (1.29) (2.79) (2.07) (1.30)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 23.52 $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total investment return (c)............. 11.95%(b) 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $238,024 $255,674 $343,427 $396,291 $196,937 $116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.20)%(a) (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.21)%(a) (1.01)% 0.07% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.59%(a) 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.60%(a) 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-19
<PAGE> 835
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
------------------------------------------------------------------------------
CLASS B++
------------------------------------------------------------------------------
SIX MONTHS APRIL 1,
ENDED 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ----------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $15.90
----------- --------- --------- --------- -------- ------------
Income from investment operations:
Net investment income (loss).......... (0.21) (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.56 2.93 2.91 3.87 2.55 2.78
----------- --------- --------- --------- -------- ------------
Net increase from investment
operations......................... 2.35 2.59 2.80 3.97 2.46 2.49
----------- --------- --------- --------- -------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.12) -- --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Total distributions................. -- (2.56) (1.29) (2.70) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Net asset value, end of period.......... $ 22.66 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $17.09
----------- --------- --------- --------- -------- ------------
----------- --------- --------- --------- -------- ------------
Total investment return (c)............. 11.57%(b) 13.35% 14.82% 22.42% 15.06% 16.1% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $243,093 $255,468 $334,590 $348,435 $80,060 $1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.85)%(a) (1.55)% (0.53)% 0.59% (0.48)% (1.3)% (a)
Without expense reductions............ (1.86)%(a) (1.66)% (0.58)% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.24%(a) 2.02% 2.01% 2.11% 2.23% 2.2% (a)
Without expense reductions............ 2.25%(a) 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-20
<PAGE> 836
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------
ADVISOR CLASS+++
--------------------------------------------------
JUNE 1,
SIX MONTHS 1995
ENDED YEAR ENDED DECEMBER TO
JUNE 30, 31, DECEMBER
1998 -------------------- 31,
(UNAUDITED) (D) 1997 1996 1995
----------- ------- ------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.10 $20.76 $19.05 $20.61
----------- ------- ------- -------
Income from investment operations:
Net investment income (loss).......... (0.10) (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 2.64 3.05 2.91 1.09
----------- ------- ------- -------
Net increase from investment
operations......................... 2.54 2.90 3.00 1.30
----------- ------- ------- -------
Distributions to shareholders:
From net investment income............ -- -- -- (0.28)
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58)
----------- ------- ------- -------
Total distributions................. -- (2.56) (1.29) (2.86)
----------- ------- ------- -------
Net asset value, end of period.......... $ 23.64 $21.10 $20.76 $19.05
----------- ------- ------- -------
----------- ------- ------- -------
Total investment return (c)............. 12.04% (b) 14.54% 15.72% 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,052 $1,140 $1,986 $1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.85)% (a) 0.55% 0.47% 1.59%(a)
Without expense reductions............ (0.86)% (a) (0.66)% 0.42% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.24% (a) 1.02% 1.01% 1.11%(a)
Without expense reductions............ 1.25% (a) 1.13% 1.06% N/A
Portfolio turnover rate++++............. 171% (a) 190% 253% 71%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-21
<PAGE> 837
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
CLASS A
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.25 $14.65 $12.76 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.03* * * * 0.09* * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 1.09 3.87 1.94 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.12 3.96 1.93 1.33
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- --
From net realized gain on
investments.......................... -- (1.33) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.36) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.37 $17.25 $14.65 $ 12.76
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.49% (b) 27.23% 15.12% 11.64% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $8,669 $7,668 $2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.28% (a) 0.56% (0.10)% 1.10% (a)
Without expense reductions and/or
reimbursement........................ (0.21)% (a) (0.42)% (3.61)% (47.44)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.73% (a) 1.99% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.22% (a) 2.97% 5.51% 50.54% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-22
<PAGE> 838
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
------------------------------------------------------------
CLASS B
------------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.04 $ 14.54 $12.75 $ 11.43
----------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... (0.03) * * * * (0.01) * * * (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 1.09 3.83 1.93 1.31
----------- -------- ------- ----------------
Net increase from investment
operations......................... 1.06 3.82 1.83 1.32
----------- -------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- -- -- --
From net realized gain on
investments.......................... -- (1.32) (0.04) --
----------- -------- ------- ----------------
Total distributions................. -- (1.32) (0.04) --
----------- -------- ------- ----------------
Net asset value, end of period.......... $ 18.10 $ 17.04 $14.54 $ 12.75
----------- -------- ------- ----------------
----------- -------- ------- ----------------
Total investment return (c)............. 6.16% (b) 26.44% 14.35% 11.55% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,175 $16,717 $5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.37)% (a) (0.09)% (0.75)% 0.45% (a)
Without expense reductions and/or
reimbursement........................ (0.86)% (a) (1.07)% (4.26)% (48.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.38% (a) 2.64% 2.65%(a) 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.87% (a) 3.62% 6.16% 51.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-23
<PAGE> 839
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
ADVISOR CLASS
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.37 $14.72 $12.77 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.05* * * * 0.15* * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 1.11 3.91 1.96 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.16 4.06 1.99 1.34
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.34) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.41) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.53 $17.37 $14.72 $ 12.77
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.68% (b) 27.78% 15.58% 11.72% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 753 $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.63% (a) 0.91% 0.25% 1.45% (a)
Without expense reductions and/or
reimbursement........................ 0.14% (a) (0.07)% (3.26)% (47.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.38% (a) 1.64% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.87% (a) 2.62% 5.16% 50.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-24
<PAGE> 840
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund
(the "Funds" formerly, GT Global America Small Cap Growth Fund, GT Global
America Mid Cap Growth Fund, and GT Global America Value Fund, respectively),
are separate series of AIM Growth Series (the "Trust", formerly G.T. Global
Growth Series). The Trust is a Delaware business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Trust has eight diversified series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The AIM Small Cap Equity Fund and AIM America Value Fund invest substantially
all of their investable assets in Small Cap Portfolio and Value Portfolio
("Portfolios"), respectively. Each Portfolio is organized as a Delaware business
trust and is registered under the 1940 Act as a diversified, open-end management
investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the AIM Small Cap Equity Fund, the AIM America Value
Fund, and their respective Portfolios have been presented on a consolidated
basis, and represent all activities of both the respective Funds and Portfolios.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its respective fund or INVESCO (NY), Inc. (the
"Sub-adviser"), which has a nominal ($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Sub-adviser to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Sub-adviser deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued at amortized cost, adjusted for market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the AIM Mid Cap Growth Fund and
each of the two Portfolios), it is the Fund's or Portfolio's policy to always
receive, as collateral, United States government securities or other high
quality debt securities of which the value, including accrued interest, is at
least equal to the amount to be repaid to the Fund or Portfolio under each
agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-25
<PAGE> 841
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
JUNE 30, 1998 PERIOD ENDED JUNE
-------------------------------- 30, 1998
AGGREGATE VALUE CASH -----------------
AIM ON LOANS COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
Small Cap Equity Fund................... $ 1,441,406 $ 1,470,234 $ 8,274
Mid Cap Growth Fund..................... 42,313,661 42,984,542 154,690
America Value Fund...................... -- -- 484
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. The cash collateral is invested in a securities lending
trust which consists of a portfolio of high quality short duration securities
whose average effective duration is restricted to 120 days or less.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the AIM Small Cap Equity Fund, the AIM America Value Fund,
and their respective Portfolios in connection with their organization, their
initial registration with the Securities and Exchange Commission and with
various states and the initial public offering of their shares aggregated
$63,500 for each Fund and $25,000 for each Portfolio. These expenses are being
amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-26
<PAGE> 842
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds advised and/or administered by
the Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Funds and certain other Funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. Each of these three funds is limited to borrowing up to 33 1/3% of
the value of each Fund's total assets. On June 30, 1998, AIM Mid Cap Growth Fund
had $6,652,000 in loans outstanding.
For the period ended June 30, 1998, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for AIM
Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund was
$513,375, $11,735,546 and $87,889 with a weighted average interest rate of
6.36%, 6.28%, and 6.24%, respectively. Interest expense for AIM Small Cap Equity
Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund for the period ended
June 30, 1998 was $3,627, $198,306, and $137, respectively, and is included in
"Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Funds' and Portfolios'
investment manager and administrator, and INVESCO (NY), Inc., (formerly,
Chancellor LGT Asset Management, Inc.) is the Funds' and Portfolios' investment
sub-adviser and/or sub-administrator. As of the close of business on May 29,
1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of Chancellor LGT Asset Management, Inc. ("Chancellor LGT"),
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included Chancellor LGT and
certain other affiliates. As a result of this transaction, Chancellor LGT was
renamed INVESCO (NY), Inc., and is now an indirect wholly-owned subsidiary of
AMVESCAP PLC. In connection with this transaction, A I M Advisors, Inc., an
indirect wholly-owned subsidiary of AMVESCAP PLC, became the investment manager
and administrator of the Funds and Portfolios and INVESCO (NY), Inc. became the
sub-adviser and sub-administrator of the Funds and Portfolios. A I M
Distributors, Inc. ("AIM Distributors") became the Funds' distributor. Finally,
the Trust was reorganized from a Massachusetts business trust into a Delaware
business trust, and each Portfolio was reorganized from a New York Trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
AIM Small Cap Equity Fund and AIM America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. AIM Mid Cap
Growth Fund pays investment management and administration fees to the Manager at
the annualized rate of 0.725% on the first $500 million of average daily net
assets on the Fund; 0.70% on the next $500 million; 0.675% on the next $500
million and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
or Portfolio's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Funds' distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Funds' distributor. The Funds offer
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors collects the sales charges imposed on sales of
Class A shares, and reallows a portion of such charges to dealers through which
the sales are made. For the period ended June 30, 1998, AIM Distributors and GT
Global retained the following sales charges: $287 and $1,833, respectively, for
the AIM Small Cap Equity Fund, $1,705 and $12,353, respectively, for the AIM Mid
Cap Growth Fund, and $162 and $1,487, respectively, for the AIM America Value
Fund. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No
FS-27
<PAGE> 843
CDSC's for Class A were collected for the period ended June 30, 1998. AIM
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. For the period ended June 30, 1998, AIM Distributors and GT
Global collected such CDSCs in the amount of: $5,915 and $65,285, respectively,
for the AIM Small Cap Equity Fund, $79,877 and $589,554, respectively, for the
AIM Mid Cap Growth Fund, and $6,047 and $32,112, respectively, for the AIM
America Value Fund. In addition, AIM Distributors makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Funds' Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Funds' reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund's were permitted to pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Funds' Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and were permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Funds'
Class A shares, less any amounts paid by the Funds as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global was reimbursed under the Class A Plan would
have been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Funds were
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for GT Global's
expenditures incurred in servicing and maintaining shareholder accounts, and
were permitted to pay GT Global a distribution fee at the annualized rate of up
to 0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continued in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Funds' Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Funds compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Funds. Under the Class A Plan, the funds
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of each of the Fund's Class A shares.
Pursuant to the Funds' Class B Plan, the Funds compensate AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Class A Plan and the Class B Plan (together, the "Plans") are designed to
compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A and Class B shares of a
Fund. Payments also can be directed by AIM Distributors to Financial
Institutions who have entered into service agreements with respect to Class A
and Class B shares of a Fund and who provide continuing personal services to
their customers who own Class A and Class B shares of a Fund. The service fees
payable to selected Financial Institutions are calculated at the annual rate of
0.25% of the average daily net asset value of those Fund shares that are held in
such Institution's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans.
The Manager and AIM Distributors have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class Shares, respectively.
This undertaking may be changed or eliminated in the future. If necessary, this
limitation will be effected by waivers by the Manager of investment management
and administration fees, waivers by AIM Distributors of payments under the Class
A Plan and/or Class B Plan and/or reimbursements by the Manager or AIM
Distributors of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Funds. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Funds for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its
FS-28
<PAGE> 844
Trustees who is not an employee, officer or director of the Manager, AIM
Distributors or GT Services $500 per year plus $150 for each meeting of the
board or any committee thereof attended by the Trustee.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases of investment securities by the
AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund, and AIM America Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $34,489,676, $425,421,321 and $21,307,726, respectively. Sales of
investment securities by the AIM Small Cap Equity Portfolio, AIM Mid Cap Growth
Fund, and AIM America Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $38,854,404, $503,976,639 and
$18,275,286, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
CAPITAL SHARES-AIM SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 766,677 $ 12,379,784 2,067,494 $ 28,341,345
Shares issued in connection with
reinvestment of distributions......... -- -- 14,194 195,720
------------ -------------- ------------ ---------------
766,677 12,379,784 2,081,688 28,537,065
Shares repurchased...................... (783,355) (12,602,269) (1,992,960) (27,546,271)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (16,678) $ (222,485) 88,728 $ 990,794
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 649,669 $ 10,068,580 2,192,656 $ 29,216,057
Shares issued in connection with
reinvestment of distributions......... -- -- 26,438 359,234
------------ -------------- ------------ ---------------
649,669 10,068,580 2,219,094 29,575,291
Shares repurchased...................... (942,259) (14,277,803) (1,570,899) (20,624,826)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (292,590) $ (4,209,223) 648,195 $ 8,950,465
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 39,133 $ 613,117 156,123 $ 2,292,127
Shares issued in connection with
reinvestment of distributions......... -- -- 507 7,039
------------ -------------- ------------ ---------------
39,133 613,117 156,630 2,299,166
Shares repurchased...................... (5,668) (88,767) (80,540) (1,200,061)
------------ -------------- ------------ ---------------
Net increase............................ 33,465 $ 524,350 76,090 $ 1,099,105
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-29
<PAGE> 845
CAPITAL SHARES-AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,237,471 $ 293,037,123 24,801,099 $ 522,081,212
Shares issued in connection with
reinvestment of distributions......... -- -- 1,170,749 23,490,213
------------ -------------- ------------ ---------------
13,237,471 293,037,123 25,971,848 545,571,425
Shares repurchased...................... (15,286,842) (338,921,081) (30,338,852) (637,412,658)
------------ -------------- ------------ ---------------
Net decrease............................ (2,049,371) $ (45,883,958) (4,367,004) $ (91,841,233)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,361,394 $ 70,538,881 9,218,434 $ 190,231,954
Shares issued in connection with
reinvestment of distributions......... -- -- 1,240,395 24,063,873
------------ -------------- ------------ ---------------
3,361,394 70,538,881 10,458,829 214,295,827
Shares repurchased...................... (5,214,434) (110,304,526) (14,376,532) (293,260,545)
------------ -------------- ------------ ---------------
Net decrease............................ (1,853,040) $ (39,765,645) (3,917,703) $ (78,964,718)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 796,165 $ 16,947,597 1,056,271 $ 23,267,932
Shares issued in connection with
reinvestment of distributions......... -- -- 5,993 120,751
------------ -------------- ------------ ---------------
796,165 16,947,597 1,062,264 23,388,683
Shares repurchased...................... (805,702) (16,969,717) (1,103,923) (24,248,785)
------------ -------------- ------------ ---------------
Net decrease............................ (9,537) $ (22,120) (41,659) $ (860,102)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
CAPITAL SHARES-AIM AMERICA VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 233,708 $ 4,201,126 781,797 $ 13,117,280
Shares issued in connection with
reinvestment of distributions......... -- -- 26,859 454,725
------------ -------------- ------------ ---------------
233,708 4,201,126 808,656 13,572,005
Shares repurchased...................... (206,495) (3,733,422) (536,657) (9,148,725)
------------ -------------- ------------ ---------------
Net increase............................ 27,213 $ 467,704 271,999 $ 4,423,280
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 402,934 $ 7,126,394 1,148,582 $ 19,043,834
Shares issued in connection with
reinvestment of distributions......... -- -- 60,093 1,004,744
------------ -------------- ------------ ---------------
402,934 7,126,394 1,208,675 20,048,578
Shares repurchased...................... (269,058) (4,850,260) (606,167) (9,803,021)
------------ -------------- ------------ ---------------
Net increase............................ 133,876 $ 2,276,134 602,508 $ 10,245,557
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 17,744 $ 319,673 14,203 $ 230,962
Shares issued in connection with
reinvestment of distributions......... -- -- 1,920 32,714
------------ -------------- ------------ ---------------
17,744 319,673 16,123 263,676
Shares repurchased...................... (2,387) (45,558) (3,834) (66,384)
------------ -------------- ------------ ---------------
Net increase............................ 15,357 $ 274,115 12,289 $ 197,292
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of a Fund's or Portfolio's expenses. For the period ended June 30, 1998,
the expenses of AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund and AIM
America Value Portfolio were reduced by $1,016, $29,201 and $1,546 respectively,
under these arrangements.
6. SUBSEQUENT EVENT
Effective September 8, 1998, INVESCO (NY), Inc. (the "Sub-adviser") will resign
as (i) sub-advisor and sub-administrator to the Value Portfolio, the Small Cap
Portfolio (together the "Portfolios") and AIM Mid Cap Growth Fund; and (ii)
sub-administrator to AIM America Value Fund and AIM Small Cap Equity Fund. A I M
Advisors, Inc. will continue to serve as the manager and administrator for the
above-named funds and portfolios.
FS-30
<PAGE> 846
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Small Cap Growth Fund - Consolidated, GT Global America Mid Cap
Growth Fund, and GT Global America Value Fund - Consolidated, three of the funds
organized as a series of GT Global Growth Series, including the portfolios of
investments, as of December 31, 1997, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated herein. These financial statements and the financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and the 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, 1997, 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of the
GT Global America Small Cap Growth Fund - Consolidated, GT Global America Mid
Cap Growth Fund, and GT Global America Value Fund - Consolidated, as of December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-31
<PAGE> 847
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accommodations, Inc.-/- ...................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-32
<PAGE> 848
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.3%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.1
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.3
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-33
<PAGE> 849
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (13.2%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.4
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.3
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.1
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 1.0
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-34
<PAGE> 850
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.4%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.8
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.2
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.4%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.7
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-35
<PAGE> 851
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
AUTOMOBILES
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 97.0
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-36
<PAGE> 852
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 99.6
Other Assets and Liabilities ................................ 131,240 0.4
------------ -----
NET ASSETS .................................................. $ 33,710,743 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-37
<PAGE> 853
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.5%)
Cendant Corp.-/- .......................................... US 924,232 $ 31,770,471 6.2
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................ US 571,700 20,867,050 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 477,325 18,317,347 3.6
BUSINESS & PUBLIC SERVICES
Signature Resorts, Inc.-/- ................................ US 789,900 17,279,063 3.4
LEISURE & TOURISM
Hilton Hotels Corp. ....................................... US 502,100 14,937,475 2.9
LEISURE & TOURISM
U.S. Office Products Co.-/- ............................... US 734,650 14,417,506 2.8
CONSUMER SERVICES
Caribiner International, Inc.-/- .......................... US 320,500 14,262,250 2.8
CONSUMER SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 264,900 13,774,800 2.7
BUSINESS & PUBLIC SERVICES
Mirage Resorts, Inc.-/- ................................... US 381,900 8,688,225 1.7
LEISURE & TOURISM
Nextel Communications, Inc. "A"-/- ........................ US 303,300 7,885,800 1.5
WIRELESS COMMUNICATIONS
Valassis Communications, Inc.-/- .......................... US 209,400 7,747,800 1.5
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 140,200 7,097,625 1.4
CONSUMER SERVICES
Service Corporation International ......................... US 137,500 5,078,906 1.0
CONSUMER SERVICES
Wolverine World Wide, Inc. ................................ US 201,600 4,561,200 0.9
RETAILERS-APPAREL
------------
186,685,518
------------
Finance (14.6%)
Conseco, Inc. ............................................. US 348,200 15,821,338 3.1
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................ US 154,100 11,181,881 2.2
BANKS-REGIONAL
CMAC Investment Corp. ..................................... US 149,700 9,038,138 1.8
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................ US 252,800 8,911,200 1.7
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 7,636,688 1.5
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................ US 228,400 7,365,900 1.4
CONSUMER FINANCE
Consolidated Capital Corp.-/- ............................. US 323,500 6,571,094 1.3
INVESTMENT MANAGEMENT
Student Loan Marketing Association ........................ US 42,800 5,954,550 1.2
OTHER FINANCIAL
Ace Ltd. .................................................. US 20,100 1,939,650 0.4
INSURANCE - PROPERTY-CASUALTY
------------
74,420,439
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-38
<PAGE> 854
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (11.1%)
AmeriSource Health Corp. "A"-/- ........................... US 214,600 $ 12,607,750 2.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 114,600 12,398,288 2.4
HEALTH CARE SERVICES
HBO & Co. ................................................. US 203,800 9,782,400 1.9
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- .......................... US 246,100 9,413,325 1.8
HEALTH CARE SERVICES
Covance, Inc.-/- .......................................... US 337,000 6,697,875 1.3
HEALTH CARE SERVICES
Guidant Corp. ............................................. US 97,400 6,063,150 1.2
MEDICAL TECHNOLOGY & SUPPLIES
------------
56,962,788
------------
Technology (11.1%)
PeopleSoft, Inc.-/- ....................................... US 380,600 14,843,400 2.9
SOFTWARE
Sterling Commerce, Inc.-/- ................................ US 365,200 14,037,375 2.7
SOFTWARE
Ciena Corp.-/- ............................................ US 186,700 11,412,038 2.2
TELECOM TECHNOLOGY
CBT Group PLC - ADR-/- {\/} ............................... IRE 110,800 9,099,450 1.8
COMPUTERS & PERIPHERALS
Pegasystems, Inc.-/- ...................................... US 371,300 7,495,619 1.5
SOFTWARE
------------
56,887,882
------------
Materials/Basic Industry (9.7%)
Crompton & Knowles Corp. .................................. US 529,200 14,023,800 2.7
CHEMICALS
International Specialty Products, Inc.-/- ................. US 834,000 12,457,875 2.4
CHEMICALS
Sealed Air Corp.-/- ....................................... US 201,000 12,411,750 2.4
PLASTICS & RUBBER
J. Ray McDermott S.A.-/- .................................. US 263,900 11,347,700 2.2
BUILDING MATERIALS & COMPONENTS
------------
50,241,125
------------
Energy (8.6%)
Cooper Cameron Corp.-/- ................................... US 170,500 10,400,500 2.0
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ........................................ US 120,600 8,675,663 1.7
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 138,900 8,429,494 1.7
OIL
Smith International, Inc.-/- .............................. US 135,600 8,322,450 1.6
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-39
<PAGE> 855
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Santa Fe International Corp. .............................. US 198,200 $ 8,064,263 1.6
ENERGY EQUIPMENT & SERVICES
------------
43,892,370
------------
Consumer Durables (4.1%)
Avis Rent A Car, Inc.-/- .................................. US 326,900 10,440,369 2.0
AUTOMOBILES
Hertz Corp. "A" ........................................... US 152,500 6,138,125 1.2
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 235,000 4,817,500 0.9
AUTOMOBILES
------------
21,395,994
------------
Multi-Industry/Miscellaneous (2.4%)
Corrections Corporation of America-/- ..................... US 324,500 12,026,781 2.4
------------
MISCELLANEOUS
Consumer Non-Durables (1.3%)
International Home Foods, Inc.-/- ......................... US 240,400 6,731,200 1.3
------------
FOOD
Capital Goods (1.3%)
U.S. Filter Corp.-/- ...................................... US 213,100 6,379,681 1.3
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $450,142,030) ................ 515,623,778 100.7
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,985,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $21,004,684,
including accrued interest).
(cost $20,589,000) ...................................... 20,589,000 4.0
------------ -----
TOTAL INVESTMENTS (cost $470,731,030) * .................... 536,212,778 104.7
Other Assets and Liabilities ................................ (23,930,616) (4.7)
------------ -----
NET ASSETS .................................................. $512,282,162 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $472,057,961 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,285,341
Unrealized depreciation: (8,130,524)
-------------
Net unrealized appreciation: $ 64,154,817
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-40
<PAGE> 856
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-41
<PAGE> 857
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-42
<PAGE> 858
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-43
<PAGE> 859
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (208,051) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,824,615 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-44
<PAGE> 860
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
-------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304; $470,731,030;
and $23,031,922, respectively) (Note 1)............................ $33,579,503 $536,212,778 $25,032,666
U.S. currency....................................................... 927 295 988
Dividends receivable................................................ 10,766 125,429 42,920
Interest receivable................................................. 142 3,317 177
Receivable for Fund shares sold..................................... 358,830 628,959 306,827
Receivable for securities sold...................................... 887,683 -- 90,237
Unamortized organizational costs (Note 1)........................... 49,458 -- 49,458
-------------- ------------- --------------
Total assets...................................................... 34,887,309 536,970,778 25,523,273
-------------- ------------- --------------
Liabilities:
Payable for custodian fees.......................................... 2,924 25,081 2,892
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,310 5,062 5,725
Payable for fund accounting fees (Note 2)........................... 1,488 9,945 652
Payable for Fund shares repurchased................................. 716,716 3,845,129 356,809
Payable for investment management and administration fees (Note
2)................................................................. 19,707 306,242 417
Payable for printing and postage expenses........................... 16,077 31,815 16,948
Payable for professional fees....................................... 15,217 27,546 19,018
Payable for registration and filing fees............................ 15,960 3,900 8,146
Payable for securities purchased.................................... 348,610 19,887,085 263,514
Payable for service and distribution expenses (Note 2).............. 21,124 285,634 15,365
Payable for transfer agent fees (Note 2)............................ 11,763 231,778 5,430
Other accrued expenses.............................................. 1,570 29,399 3,642
-------------- ------------- --------------
Total liabilities................................................. 1,176,466 24,688,616 698,558
Minority interest (Notes 1 & 2)..................................... 100 -- 100
-------------- ------------- --------------
Net assets............................................................ $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
Class A:
Net asset value and redemption price per share ($10,896,107 DIVIDED BY
763,367;
$255,674,204 DIVIDED BY 12,169,079; and $7,668,100 DIVIDED BY 444,643
shares outstanding, respectively) ................................... $ 14.27 $ 21.01 $ 17.25
-------------- ------------- --------------
-------------- ------------- --------------
Maximum offering price per share (100/95.25 of $14.27; 100/95.25 of
$21.01; and 100/95.25 of $17.25, respectively) *..................... $ 14.98 $ 22.06 $ 18.11
-------------- ------------- --------------
-------------- ------------- --------------
Class B:+
Net asset value and offering price per share $21,222,157 DIVIDED BY
1,509,212; $255,468,031 DIVIDED BY 12,580,716; and $16,717,458
DIVIDED BY 981,035 shares outstanding, respectively)................. $ 14.06 $ 20.31 $ 17.04
-------------- ------------- --------------
-------------- ------------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share ($1,592,479 DIVIDED BY 110,687; $1,139,927 DIVIDED BY 54,025;
and $439,057 DIVIDED BY 25,283 shares outstanding, respectively)..... $ 14.39 $ 21.10 $ 17.37
-------------- ------------- --------------
-------------- ------------- --------------
Net assets consist of:
Paid in capital (Note 4)............................................ $31,557,971 $430,679,692 $22,421,981
Accumulated net realized gain on investments........................ 1,256,573 16,120,722 401,890
Net unrealized appreciation of investments.......................... 896,199 65,481,748 2,000,744
-------------- ------------- --------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-45
<PAGE> 861
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
------------- ------------ -------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income.............................................. $ 35,957 $2,095,256 $ 357,943
Interest income.............................................. 95,213 519,576 46,139
------------- ------------ -------------
Total investment income.................................... 131,170 2,614,832 404,082
------------- ------------ -------------
Expenses:
Investment management and administration fees (Note 2)....... 184,004 3,999,732 113,543
Amortization of organization costs (Note 1).................. 17,702 -- 17,702
Custodian Fees............................................... 21,876 137,385 9,431
Directors' and Trustees' fees and expenses (Note 2).......... 14,813 12,580 12,042
Fund accounting fees (Note 2)................................ 6,379 142,274 3,938
Printing and postage expenses................................ 61,435 102,242 51,829
Professional fees............................................ 63,468 72,533 71,745
Registration and filing fees................................. 72,360 73,688 65,399
Service and distribution expenses: (Note 2)
Class A.................................................... 33,776 958,593 17,701
Class B.................................................... 148,043 2,781,908 102,587
Transfer agent fees (Note 2)................................. 102,790 1,545,314 59,946
Other expenses (Note 1)...................................... 5,430 156,232 9,271
------------- ------------ -------------
Total expenses before reductions and reimbursement......... 732,076 9,982,481 535,134
------------- ------------ -------------
Expenses reimbursed by Chancellor LGT Asset Management,
Inc. (Note 2)........................................... (131,297) -- (151,962)
Expense reductions (Notes 1 & 5)......................... (20,049) (600,349) (1,332)
------------- ------------ -------------
Total net expenses......................................... 580,730 9,382,132 381,840
------------- ------------ -------------
Net investment income (loss)................................... (449,560) (6,767,300) 22,242
------------- ------------ -------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments............................. 2,524,251 91,288,360 1,352,859
Net change in unrealized appreciation (depreciation) of
investments................................................. 1,674,235 (23,043,968) 2,016,032
------------- ------------ -------------
Net realized and unrealized gain on investments................ 4,198,486 68,244,392 3,368,891
------------- ------------ -------------
Net increase in net assets resulting from operations........... $ 3,748,926 $61,477,092 $ 3,391,133
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-46
<PAGE> 862
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
AMERICA SMALL CAP AMERICA MID CAP AMERICA VALUE
GROWTH FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
------------------------ ------------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER DECEMBER DECEMBER YEAR ENDED DECEMBER DECEMBER
31, 31, 31, DECEMBER 31, 31, 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $(449,560) $(110,516) $(6,767,300) $ (1,367,346) $ 22,242 $ (30,160)
Net realized gain on investments and
foreign currency transactions........ 2,524,251 1,264,689 91,288,360 24,339,369 1,352,859 733,904
Net change in unrealized appreciation
(depreciation) of investments........ 1,674,235 (782,829) (23,043,968) 76,318,599 2,016,032 (69,965)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting
from operations.................... 3,748,926 371,344 61,477,092 99,290,622 3,391,133 633,779
----------- ----------- ----------- ------------ ----------- -----------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (12,256) --
From net realized gain on
investments.......................... (213,287) (564,752) (27,861,047) (21,518,831) (482,262) (7,007)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (410,555) (727,944) (29,550,073) (20,232,121) (1,128,861) (14,950)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (1,610) --
From net realized gain on
investments.......................... (32,021) (28,106) (120,835) (167,680) (30,657) (443)
----------- ----------- ----------- ------------ ----------- -----------
Total distributions................. (655,863) (1,320,802) (57,531,955) (41,918,632) (1,655,646) (22,400)
----------- ----------- ----------- ------------ ----------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 60,411,522 43,976,336 783,255,935 2,122,781,710 33,884,259 11,770,124
Decrease from capital shares
repurchased.......................... (49,371,158) (27,455,528) (954,921,988) (2,246,270,951) (19,018,130) (6,364,460)
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) from capital
share transactions................. 11,040,364 16,520,808 (171,666,053) (123,489,241) 14,866,129 5,405,664
----------- ----------- ----------- ------------ ----------- -----------
Total increase (decrease) in net
assets................................. 14,133,427 15,571,350 (167,720,916) (66,117,251) 16,601,616 6,017,043
Net assets:
Beginning of year..................... 19,577,316 4,005,966 680,003,078 746,120,329 8,222,999 2,205,956
----------- ----------- ----------- ------------ ----------- -----------
End of year *........................ 3$3,710,743 1$9,577,316 $512,282,162 $680,003,078 2$4,824,615 $8,222,999
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
* Includes undistributed/accumulated
net investment income (loss) of...... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-47
<PAGE> 863
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.52 $ 11.80 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.18) ** (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.20 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.02 1.64 0.37
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.27 $ 12.52 $ 11.80
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.23 % 13.81 % 3.24 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 10,896 $ 8,448 $ 1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.40)% (0.38)% 1.68 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.00)% (1.47)% (20.52)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.92 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.52 % 3.09 % 24.20 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-48
<PAGE> 864
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.42 $ 11.78 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.26) ** (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.17 1.70 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 1.91 1.56 0.35
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.06 $ 12.42 $ 11.78
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 15.47 % 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,222 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (2.05)% (1.03)% 1.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.65)% (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.57 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.17 % 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-49
<PAGE> 865
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.58 $ 11.81 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.14) ** --** 0.05*
Net realized and unrealized gain on
investments.......................... 2.22 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.08 1.69 0.38
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.39 $ 12.58 $ 11.81
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.63 % 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.05)% (0.03)% 2.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.57 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.17 % 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-50
<PAGE> 866
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 3.00 2.96 3.93 2.55 1.56
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.80 2.99 4.17 2.59 1.35
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.56) (1.29) (2.79) (2.07) (1.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,674 $ 343,427 $ 396,291 $ 196,937 $ 116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.01)% 0.07% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-51
<PAGE> 867
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-------------------------------------------------------------
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 15.90
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.93 2.91 3.87 2.55 2.78
---------- ---------- ---------- ---------- -------------
Net increase from investment
operations......................... 2.59 2.80 3.97 2.46 2.49
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.12) -- --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Total distributions................. (2.56) (1.29) (2.70) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 13.35% 14.82% 22.42% 15.06% 16.1%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,468 $ 334,590 $ 348,435 $ 80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.55)% (0.53)% 0.59% (0.48)% (1.3)%(a)
Without expense reductions............ (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.02% 2.01% 2.11% 2.23% 2.2%(a)
Without expense reductions............ 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-52
<PAGE> 868
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-----------------------------------------
ADVISOR CLASS+++
-----------------------------------------
JUNE 1, 1995
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.76 $ 19.05 $ 20.61
------------ ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 3.05 2.91 1.09
------------ ------------ -------------
Net increase from investment
operations......................... 2.90 3.00 1.30
------------ ------------ -------------
Distributions to shareholders:
From net investment income............ -- -- (0.28)
From net realized gain on
investments.......................... (2.56) (1.29) (2.58)
------------ ------------ -------------
Total distributions................. (2.56) (1.29) (2.86)
------------ ------------ -------------
Net asset value, end of period.......... $ 21.10 $ 20.76 $ 19.05
------------ ------------ -------------
------------ ------------ -------------
Total investment return (c)............. 14.54 % 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,140 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.55)% 0.47 % 1.59%(a)
Without expense reductions............ (0.66)% 0.42 % N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.02 % 1.01 % 1.11%(a)
Without expense reductions............ 1.13 % 1.06 % N/A
Portfolio turnover rate++++............. 190 % 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-53
<PAGE> 869
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.65 $ 12.76 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.09 * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 3.87 1.94 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 3.96 1.93 1.33
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... (1.33) (0.04) --
------------ ------------ --------------
Total distributions................. (1.36) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.25 $ 14.65 $ 12.76
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.23 % 15.12 % 11.64 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.56 % (0.10)% 1.10 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.42)% (3.61)% (47.44)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.99 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97 % 5.51 % 50.54 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-54
<PAGE> 870
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.54 $ 12.75 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 3.83 1.93 1.31
------------ ------------ --------------
Net increase from investment
operations......................... 3.82 1.83 1.32
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ -- -- --
From net realized gain on
investments.......................... (1.32) (0.04) --
------------ ------------ --------------
Total distributions................. (1.32) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.04 $ 14.54 $ 12.75
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 26.44 % 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (0.09)% (0.75)% 0.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.07)% (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.64 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.62 % 6.16 % 51.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-55
<PAGE> 871
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.72 $ 12.77 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.15 * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 3.91 1.96 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 4.06 1.99 1.34
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.34) (0.04) --
------------ ------------ --------------
Total distributions................. (1.41) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.37 $ 14.72 $ 12.77
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.78 % 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.91 % 0.25 % 1.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.07)% (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.64 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.62 % 5.16 % 50.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-56
<PAGE> 872
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund,
and GT Global America Value Fund ("Funds"), are separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1997, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-57
<PAGE> 873
GT GLOBAL AMERICA FUNDS
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 YEAR ENDED
-------------------------------- DECEMBER 31, 1997
AGGREGATE VALUE CASH -----------------
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Small Cap Growth Fund........... $ 1,812,494 $ 1,869,550 $ 17,489
America Mid Cap Growth Fund............. 45,019,438 45,567,400 516,083
America Value Fund...................... 794,531 810,000 896
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the
Portfolios' custodian fees.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-58
<PAGE> 874
GT GLOBAL AMERICA FUNDS
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Funds and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Funds' total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for GT
Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, and
GT Global America Value Fund was $101,429, $6,068,763, and $284,000 with a
weighted average interest rate of 6.34%, 6.33%, and 6.31%, respectively.
Interest expense for GT Global America Small Cap Growth Fund, GT Global America
Mid Cap Growth Fund, and GT Global America Value Fund for the year ended
December 31, 1997 was $125, $125,935, and $50, respectively, included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. GT Global America Small Cap Growth Fund and GT Global
America Value Fund each pays the Manager administration fees at the annualized
rate of 0.25% of such Fund's average daily net assets. Each Portfolio pays
investment management and administration fees to the Manager at the annualized
rate of 0.475% on the first $500 million of average daily net assets of the
Portfolio; 0.45% on the next $500 million; 0.425% on the next $500 million; and
0.40% on amounts thereafter. GT Global America Mid Cap Growth Fund pays
investment management and administration fees to the Manager at the annualized
rate of 0.725% on the first $500 million of average daily net assets on the
Fund; 0.70% on the next $500 million; 0.675% on the next $500 million and 0.65%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's or Portfolio's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained the
following sales charges: $5,417 for the GT Global America Small Cap Growth Fund,
$38,700 for the GT Global America Mid Cap Growth Fund, and $5,770 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $23,780 for the year ended December 31, 1997 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected such CDSCs
in the amount of: $60,107 for the GT Global America Small Cap Growth Fund,
$2,316,997 for the GT Global America Mid Cap Growth Fund, and $55,700 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the
FS-59
<PAGE> 875
GT GLOBAL AMERICA FUNDS
Class A Plan, a Fund may pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and may pay GT Global a distribution fee at the annualized rate of up
to 0.35% of the average daily net assets of the Fund's Class A shares, less any
amounts paid by the Fund as the aforementioned service fee, for GT Global's
expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the
average daily net assets of the Fund's Class A, Class B, Advisor Class Shares,
respectively. This undertaking may be changed or eliminated in the future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1997, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,037,388,895, $66,820,422 and $25,951,699, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,221,752,474, $55,910,483 and
$13,967,002, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
FS-60
<PAGE> 876
GT GLOBAL AMERICA FUNDS
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,067,494 $ 28,341,345 1,491,083 $ 20,216,595
Shares issued in connection with
reinvestment of distributions......... 14,194 195,720 39,998 505,573
------------ -------------- ------------ ---------------
2,081,688 28,537,065 1,531,081 20,722,168
Shares repurchased...................... (1,992,960) (27,546,271) (1,019,989) (13,880,892)
------------ -------------- ------------ ---------------
Net increase............................ 88,728 $ 990,794 511,092 $ 6,841,276
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,192,656 $ 29,216,057 1,665,796 $ 22,115,741
Shares issued in connection with
reinvestment of distributions......... 26,438 359,234 52,848 663,246
------------ -------------- ------------ ---------------
2,219,094 29,575,291 1,718,644 22,778,987
Shares repurchased...................... (1,570,899) (20,624,826) (1,029,367) (13,501,795)
------------ -------------- ------------ ---------------
Net increase............................ 648,195 $ 8,950,465 689,277 $ 9,277,192
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 156,123 $ 2,292,127 33,521 $ 447,953
Shares issued in connection with
reinvestment of distributions......... 507 7,039 2,144 27,228
------------ -------------- ------------ ---------------
156,630 2,299,166 35,665 475,181
Shares repurchased...................... (80,540) (1,200,061) (5,440) (72,841)
------------ -------------- ------------ ---------------
Net increase............................ 76,090 $ 1,099,105 30,225 $ 402,340
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-61
<PAGE> 877
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 24,801,099 $ 522,081,212 89,962,964 $ 1,853,673,285
Shares issued in connection with
reinvestment of distributions......... 1,170,749 23,490,213 853,598 17,867,701
------------ -------------- ------------ ---------------
25,971,848 545,571,425 90,816,562 1,871,540,986
Shares repurchased...................... (30,338,852) (637,412,658) (95,061,922) (1,956,032,031)
------------ -------------- ------------ ---------------
Net decrease............................ (4,367,004) $ (91,841,233) (4,245,360) $ (84,491,045)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,218,434 $ 190,231,954 11,161,651 $ 224,412,718
Shares issued in connection with
reinvestment of distributions......... 1,240,395 24,063,873 803,575 16,429,676
------------ -------------- ------------ ---------------
10,458,829 214,295,827 11,965,226 240,842,394
Shares repurchased...................... (14,376,532) (293,260,545) (14,026,348) (280,392,879)
------------ -------------- ------------ ---------------
Net decrease............................ (3,917,703) $ (78,964,718) (2,061,122) $ (39,550,485)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,056,271 $ 23,267,932 485,169 $ 10,230,701
Shares issued in connection with
reinvestment of distributions......... 5,993 120,751 8,013 167,629
------------ -------------- ------------ ---------------
1,062,264 23,388,683 493,182 10,398,330
Shares repurchased...................... (1,103,923) (24,248,785) (470,673) (9,846,041)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (41,659) $ (860,102) 22,509 $ 552,289
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-62
<PAGE> 878
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 781,797 $ 13,117,280 392,444 $ 5,443,835
Shares issued in connection with
reinvestment of distributions......... 26,859 454,725 365 5,408
------------ -------------- ------------ ---------------
808,656 13,572,005 392,809 5,449,243
Shares repurchased...................... (536,657) (9,148,725) (288,378) (3,812,666)
------------ -------------- ------------ ---------------
Net increase............................ 271,999 $ 4,423,280 104,431 $ 1,636,577
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,148,582 $ 19,043,834 445,266 $ 6,167,388
Shares issued in connection with
reinvestment of distributions......... 60,093 1,004,744 918 13,509
------------ -------------- ------------ ---------------
1,208,675 20,048,578 446,184 6,180,897
Shares repurchased...................... (606,167) (9,803,021) (166,052) (2,502,350)
------------ -------------- ------------ ---------------
Net increase............................ 602,508 $ 10,245,557 280,132 $ 3,678,547
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,203 $ 230,962 10,181 $ 139,541
Shares issued in connection with
reinvestment of distributions......... 1,920 32,714 30 443
------------ -------------- ------------ ---------------
16,123 263,676 10,211 139,984
Shares repurchased...................... (3,834) (66,384) (3,594) (49,444)
------------ -------------- ------------ ---------------
Net increase............................ 12,289 $ 197,292 6,617 $ 90,540
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1997, the
expenses of Small Cap Growth Portfolio, GT Global America Mid Cap Growth Fund
and Value Portfolio were reduced by $2,560, $84,266 and $436 respectively, under
these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America Mid
Cap Growth Fund designates $9,085,505, and the GT Global America Value Fund
designates $23,905 as capital gains dividends for the fiscal year ended December
31, 1997.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1997:
<TABLE>
<CAPTION>
FUND
- ----------------------------------------------------------------------
<S> <C>
GT Global America Small Cap Growth Fund............................... 3.06%
GT Global America Mid Cap Growth Fund................................. 3.13%
GT Global America Value Fund.......................................... 16.05%
</TABLE>
FS-63
<PAGE> 879
STATEMENT OF
ADDITIONAL INFORMATION
ADVISOR CLASS SHARES OF
AIM WORLDWIDE GROWTH FUND
AIM INTERNATIONAL GROWTH FUND
AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND
AIM MID CAP EQUITY FUND
AIM JAPAN GROWTH FUND
(SERIES PORTFOLIOS OF
AIM GROWTH SERIES)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 77046-1173
(713) 626-1919
---------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE
ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON TX 77210-4739
OR BY CALLING (800) 347-4246.
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 8, 1998
RELATING TO THE AIM WORLDWIDE GROWTH FUND PROSPECTUS, THE AIM INTERNATIONAL
GROWTH FUND PROSPECTUS, THE AIM NEW PACIFIC GROWTH FUND PROSPECTUS, THE AIM
EUROPE GROWTH FUND PROSPECTUS, THE AIM MID CAP EQUITY FUND PROSPECTUS AND THE
AIM JAPAN GROWTH FUND PROSPECTUS
EACH DATED SEPTEMBER 8, 1998
<PAGE> 880
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
INTRODUCTION................................................ 4
GENERAL INFORMATION ABOUT THE FUNDS......................... 4
The Trust and its Shares.................................. 4
INVESTMENT OBJECTIVES AND POLICIES.......................... 5
Selection of Investments.................................. 5
Investments in Other Investment Companies................. 5
Samurai and Yankee Bonds.................................. 5
Depositary Receipts....................................... 5
Warrants or Rights........................................ 6
Lending of Portfolio Securities........................... 6
Commercial Bank Obligations............................... 6
Repurchase Agreements..................................... 7
Borrowing, Reverse Repurchase Agreements and "Roll"
Transactions........................................... 7
Temporary Defensive Strategies............................ 8
OPTIONS, FUTURES AND CURRENCY STRATEGIES.................... 8
Special Risks of Options, Futures and Currency
Strategies............................................. 8
Writing Call Options...................................... 8
Writing Put Options....................................... 9
Purchasing Put Options.................................... 10
Purchasing Call Options................................... 10
Index Options............................................. 11
Interest Rate, Currency and Stock Index Futures
Contracts.............................................. 12
Options on Futures Contracts.............................. 14
Limitations on Use of Futures, Options on Futures and
Certain Options on Currencies.......................... 14
Forward Contracts......................................... 14
Foreign Currency Strategies -- Special Considerations..... 15
Cover..................................................... 16
RISK FACTORS................................................ 16
Illiquid Securities....................................... 16
Foreign Securities........................................ 17
Debt Securities........................................... 21
INVESTMENT LIMITATIONS...................................... 21
EXECUTION OF PORTFOLIO TRANSACTIONS......................... 23
Portfolio Trading and Turnover............................ 24
MANAGEMENT.................................................. 25
Trustees and Executive Officers........................... 25
Investment Management and Administration Services......... 27
Distribution Services..................................... 27
Expenses of the Funds..................................... 27
NET ASSET VALUE DETERMINATION............................... 28
HOW TO PURCHASE AND REDEEM SHARES........................... 28
Programs and Services for Shareholders.................... 29
Dividend Order............................................ 29
</TABLE>
2
<PAGE> 881
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
TAXES....................................................... 29
General................................................... 29
Foreign Taxes............................................. 29
Passive Foreign Investment Companies...................... 30
Non-U.S. Shareholders..................................... 30
Options, Futures and Foreign Currency Transactions........ 30
MISCELLANEOUS INFORMATION................................... 31
Custodian................................................. 31
Transfer Agency and Accounting Agency Services............ 31
Independent Accountants................................... 32
Shareholder Liability..................................... 32
Names..................................................... 32
Control Persons and Principal Holders of Securities....... 33
INVESTMENT RESULTS.......................................... 35
Total Return Quotations................................... 35
Performance Information................................... 38
APPENDIX.................................................... 40
Description of Bond Ratings............................... 40
Description of Commercial Paper Ratings................... 41
Absence of Rating......................................... 41
FINANCIAL STATEMENTS........................................ FS
</TABLE>
3
<PAGE> 882
INTRODUCTION
This Statement of Additional Information relates to the Advisor Class shares
of AIM Worldwide Growth Fund ("Worldwide Fund"), AIM International Growth Fund
("International Fund"), AIM New Pacific Growth Fund ("Pacific Fund"), AIM Europe
Growth Fund ("Europe Fund"), AIM Mid Cap Equity Fund, formerly AIM Mid Cap
Growth Fund ("Mid Cap Fund") and AIM Japan Growth Fund ("Japan Fund")
(individually, a "Fund," and collectively, the "Funds"). Each Fund is a
diversified series of AIM Growth Series (the "Trust"), a registered open-end
management investment company.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for, and INVESCO (NY), Inc. (the "Sub-advisor") serves as the
investment sub-advisor of and sub-administrator for, Worldwide Fund,
International Fund, Pacific Fund, Europe Fund and Japan Fund.
The Trust is a series mutual fund. The rules and regulations of the Securities
and Exchange Commission (the "SEC") require all mutual funds to furnish
prospective investors certain information concerning the activities of the fund
being considered for investment. This information for Worldwide Fund is included
in a Prospectus dated September 8, 1998, for International Fund is included in a
separate Prospectus dated September 8, 1998, for Pacific Fund is included in a
separate Prospectus dated September 8, 1998, for Europe Fund is included in a
separate Prospectus dated September 8, 1998, for Mid Cap Fund is included in a
separate Prospectus dated September 8, 1998, and for Japan Fund is included in a
separate Prospectus dated September 8, 1998. Additional copies of the
Prospectuses and 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, TX 77210-4739
or by calling (800) 347-4246. Investors must receive a Prospectus before they
invest.
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 Prospectus; and, in order to avoid repetition, reference will be
made to sections of the Prospectus. Additionally, the Prospectus and this
Statement of Additional Information omit certain information contained in the
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items omitted from the Prospectus and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Global Growth Series, which
was organized as a Massachusetts business trust on February 19, 1985. The Trust
was reorganized on May 29, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of the following portfolios: each of the six Funds, AIM
Small Cap Growth Fund, and AIM Basic Value Fund. Each of these funds has three
separate classes: Class A, Class B and Advisor Class shares. All historical
financial and other information contained in this Statement of Additional
Information for periods prior to May 29, 1998, is that of the series G.T. Global
Growth Series.
This Statement of Additional Information relates solely to the Advisor Class
shares of the Funds.
The term "majority of the outstanding shares" of the Trust, a particular Fund,
or of a particular class of a Fund means, respectively, the vote of the lesser
of (a) 67% or more of the shares of the Trust, such Fund or such class present
at a meeting of the Trust's shareholders, if the holders of more than 50% of the
outstanding shares of the Trust, such Fund or such class are present or
represented by proxy, or (b) more than 50% of the outstanding shares of the
Trust, such Fund or such class.
Class A, and Class B and Advisor Class shares of each Fund have equal rights
and privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees with respect to the class of such Fund and, upon liquidation of the
Fund, to participate proportionately in the net assets of the Fund allocable to
such class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion
and exchange rights as set forth in the Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
Shareholders of the Funds do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Funds voting
together for election of trustees may elect all of the members of the Board of
Trustees of the Trust. In such event, the remaining holders cannot elect any
trustees of the Trust.
4
<PAGE> 883
INVESTMENT OBJECTIVES AND POLICIES
SELECTION OF INVESTMENTS
In determining the appropriate distribution of investments among various
countries and geographic regions for the Funds, AIM and/or the Sub-advisor
ordinarily consider the following factors: prospects for relative economic
growth between the different countries in which each Fund may invest; expected
levels of inflation; government policies influencing business conditions; the
outlook for currency relationships; and the range of the individual investment
opportunities available to international investors.
In analyzing companies for investment by each Fund, AIM and/or the Sub-advisor
ordinarily look for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by a
Fund or the Funds in the aggregate. In addition, in some instances only special
classes of securities may be purchased by foreigners and the market prices,
liquidity and rights with respect to those securities may vary from shares owned
by nationals.
At this time, AIM and/or the Sub-advisor are not aware of the existence of any
investment or exchange control regulations that might substantially impair the
operations of the Funds as described in the Prospectus and this Statement of
Additional Information. Although restrictions may in the future make it
undesirable to invest in certain countries, AIM and/or the Sub-advisor does not
believe that any current repatriation restrictions would affect its decisions to
invest in the countries eligible for investment by any Fund. It should be noted,
however, that this situation could change at any time.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Fund presently may be made
only by acquiring shares of other investment companies (including investment
vehicles or companies advised by AIM and/or the Sub-advisor or their affiliates
("Affiliated Funds")) with local governmental approval to invest in those
countries. At such time as direct investment in these countries is allowed, the
Funds anticipate investing directly in these markets. The Funds may also invest
in the securities of closed-end investment companies within the limits of the
Investment Company Act of 1940, as amended (the "1940 Act"). These limitations
currently provide that, in part, each Fund may purchase shares of a closed-end
investment company unless: (a) such a purchase would cause a Fund to own more
than 3% of the total outstanding voting stock of the investment company or (b)
such a purchase would cause a Fund to have more than 5% of its assets invested
in the investment company or more than 10% of its assets invested in an
aggregate of all such investment companies. Investment in investment companies
may involve the payment of substantial premiums above the value of such
companies' portfolio securities. The Funds do not intend to invest in such
vehicles or funds unless AIM and/or the Sub-advisor determine that the potential
benefits of such investments justify the payment of any applicable premiums. The
return on such securities will be reduced by operating expenses of such
companies including payments to the investment managers of those investment
companies. With respect to investments in Affiliated Funds, AIM and/or the
Sub-advisor waive their advisory fee to the extent that such fees are based on
assets of a Fund invested in Affiliated Funds.
SAMURAI AND YANKEE BONDS
The International Fund, the Japan Fund, the Pacific Fund and the Worldwide
Fund may invest in yen-denominated bonds sold in Japan by non-Japanese issuers
("Samurai bonds"), and the Worldwide Fund and the Mid Cap Fund may invest in
dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee
bonds"). As compared with bonds issued in their countries of domicile, such bond
issues normally carry a higher interest rate but are less actively traded. It is
the policy of each Fund to invest in Samurai or Yankee bond issues only after
taking into account considerations of quality and liquidity, as well as yield.
These bonds are issued by governments that are members of the Organization for
Economic Cooperation and Development or have AAA ratings. None of the Funds has
invested in Samurai or Yankee bonds since 1982.
DEPOSITARY RECEIPTS
Each Fund may hold securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"), Global
Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs") or other
securities convertible into securities of eligible European or Far Eastern
issuers. These securities may not necessarily
5
<PAGE> 884
be denominated in the same currency as the securities for which they may be
exchanged. ADRs and ADSs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust
companies and evidence ownership of either foreign or domestic securities. GDRs
are similar to EDRs and are designed for use in several international financial
markets. Generally, ADRs and ADSs in registered form are designed for use in
United States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of a Fund's investment policies, its
investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in the
equity securities representing securities of foreign issuers into which they may
be converted.
ADR facilities may be established as either "unsponsored" or "sponsored."
While ADRs issued under these two types of facilities are in some respects
similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants. A
depository may establish an unsponsored facility without participation by (or
even necessarily the acquiescence of) the issuer of the deposited securities,
although typically the depository requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facilities. The depository usually charges
fees upon the deposit and withdrawal of the deposited securities, the conversion
of dividends into U.S. dollars, the disposition of non-cash distributions and
the performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Funds may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to subscribe for other securities or
commodities. Warrants do not carry with them the right to dividends or voting
rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the issuer. As a
result, warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Fund may make secured
loans of its portfolio securities amounting to not more than 30% of its total
assets. Securities loans are made to broker/dealers or institutional investors
pursuant to agreements requiring that the loans continuously be secured by
collateral at least equal at all times to the value of the securities lent, plus
any accrued interest, "marked to market" on a daily basis. The Funds may pay
reasonable administrative and custodial fees in connection with the loans of
their securities. While the securities loans are outstanding, the Funds will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. Each Fund will have a right to call each
loan at any time and obtain the securities within the stated settlement period.
The Funds will not have the right to vote equity securities while they are being
lent, but may call in a loan in anticipation of any important vote. Loans only
will be made to firms deemed by AIM and/or the Sub-advisor to be of good
standing and will not be made unless, in the judgment of AIM and/or the
Sub-advisor, the consideration to be earned from such loans would justify the
risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of
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<PAGE> 885
foreign banks may subject the Funds to investment risks that are different in
some respects from those of investments in obligations of domestic issuers.
Although a Fund typically will acquire obligations issued and supported by the
credit of U.S. or foreign banks having total assets at the time of purchase of
$1 billion or more, this $1 billion figure is not an investment policy or
restriction of any Fund. For the purposes of calculation with respect to the $1
billion figure, the assets of a bank will be deemed to include the assets of its
U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Funds intend to enter into
repurchase agreements only with banks and dealers believed by AIM and/or the
Sub-advisor to present minimal credit risks in accordance with guidelines
approved by the Trust's Board of Trustees (the "Board"). AIM and/or the
Sub-advisor reviews and monitors the creditworthiness of such institutions under
the Board's general supervision.
A Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, each Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. A Fund will not enter into a repurchase agreement with a maturity of
more than seven days if, as a result, more than 15% of the value of its net
assets would be invested in such repurchase agreements and other illiquid
investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's borrowings will not exceed 33 1/3% of its total assets, i.e., each
Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by a Fund may cause greater fluctuation in the value
of its shares than would be the case if the Fund did not borrow.
Each Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. Each Fund, however, currently is prohibited, pursuant
to a non-fundamental investment policy, from borrowing money in order to
purchase securities. Nevertheless, this policy may be changed in the future by
the Trust's Board of Trustees. If a Fund employs leverage in the future, it
would be subject to certain additional risks. Use of leverage creates an
opportunity for greater growth of capital but would exaggerate any increases or
decreases in a Fund's net asset value. When the income and gains on securities
purchased with the proceeds of borrowings exceed the costs of such borrowings, a
Fund's earnings or net asset value will increase faster than otherwise would be
the case; conversely, if such income and gains fail to exceed such costs, a
Fund's earnings or net asset value would decline faster than would otherwise be
the case.
Each Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. Each Fund also may engage in "roll"
borrowing transactions which involve its sale of Government National Mortgage
Association certificates or other securities together with a commitment (for
which the Fund may receive a fee) to purchase similar, but not identical,
securities at a future date. A Fund will segregate with a custodian liquid
assets in an amount sufficient to cover its obligations under "roll"
transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
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TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Funds may invest include the following:
government securities; high grade commercial paper; bank certificates of
deposit; bankers' acceptances; and repurchase agreements related to any of the
foregoing. High grade commercial paper refers to commercial paper rated P-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"), at the time of investment
or, if unrated, deemed by the Sub-advisor to be of comparable quality.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon AIM
and/or the Sub-advisor's ability to predict movements of the overall
securities and currency markets, which requires different skills than
predicting changes in the prices of individual securities. While AIM and/or
the Sub-advisor are experienced in the use of these instruments, there can
be no assurance that any particular strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used
in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(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. For example, if a Fund
entered into a short hedge because AIM and/or the Sub-advisor projected a
decline in the price of a security in the Fund's portfolio, and the price
of that security increased instead, the gain from threat increase might by
wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Fund could suffer
a loss. In either such case, the Fund would have been in a better position
had it not hedged at all.
(4) 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 (i.e.,
instruments other than purchased options). If the 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. The Fund's ability to close out a
position in an instrument prior to expiration or maturity depends on the
existence of a liquid secondary market or, in the absence of such a market,
the ability and willingness of the other party to the transaction ("contra
party") to enter into a transaction closing out the position. Therefore,
there is no assurance that any position can be closed out at a time and
price that is favorable to the Fund.
WRITING CALL OPTIONS
A Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of AIM and/or the Sub-advisor, are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency 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 the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of
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the call option, or such earlier time at which the writer effects a closing
purchase transaction by purchasing an option identical to that previously sold.
Portfolio securities or currencies on which call options may be written will
be purchased solely on the basis of investment considerations consistent with
each Fund's investment objectives. 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 or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, a Fund has no
control over when it may be required to sell the underlying securities 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, the Fund
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 or currency
during the option period. If the call option is exercised, the Fund will realize
a gain or loss from the sale of the underlying security or currency, which will
be increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment and
the length of the option period. In determining whether a particular call option
should be written, AIM and/or the Sub-advisor will consider the reasonableness
of the anticipated premium and the likelihood that a liquid secondary market
will exist for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date or both.
The Funds will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities, indices or currencies at the time
the options are written. From time to time, a Fund may purchase an underlying
security or currency for delivery in accordance with the exercise of an option,
rather than delivering such security or currency from its portfolio. In such
cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.
WRITING PUT OPTIONS
The Funds may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund generally would write put options in circumstances where AIM and/or the
Sub-advisor wishes to purchase the underlying security or currency for the
Fund's portfolio at a price lower than the current market price of the security
or currency. In such event, the 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. Since the Fund also would receive interest on debt
securities or currencies maintained to cover the exercise price of the option,
this technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price, less
the premium received.
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<PAGE> 888
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
Each Fund may purchase put options on securities, indices and currencies. As
the holder of a put option, a Fund would have the right to sell the underlying
security 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 option, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. The premium paid for the put option and any
transaction costs would reduce any profit otherwise available for distribution
when the security or currency eventually is sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund may purchase call options on securities, indices and currencies. As
the holder of a call option, a Fund would have the right to purchase the
underlying security 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 option, exercise such option
or permit such option to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable a Fund to acquire the security or currency
at the exercise price of the call option plus the premium paid. At times, the
net cost of acquiring the security or currency in this manner may be less than
the cost of acquiring the security or currency directly. This technique also may
be useful to the Funds in purchasing a large block of securities that would be
more difficult to acquire by direct market purchases. As long as it holds such a
call option, rather than the underlying security or currency itself, a Fund is
partially protected from any unexpected decline in the market price of the
underlying security 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 Fund also may purchase call options on underlying securities or
currencies it owns to avoid realizing losses that would result in a reduction of
its current return. For example, where a Fund has written a call option on an
underlying security or currency having a current market value below the price at
which it purchased the security or currency, an increase in the market price
could result in the exercise of the call option written by the Fund and the
realization of a loss on the underlying security or currency. Accordingly, the
Fund could purchase a call option on the same underlying security or currency,
which could be exercised to fulfill the Fund's delivery obligations under its
written call (if it is exercised). This strategy could allow the Fund to avoid
selling the portfolio security or currency at a time when it has an unrealized
loss; however, the Fund would have to pay a premium to purchase the call option
plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Fund's total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in
using Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration of the option. A call option gives
a Fund as purchaser the right (but not the obligation) to purchase a specified
amount of currency at the exercise price at any time until (American style) or
on (European style) the expiration date of the option. A Fund might purchase a
currency put option, for example, to protect itself against a decline in the
dollar value of a currency in which it holds or anticipates holding securities.
If the currency's value should decline against the dollar, the
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<PAGE> 889
loss in currency value should be offset, in whole or in part, by an increase in
the value of the put. If the value of the currency instead should rise against
the dollar, any gain to the Fund would be reduced by the premium it had paid for
the put option. A currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value against the dollar
of a currency in which the Fund anticipates purchasing securities.
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 AIM and/or the Sub-advisor
believe 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.
The staff of the SEC considers purchased OTC options 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
the Fund. The assets used as cover for OTC options written by a 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.
A Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. A Fund intends to purchase
or write only those exchange-listed options for which there appears to be a
liquid secondary market. However, there can be no assurance that such a market
will exist at any particular time. Closing transactions can be made for OTC
options only by negotiating directly with the contra party or by a transaction
in the secondary market if any such market exists. Although a Fund will enter
into OTC options only with contra parties that are expected to be capable of
entering into closing transactions with the Fund, 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 contra party, the
Fund might be unable to close out an OTC option position at any time prior to
its expiration.
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. When a Fund writes a
call on an index, it receives a premium and agrees that, prior to the expiration
date, the purchaser of the call, upon exercise of the call, will receive from
the Fund an amount of cash if the closing level of the index upon which the call
is based is greater than the exercise price of the call. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference. When a Fund
buys a call on an index, it pays a premium and has the same rights as to such
calls as are indicated above. When a Fund buys a put on an index, it pays a
premium and has the right, prior to the expiration date, to require the seller
of the put, upon the Fund's exercise of the put, to deliver to the Fund an
amount of cash if the closing level of the index upon which the put is based is
less than the exercise price of the put, which amount of cash is determined by
the multiplier, as described above for calls. When a Fund writes a put on an
index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier, if the closing level is less than the exercise price.
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, a 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 vary from the
value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options.
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<PAGE> 890
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the Fund, as the call writer, will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a Fund purchases an index option and exercises it before the closing index
value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
A Fund may enter into interest rate, currency or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates, currency exchange rates or stock price levels in order
to establish more definitely the effective return on securities or currencies
held or intended to be acquired by the Fund. The Funds' hedging may include
sales of Futures as an offset against the effect of expected increases in
interest rates, or decreases in currency exchange rates and stock prices, and
purchases of Futures as an offset against the effect of expected declines in
interest rates, or increases in currency exchange rates or stock prices.
The Funds only will enter into Futures Contracts that are traded 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 by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could
be used to reduce the Funds' exposure to interest rate and currency exchange
rate fluctuations, the Funds may be able to hedge its exposure more effectively
and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract 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 at which the Futures Contract is originally struck; 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 Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment
for financial instruments or currencies, Futures Contracts usually are closed
out before the delivery date. Closing out an open Futures Contract sale or
purchase is effected by entering into an offsetting Futures Contract purchase or
sale, respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Funds will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one Futures Contract of September Deutschemarks on an
exchange may be fulfilled at any time before delivery under the Futures Contract
is required (i.e., on a specified date in September, the "delivery month") by
the purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures
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<PAGE> 891
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Funds' Futures transactions will be entered into for hedging purposes
only; that is, Futures Contracts will be sold to protect against a decline in
the price of securities or currencies that a Fund owns, or Futures Contracts
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 Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to ensure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
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 the 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 Contract more or less valuable, a process
known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest and currency rates, which in turn are affected by fiscal and monetary
policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for Futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when and how to hedge involves skill and judgment, and even
a well-conceived hedge may be unsuccessful to some degree because of unexpected
market behavior or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in
Futures Contract and option on Futures Contract prices during a single trading
day. The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices occasionally have moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
If a Fund were unable to liquidate a Futures or option on 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.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price
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<PAGE> 892
distortions. In addition, activities of large traders in both the Futures and
securities markets involving arbitrage, "program trading" and other investment
strategies might result in temporary price distortions.
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,
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 is
exercised on the last trading day 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 level of the securities, currencies
or index upon which the Futures Contract is based on the expiration date.
Purchasers of options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is be
subject to the maintenance of a liquid secondary market.
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 liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, i.e.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Trust's Board
of Trustees without a shareholder vote. This limitation does not limit the
percentage of a Fund's assets at risk to 5%.
FORWARD CONTRACTS
A Forward Contract is an obligation, generally 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 may
either 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.
A Fund engages in forward currency transactions in anticipation of or to
protect itself against fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, a Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, a Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
Forward Contract generally has no deposit requirement, and no commissions are
charged at any stage for trades. Each Fund will enter into such Forward
Contracts with major U.S. or foreign banks and securities or currency dealers in
accordance with guidelines approved by the Board.
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<PAGE> 893
Each Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the overall investments of the Fund. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing a Fund
to sustain losses on these contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the maturity date, the same amount of
the currency that it is obligated to deliver. Similarly, a Fund may close out a
Forward Contract requiring it to purchase a specified currency by entering into
a second contract if its contra party agrees, entitling it to sell the same
amount of the same currency on the maturity date of the first contract. The Fund
would realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange rate or
rates between the currencies involved moved between the execution dates of the
first contract and the offsetting contract.
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 usually are 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 Contracts 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.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that a Fund owns or intends to acquire that are attributable to changes
in the value of the currency in which it is denominated. Such hedges do not,
however, protect against price movements in the securities that are attributable
to other causes.
A Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which AIM and/or the Sub-advisor believe will have a
positive correlation to the value of the currency being hedged. The risk that
movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward
Contracts and options on foreign currencies depends on the value of the
underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of Futures Contracts, Forward
Contracts or options, a Fund could be disadvantaged by dealing in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirements that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the
interbank market and thus might not reflect odd-lot transactions where rates
might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.
Settlement of Futures Contracts, Forward Contracts and options involving
foreign currencies might be required to take place within the country issuing
the underlying currency. Thus, a Fund might be required to accept or make
delivery of the
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<PAGE> 894
underlying foreign currency in accordance with any U.S. or foreign regulations
regarding the maintenance of foreign banking arrangements by U.S. residents and
might be required to pay any fees, taxes and charges associated with such
delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other
than options purchased by a Fund) expose the 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, receivables and
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.
Assets used as cover or held in a segregated account 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.
RISK FACTORS
ILLIQUID SECURITIES
A Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if a Fund cannot reasonably expect within
seven days to sell the securities for approximately the amount at which the Fund
values such securities. See "Investment Limitations." The sale of illiquid
securities, if they can be sold at all, generally will require more time and
result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities such as securities eligible for
trading on U.S. securities exchanges or in the OTC markets. Moreover, restricted
securities, which may be illiquid for purposes of this limitation, often sell,
if at all, at a price lower than similar securities that are not subject to
restrictions on resale.
Illiquid securities include those that are subject to restrictions contained
in the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, the Trust's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. The Trust's Board has delegated the function of making day-to-day
determinations of liquidity to AIM and/or the Sub-advisor in accordance with
procedures approved by the
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<PAGE> 895
Board. AIM and/or the Sub-advisor take into account a number of factors in
reaching liquidity decisions, including: (i) the frequency of trading in the
security; (ii) the number of dealers who make quotes for the security; (iii) the
number of dealers who have undertaken to make a market in the security; (iv) the
number of other potential purchasers; and (v) the nature of the security and how
trading is effected (e.g., the time needed to sell the security, how offers are
solicited, and the mechanics of transfer.) Aim and/or the Sub-advisor monitor
the liquidity of securities in each Fund's portfolio and periodically reports
such determinations to the Trust's Board of Trustees. If the liquidity
percentage restriction of a Fund is satisfied at the time of investment, a later
increase in the percentage of illiquid securities held by the Fund resulting
from a change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by the Fund increases above the
applicable limit, Aim and/or the Sub-advisor will take appropriate steps to
bring the aggregate amount of illiquid assets back within the prescribed
limitations as soon as reasonably practicable, taking into account the effect of
any disposition on the Fund.
FOREIGN SECURITIES
Political, Social and Economic Risks. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
Religious, Political and Ethnic Instability. Certain countries in which a Fund
may invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
a Fund invests and adversely affect the value of its assets.
Foreign Investment Restrictions. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
Non-Uniform Corporate Disclosure Standards and Governmental
Regulation. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the foreign securities held by a Fund
(other than the Mid Cap Fund) will not be registered with the SEC or regulators
of any foreign country, nor will the issuers thereof be subject to the SEC's
reporting requirements. Thus, there will be less available information
concerning most foreign issuers of securities held by a Fund than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, AIM and/or the Sub-advisor will take appropriate steps to evaluate the
proposed investment, which may include on-site inspection of the issuer,
interviews with its management and consultations with accountants, bankers and
other specialists. There is substantially less publicly available information
about foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.
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<PAGE> 896
Currency Fluctuations. Because each Fund, other than the Mid Cap Fund, under
normal circumstances will invest a substantial portion of its total assets in
the securities of foreign issuers that are denominated in foreign currencies,
the strength or weakness of the U.S. dollar against such foreign currencies will
account for a significant part of the Fund's investment performance. A decline
in the value of any particular currency against the U.S. dollar will cause a
decline in the U.S. dollar value of a Fund's holdings of securities and cash
denominated in such currency and, therefore, will cause an overall decline in
the Fund's net asset value and any net investment income and capital gains
derived from such securities to be distributed in U.S. dollars to shareholders
of the Fund. Moreover, if the value of the foreign currencies in which a Fund
receives its income declines relative to U.S. dollars between the receipt of
income and the making of Fund distributions, it may be required to liquidate
securities in order to make distributions if it has insufficient cash in U.S.
dollars to meet distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is
determined by several factors, including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the relative
movement of interest rate and the pace of business activity in the other
countries and the United States, and other economic and financial conditions
affecting the world economy.
Although each Fund values its assets daily in terms of U.S. dollars, they do
not intend to convert their holdings of foreign currencies into U.S. dollars on
a daily basis. Each Fund will do so, from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should a Fund desire to sell that
currency to the dealer.
Adverse Market Characteristics. Securities of many foreign issuers may be less
liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities exchange transactions usually are subject to
fixed commissions, which generally are higher than negotiated commissions on
U.S. transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems either could result in losses to a Fund due
to subsequent declines in value of the portfolio security or, if a Fund has
entered into a contract to sell the security, could result in possible liability
to the purchaser. AIM and/or the Sub-advisor will consider such difficulties
when determining the allocation of each Fund's assets, although AIM and/or the
Sub-advisor do not believe that such difficulties will have a material adverse
effect on the Funds' portfolio trading activities.
The Funds may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian; (ii) maintaining appropriate safeguards
to protect the Funds' investments and (iii) obtaining and enforcing judgments
against such custodians.
Withholding Taxes. A Fund's net investment income from foreign issuers may be
subject to non-U.S. withholding taxes by the foreign issuer's country, thereby
reducing the Fund's net investment income or delaying the receipt of income
whose those taxes may be recaptured. See "Taxes" herein.
Concentration. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.
Special Considerations Affecting Western European Countries. The countries
that are members of the European Economic Community ("Common Market")
(Australia, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain, Sweden and the United Kingdom)
eliminated certain import tariffs and quotas and other trade barriers with
respect to one another over the past several years. AIM and/or the Sub-advisor
believe that this deregulation should improve the prospects for economic growth
in many Western European countries. Among other things, the deregulation could
enable companies domiciled in one country to avail themselves of lower labor
costs existing in other countries. In addition, this deregulation could benefit
companies domiciled in one country by opening additional markets for their goods
and services in other countries. Since, however, it is not clear what the exact
form or effect of these Common Market reforms will be on business in Western
Europe, it is impossible to predict the long-term impact of the implementation
of these programs on the securities owned by a Fund.
18
<PAGE> 897
Special Considerations Affecting Russia and Eastern European
Countries. Investing in Russia and Eastern European countries involves a high
degree of risk and special considerations not typically associated with
investing in the U.S. securities markets and should be considered highly
speculative. Such risks include: (1) delays in settling portfolio transactions
and risk of loss arising out of the system of share registration and custody;
(2) the risk that it may be impossible or more difficult than in other countries
to obtain and/or enforce a judgment; (3) pervasiveness of corruption and crime
in the economic system; (4) currency exchange rate volatility and the lack of
available currency hedging instruments; (5) higher rates of inflation (including
the risk of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends and on a Fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and may
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt that may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.
Special Considerations Affecting Pacific Region Countries. Many Pacific region
countries may be subject to a greater degree of social, political and economic
instability than is the case in the United States. Such instability may result
from, among other things, the following: (i) authoritarian governments or
military involvement in political and economic decision making, and changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; (iii)
internal insurgencies; (iv) hostile relations with neighboring countries; and
(v) ethnic, religious and racial disaffection. Such social, political and
economic instability could significantly disrupt the principal financial markets
in which a Fund invests and adversely affect the value of a Fund's assets. In
addition, there may be the possibility of asset expropriations or future
confiscatory levels of taxation affecting the Funds.
In China, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea
and Thailand, government regulation or a company's charter may limit the maximum
foreign aggregate ownership of equity in the company. South Korea generally
prohibits foreign investment in won-denominated debt securities, and Sri Lanka
prohibits foreign investment in government debt securities. South Korea
prohibits foreign investment in specified telecommunications companies, and the
Philippines prohibits foreign investment in mass media companies and companies
providing certain professional services. In the Philippines, a Fund may
generally invest in "B" shares of Philippine issuers engaged in partly
nationalized business activities, the market prices, liquidity and rights of
which may vary from shares owned by nationals. Similarly, in China, a Fund may
only invest in "B" shares of securities traded on The Shanghai Securities
Exchange and The Shenzhen Stock Exchange, currently the two officially
recognized securities exchanges in China. "B" shares traded on The Shanghai
Securities Exchange are settled in U.S. dollars, and those traded on The
Shenzhen Stock Exchange are generally settled in Hong Kong dollars.
If, because of restrictions on repatriation or conversion of funds, a Fund
were unable to timely distribute substantially all of its net investment income,
and net capital gains, the Fund could be subject to federal income and excise
taxes that would not otherwise be incurred and could cease to qualify for the
favorable tax treatment afforded to regulated investment companies ("RICs")
under the Internal Revenue Code of 1986, as amended (the "Code"). In such case,
it would become subject to federal income tax on all of its income and net
gains.
Several Pacific region countries have or in the past have had hostile
relationships with neighboring nations or have experienced internal insurgency.
Thailand has experienced border conflicts with Laos and Cambodia, and India is
engaged in border disputes with several of its neighbors, including China and
Pakistan. An uneasy truce exists between North Korea and South Korea, and the
recurrence of hostilities remains possible. Reunification of North Korea and
South Korea could have a detrimental effect on the economy of South Korea. Also,
China continues to claim sovereignty over Taiwan and recently has conducted
military maneuvers near Taiwan.
The economies of most Pacific region countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of Pacific region
19
<PAGE> 898
countries. In addition, the economies of some of the Asia Pacific region
countries, Australia and Indonesia, for example, are vulnerable to weakness in
world prices for their commodity exports, including crude oil.
Few of the Pacific region countries have Western-style or fully democratic
governments. Some governments in the region are authoritarian in nature and
influenced by security forces. For example, during the course of the last 25
years, governments in the region have been installed or removed as a result of
military coups, while others have periodically demonstrated repressive police
state characteristics. In several Pacific region countries, the leadership
ability of the government has suffered as a result of recent corruption
scandals. Disparities of wealth, among other factors, have also led to social
unrest in some of the Asia Pacific region countries, accompanied, in certain
cases, by violence and labor unrest. Ethnic, religious and racial disaffection,
as evidenced in India, Pakistan, and Sri Lanka, for example, have created
social, economic and political problems. Such problems also have occurred in
other regions.
Starting in mid-1997, some Pacific region countries began to experience
currency devaluations that resulted in high interest rate levels and sharp
reductions in economic activity. While the currency crisis diminished prospects
for short-term corporate earnings growth, AIM and/or the Sub-advisor believe
that high interest rate levels may force governments and corporations to
restructure the financial sector in a manner that may facilitate a return to
high levels of long-term economic activity.
China assumed sovereignty over Hong Kong in July 1997. Although China has
committed by treaty to preserve the economic and social freedoms enjoyed in Hong
Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty has increased sensitivity in Hong Kong
to political developments and statements by public figures in China. Business
confidence in Hong Kong, therefore, can be significantly affected by such
developments and statements, which in turn can affect markets and business
performance.
In addition, there is continuing risk that the Hong Kong dollar will be
devalued and a risk of possible loss of investor confidence in the Hong Kong
markets and dollar. However, factors exist that are likely to mitigate this
risk. First, China has stated its intention to implement a "one country, two
systems" policy, which would preserve monetary sovereignty and leave control in
the hands of the Hong Kong Monetary Authority ("HKMA").
Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule and,
therefore, it is anticipated that, if international investors lose confidence in
Hong Kong dollar assets, the HKMA would take steps to support the currency,
though the taking of such steps cannot be assured. Third, Hong Kong's and
China's sizable combined foreign exchange reserve may be used to support the
value of the Hong Kong dollar, provided that China does not appropriate such
reserves for other uses, which is not anticipated but cannot be assured.
Finally, China would be likely to experience significant adverse political and
economic consequences if confidence in the Hong Kong dollar and the territory
assets were to be endangered.
Special Considerations Affecting Latin American Countries. Most Latin American
countries have experienced substantial, and in some periods extremely high,
rates of inflation for many years. Inflation and rapid fluctuations in inflation
rates have had and may continue to have very negative effects on the economies
and securities markets of certain Latin American countries. Certain Latin
American countries are also among the largest debtors to commercial banks and
foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.
Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.
Certain Latin American countries may have managed currencies that are
maintained at artificial levels to the U.S. dollar rather than at levels
determined by the market. This type of system can lead to sudden and large
adjustments in the currency which, in turn, can have a disruptive and negative
effect on foreign investors. For example, in late 1994, the value of the Mexican
peso lost more than one-third of its value relative to the U.S. dollar.
Special Considerations Affecting Emerging Markets. Investing in the securities
of companies in emerging markets may entail special risks relating to potential
political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation by any country, a Fund could lose its entire investment in any such
country.
20
<PAGE> 899
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging markets there may be
share registration and delivery delays or failures.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.
DEBT SECURITIES
Each Fund is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, AIM and/or the Sub-advisor review and
monitor the creditworthiness of each issuer and issue and analyzes interest rate
trends and specific developments that may affect individual issuers, in addition
to relying on ratings assigned by S&P, Moody's or another nationally recognized
statistical rating organization ("NRSRO") as indicators of quality. Debt
securities rated Baa by Moody's or BBB by S&P are investment grade, although
Moody's considers securities rated Baa to have speculative characteristics.
Changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity for such securities to make principal and interest payments
than is the case for higher grade debt securities. Each Fund is also permitted
to purchase debt securities that are not rated by S&P, Moody's or another NRSRO,
but that AIM and/or the Sub-advisor determine to be of comparable quality to
that of rated securities in which the Fund may invest. Such securities are
included in the computation of any percentage limitations applicable to the
comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a Fund
has acquired the security. AIM and/or the Sub-advisor will consider such an
event in determining whether a Fund should continue to hold the security but is
not required to dispose of it. Credit ratings attempt to evaluate the safety of
principal and interest payments and do not reflect an assessment of the
volatility of the security's market value or the liquidity of an investment in
the security. Also, NRSROs may fail to make timely changes in credit ratings in
response to subsequent events, so that an issuer's current financial condition
may be better or worse than the rating indicates. For a description of Moody's
and S&P ratings, see "Appendix" herein.
INVESTMENT LIMITATIONS
Each Fund has adopted the following investment limitations as fundamental
policies that may not be changed without approval by the affirmative vote of a
majority of the outstanding shares of the Fund. No Fund may:
(1) Purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation,
and except that the Fund may exercise rights under agreements relating to
such securities, including the right to enforce security interests and to
hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner;
(2) Purchase or sell physical commodities, but the Fund may purchase,
sell or enter into financial options and futures, forward and spot currency
contracts, swap transactions and other financial contracts or derivative
instruments;
(3) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that the Fund
may borrow up to an additional 5% of its total assets (not including the
amount borrowed) for temporary or emergency purposes;
(4) Make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
limitation, the acquisition of bonds, debentures, other debt securities or
instruments, or
21
<PAGE> 900
participations or other interests therein and investments in government
obligations, commercial paper, certificates of deposit, bankers'
acceptances or similar instruments will not be considered the making of a
loan;
(5) Purchase securities of any one issuer if, as a result, more than
5% of the Fund's total assets would be invested in securities of that
issuer or the Fund would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Fund's total
assets may be invested without regard to this limitation, and except that
this limitation does not apply to securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities or to securities issued
by other investment companies;
(6) Engage in the business of underwriting securities of other
issuers, except to the extent that the Fund might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities; or
(7) Purchase any security if, as a result of that purchase, 25% or
more of the Fund's total assets would be invested in securities of issuers
having their principal business activities in the same industry, except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities.
Notwithstanding any other investment policy of the Fund, the Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
For purposes of the concentration policy contained in limitation (7) above,
each Fund intends to comply with the SEC staff position that securities issued
or guaranteed as to principal and interest by any single foreign government or
any supranational organization are considered to be securities of issuers in the
same industry.
The following investment limitations of each Fund are not fundamental policies
and may be changed by vote of the Trust's Board of Trustees without shareholder
approval. Each Fund may not:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Fund's total assets;
(3) Enter into a futures contract, an option on a futures contract or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of
these positions (excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Fund's portfolio, after taking
into account unrealized profits and unrealized losses on any contracts the
Fund has entered into;
(4) Purchase securities on margin, provided that the Fund may obtain
short-term credits as may be necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments; or
(5) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Fund's investment policies or restrictions. A Fund
may exchange securities, exercise conversion or subscription rights, warrants,
or other rights to purchase common stock or other equity securities and may
hold, except to the extent limited by the 1940 Act, any such securities so
acquired without regard to the Fund's investment policies and restrictions. The
original cost of the securities so acquired will be included in any subsequent
determination of a Fund's compliance with the investment percentage limitations
referred to above and in the Prospectus.
Investors should refer to each Fund's Prospectus for further information with
respect to that particular Fund's investment objective, which may not be changed
without the approval of its shareholders, and other investment policies,
techniques and limitations, which may be changed without shareholder approval.
22
<PAGE> 901
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by the Trust's Board of Trustees, AIM and/or
the Sub-advisor are responsible for the execution of the Funds' portfolio
transactions and the selection of brokers/dealers who execute such transactions
on behalf of the Funds. In executing transactions, AIM and/or the Sub-advisor
seek the best net results for each Fund, taking into account such factors as the
price (including the applicable brokerage commission or dealer spread), size of
the order, difficulty of execution and operational facilities of the firm
involved. Although AIM and/or the Sub-advisor generally seek reasonably
competitive commission rates and spreads, payment of the lowest commission or
spread is not necessarily consistent with the best net results. While the Funds
may engage in soft dollar arrangements for research services, as described
below, the Funds have no obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Consistent with the interests of the Funds, AIM and/or the Sub-advisor may
select brokers to execute the Funds' portfolio transactions on the basis of the
research services they provide to AIM and/or the Sub-advisor for its use in
managing the Funds and its other advisory accounts. Such services may include
furnishing analysis, reports and information concerning issuers, industries,
securities, geographic regions, economic factors and trends, portfolio strategy,
and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement).
Research and brokerage services received from such broker are in addition to,
and not in lieu of, the services required to be performed by AIM and/or the
Sub-advisor under the applicable investment management and administration
contract. A commission paid to such broker may be higher than that which another
qualified broker would have charged for effecting the same transaction, provided
that AIM and/or the Sub-advisor determines in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of AIM and/or the Sub-advisor to the Funds and its other clients
and that the total commissions paid by each Fund will be reasonable in relation
to the benefits received by the Funds over the long term. Research services may
also be received from dealers who execute Fund transactions in OTC markets.
AIM and/or the Sub-advisor may allocate brokerage transactions to
broker/dealers who have entered into arrangements under which the broker/dealer
allocates a portion of the commissions paid by the Fund toward payment of its
expenses, such as transfer agent and custodian fees.
Investment decisions for each Fund and for other investment accounts managed
by AIM and/or the Sub-advisor are made independently of each other in light of
differing conditions. However, the same investment decision occasionally may be
made for two or more of such accounts, including one or more Funds. In such
cases, simultaneous transactions may occur. Purchases or sales are then
allocated as to price or amount in a manner deemed fair and equitable to all
accounts involved. While in some cases this practice could have a detrimental
effect upon the price or value of the security as far as a Fund is concerned, in
other cases AIM and/or the Sub-advisor believe that coordination and the ability
to participate in volume transactions will be beneficial to the Funds.
Under a policy adopted by the Trust's Board of Trustees, and subject to the
policy of obtaining the best net results, AIM and/or the Sub-advisor may
consider a broker/dealer's sale of the shares of the Funds and the other funds
for which AIM or the Sub-advisor serves as investment manager and/or
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/ dealers that sell shares of the Funds and such
other funds.
Each Fund contemplates purchasing most foreign equity securities in OTC
markets or stock exchanges located in the countries in which the respective
principal offices of the issuers of the various securities are located, if that
is the best available market. The fixed commissions paid in connection with most
such foreign stock transactions generally are higher than negotiated commissions
on U.S. transactions. There generally is less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.
Foreign security settlements may in some instances be subject to delays and
related administrative uncertainties.
Foreign equity securities may be held by a Fund in the form of ADRs, ADSs,
EDRs, GDRs, CDRs or securities convertible into foreign equity securities. ADRs,
ADSs, EDRs, GDRs and CDRs may be listed on stock exchanges, or traded in the OTC
markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments in
which the Funds may invest are generally traded in the OTC markets.
Each Fund contemplates that, consistent with the policy of obtaining the best
net results, brokerage transactions may be conducted through certain companies
that are affiliated with AIM or the Sub-advisor. The Trust's Board of Trustees
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage
23
<PAGE> 902
commissions paid to such affiliates are reasonable and fair in the context of
the market in which they are operating. Any such transactions will be effected
and related compensation paid only in accordance with applicable SEC
regulations.
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
another AIM Fund 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.
For the fiscal year ended December 31, 1995, the Europe Fund paid to GT Bank
in Liechtenstein AG and GT Bank in Liechtenstein (Zurich), each of which was an
"affiliated" broker as defined in the 1940 Act, aggregate brokerage commissions
of $9,529 and $16,250, respectively, for transactions involving purchases and
sales of portfolio securities.
For the fiscal year ended December 31, 1995, the International Fund paid to GT
Bank in Liechtenstein AG aggregate brokerage commissions of $1,475 for
transactions involving purchases and sales of portfolio securities which
represented 0.08% of the total brokerage commissions paid by the International
Fund and less than 0.01% of the aggregate dollar amount of transactions
involving payment of commissions by the International Fund. For the fiscal year
ended December 31, 1996, the International Fund paid to GT Bank in Liechtenstein
(Deutschland) Gmbh and GT Bank in Liechtenstein AG aggregate brokerage
commissions of $6,284 and $8,378, respectively, for transactions involving
purchases and sales of portfolio securities which represented 0.09% and 0.50%,
respectively, of the total brokerage commissions paid by the International Fund,
and 0.08% and 0.94%, respectively, of the aggregate dollar amount of
transactions involving payment of commissions by the International Fund. For the
fiscal year ended December 31, 1996, the Worldwide Fund paid to GT Bank in
Liechtenstein (Deutschland) Gmbh aggregate brokerage commissions of $361.87 for
transactions involving purchases and sales of portfolio securities which
represented less than 0.01% of the total brokerage commissions paid by the
Worldwide Fund, and less than 0.01% of the aggregate dollar amount of the
transactions involving payment of commissions by the Worldwide Fund.
For the fiscal year ended December 31, 1997, no payments were made to
affiliated brokers.
Aggregate brokerage commissions paid by the Funds for their three most recent
fiscal years were:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
---- ---------- ---------- ----------
<S> <C> <C> <C>
Mid Cap Fund.................................. $2,193,539 $2,760,768 $ 878,569
Europe Fund................................... $2,217,385 $2,711,139 $3,877,784
International Fund............................ $ 874,443 $1,496,178 $1,889,228
Japan Fund.................................... $ 218,841 $ 253,623 $ 440,117
Pacific Fund.................................. $2,767,789 $5,151,533 $3,310,887
Worldwide Fund................................ $ 578,365 $ 792,165 $1,007,167
</TABLE>
PORTFOLIO TRADING AND TURNOVER
Although the Funds generally do not intend to trade for short-term profits,
the securities held by a Fund will be sold whenever AIM and/or the Sub-advisor
believe it is appropriate to do so, without regard to the length of time a
particular security may have been held. Portfolio turnover rate is calculated by
dividing the lesser of sales or purchases of portfolio securities by each Fund's
average month-end portfolio sales, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when AIM and/or the
Sub-advisor deem portfolio changes appropriate. Higher portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs that a Fund will bear directly and may result in the realization of net
capital gains that are taxable when distributed to the Fund's shareholders. The
portfolio turnover rates for the fiscal years ended December 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
FUND 1997 1996
---- ---- ----
<S> <C> <C>
Mid Cap Fund................................................ 190% 253%
Europe Fund................................................. 107% 123%
International Fund.......................................... 72% 74%
Japan Fund.................................................. 58% 31%
Pacific Fund................................................ 80% 93%
Worldwide Fund.............................................. 92% 80%
</TABLE>
24
<PAGE> 903
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless otherwise
indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM, (51) Trustee, Chairman of the Director, President and Chief Executive Officer,
Board and 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, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------
C. DEREK ANDERSON, (57) Trustee Mr. Anderson is President, Plantagenet Capital
220 Sansome Street Management, LLC (an investment partnership); Chief
Suite 400 Executive Officer, Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); Director, Anderson Capital
Management, Inc. since 1988; Director, PremiumWear,
Inc. (formerly Munsingwear, Inc.) (a casual apparel
company) and Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a trustee of
each of the other investment companies registered
under the 1940 Act that is sub-advised or sub-
administered by the Sub-advisor.
- ----------------------------------------------------------------------------------------------------------
FRANK C. BAYLEY, (59) Trustee Mr. Bayley is a partner of the law firm of Baker &
Two Embarcadero Center McKenzie, and serves as a Director and Chairman of
Suite 2400 C.D. Stimson Company (a private investment company).
San Francisco, CA 94111 Mr. Bayley is also a trustee of each of the other
investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the
Sub-advisor.
- ----------------------------------------------------------------------------------------------------------
ARTHUR C. PATTERSON, Trustee Mr. Patterson is Managing Partner of Accel Partners
(54) (a venture capital firm). He also serves as a
428 University Avenue director of Viasoft and PageMart, Inc. (both public
Palo Alto, CA 94301 software companies), as well as several other
privately held software and communications companies.
Mr. Patterson is also a trustee of each of the other
investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the Sub-
advisor.
- ----------------------------------------------------------------------------------------------------------
RUTH H. QUIGLEY, (63) Trustee Miss Quigley is a private investor. From 1984 to
1055 California Street 1986, she was President of Quigley Friedlander & Co.,
San Francisco, CA 94108 Inc. (a financial advisory services firm). Miss
Quigley is also a trustee of each of the other
investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the
Sub-advisor.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
* A trustee who is an "interested person" of the Trust and AIM Advisors, Inc. as defined in the 1940 Act.
</TABLE>
25
<PAGE> 904
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
+JOHN J. ARTHUR, (53) Vice President Director, Senior Vice President and Treasurer, A I M
Advisors, Inc.; Vice President and Treasurer, A I M
Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company.
- ----------------------------------------------------------------------------------------------------------
KENNETH W. CHANCEY, (52) Vice President and Senior Vice President - Mutual Fund Accounting, the
50 California Street Principal Accounting Sub- advisor since 1997; Vice President -- Mutual
San Francisco, CA 94111 Officer Fund Accounting, the Sub-advisor from 1992 to 1997.
- ----------------------------------------------------------------------------------------------------------
MELVILLE B. COX, (54) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and
Fund Management Company.
- ----------------------------------------------------------------------------------------------------------
GARY T. CRUM, (50) Vice President Director and President, A I M Capital Management,
Inc.; Director and Senior Vice President, A I M
Management Group Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------
HELGE K. LEE, (52) Vice President and Chief Legal and Compliance Officer -- North America,
50 California Street Secretary the Sub-advisor since October 1997; Executive Vice
San Francisco, CA 94111 President of the Asset Management Division of
Liechtenstein Global Trust since October 1996; Senior
Vice President, General Counsel and Secretary of LGT
Asset Management Inc., Chancellor LGT Asset
Management, Inc., GT Global, GT Global Investor
Services, Inc. and G.T. Insurance from May 1994 to
October 1996; Senior Vice President, General Counsel
and Secretary of Strong/Corneliuson Management, Inc.
and Secretary of each of the Strong Funds from
October 1991 through May 1994.
- ----------------------------------------------------------------------------------------------------------
+CAROL F. RELIHAN, (43) Vice President Director, Senior Vice President, General Counsel and
Secretary, A I M Advisors, Inc.; Vice President,
General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- ----------------------------------------------------------------------------------------------------------
DANA R. SUTTON, (39) Vice President and Vice President and Fund Controller, A I M Advisors,
Assistant Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
+ Mr. Arthur and Ms. Relihan are married to each other.
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and the
Funds and recommending firms to serve as independent auditors of the Trust. All
of the Trust's Trustees also serve as directors or trustees of some or all of
the other investment companies managed, administered or advised by AIM. All of
the Trust's Executive Officers hold similar offices with some or all of the
other investment companies managed, administered or advised by AIM. Each Trustee
who is not a director, officer or employee of AIM and/or the Sub-advisor or any
affiliated company is paid aggregate fees of $5,000 a year plus $300 per Fund
for each meeting of the Board attended by the Trustee, and reimbursed travel and
other expenses incurred in connection with attendance at such meetings. Other
26
<PAGE> 905
Trustees and Officers receive no compensation or expense reimbursements from the
Trust. For the fiscal year ended December 31, 1997, the Trust paid Mr. Anderson,
Mr. Bayley, Mr. Patterson and Miss Quigley, who are not directors, officers or
employees of AIM and/or the Sub-advisor or any affiliated company, total
compensation of $19,276, $20,044, $16,350 and $18,203, respectively, for their
services as Trustees. For the year ended December 31, 1997, Mr. Anderson, Mr.
Bayley, Mr. Patterson and Miss Quigley, who are not directors, officers or
employees of AIM and/or the Sub-advisor or any other affiliated company,
received total compensation of $103,654, $106,556, $89,700 and $98,038,
respectively, from the investment companies managed or administered by AIM and
sub-advised or sub-administered by the Sub-advisor for which he or she serves as
a Trustee. Fees and expenses disbursed to the Trustees contained no accrued or
payable pension or retirement benefits. As of June 26, 1998, the Officers and
Trustees and their families as a group owned in the aggregate beneficially or of
record less than 1% of the outstanding shares of any Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM serves as the investment manager and administrator to each Fund under an
investment management and administration contract ("Management Contract")
between the Trust and AIM. The Sub-advisor serves as the sub-advisor and
sub-administrator to each of Worldwide Fund, International Fund, Pacific Fund,
Europe Fund and Japan Fund under a sub-advisory and sub-administration contract
between AIM and the Sub-advisor ("Sub-Management Contract," and together with
the Management Contract, the "Management Contracts"). As investment managers and
administrators, AIM and/or the Sub-advisor make all investment decisions for
each Fund and administer each Fund's affairs. Among other things, AIM and/or the
Sub-advisor furnish the services and pay the compensation and travel expenses of
persons who perform the executive, administrative, clerical and bookkeeping
functions of the Trust and the Funds and provide suitable office space and
necessary small office equipment and utilities.
The Management Contracts may be renewed for additional one-year terms with
respect to each Fund, provided that any such renewal has been specifically
approved at least annually by: (i) the Board of Trustees or the vote of a
majority of the Fund's outstanding voting securities (as defined in the 1940
Act), and (ii) a majority of Trustees who are not parties to the Management
Contracts or "interested persons" of any such party (as defined in the 1940
Act), cast in person at a meeting called for the specific purpose of voting on
such approval. With respect to any Fund, either the Trust or each of AIM or the
Sub-advisor may terminate the Management Contracts without penalty upon sixty
days' written notice to the other party. The Management Contracts terminate
automatically in the event of their assignment (as defined in the 1940 Act).
The amounts of investment management and administration fees paid by each Fund
to the Sub-advisor during the Funds' three most recent fiscal years were as
follows:
<TABLE>
<CAPTION>
FUND 1997 1996 1995
---- ---------- ---------- ----------
<S> <C> <C> <C>
Mid Cap Fund.................................. $3,999,732 $4,982,969 $4,425,913
Europe Fund................................... $5,228,246 $5,416,280 $6,161,265
International Fund............................ $2,309,873 $3,034,522 $4,027,923
Japan Fund.................................... $1,017,788 $1,367,702 $1,167,576
Pacific Fund.................................. $3,736,264 $5,260,774 $5,176,333
Worldwide Fund................................ $1,619,691 $1,885,798 $2,050,983
</TABLE>
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through the Funds'
principal underwriter and distributor, AIM Distributors, on a "best efforts"
basis without a front-end sales charge or a contingent deferred sales charge.
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by AIM, the Sub-advisor, AIM
Distributors and other agents. These expenses include, in addition to the
advisory, distribution, transfer agency, pricing and accounting agency and
brokerage fees discussed above, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. Certain of these expenses, such as custodial fees and
brokerage fees generally are higher for non-U.S. securities. The allocation of
general Trust expenses, and expenses shared by the Funds with one another, are
made on a basis deemed fair and equitable, which may be based on the relative
net assets of the Funds or the nature of the services performed and relative
applicability to each Fund. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, that are capitalized in
accordance with generally accepted accounting principles applicable to
27
<PAGE> 906
investment companies, are accounted for as capital items and not as expenses.
The ratio of each Fund's, other than Mid Cap Fund's, expenses to its relative
net assets can be expected to be higher than the expense ratios of funds
investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
each Fund generally are higher than the comparable expenses of such other funds.
NET ASSET VALUE DETERMINATION
The net asset value per share of each Fund is normally determined daily as of
the close of trading on the New York Stock Exchange ("NYSE") (generally 4:00
p.m. Eastern time) on each business day of the Fund. In the event the NYSE
closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the net
asset value of a Fund is determined as of the close of the NYSE on such day. Net
asset value per share is determined by dividing the value of each 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 each 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 mean between the closing bid and
asked prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. Each security reported on the
NASDAQ National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean between the closing bid and asked
prices on that day. Debt securities 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, 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. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE.
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 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 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 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 of the Fund.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
Complete information concerning the method of exchanging shares of the Funds
for shares of the other AIM Funds is set forth in the Prospectuses under the
heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 A I M
Fund Services, Inc. ("AFS"), 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
28
<PAGE> 907
(other than any applicable contingent deferred sales charge) when shares are
redeemed or repurchased, dealers may charge a fair service fee for handling the
transaction.
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the 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.
PROGRAMS AND SERVICES FOR SHAREHOLDERS. The Funds provide certain services for
shareholders and certain investment or redemption programs. See "Exchange
Privilege" and "How to Redeem Shares" in the Prospectus. All inquiries
concerning these programs should be made directly to A I M Fund Services, Inc.,
P.O. Box 4739, Houston, Texas 77210-4739, toll free at (800) 959-4246.
DIVIDEND ORDER. Dividends may be paid to someone other than the registered
owner, or sent to an address other than the address of record. (Please note that
signature guarantees are required to effect this option.) An investor also may
direct that his or her dividends be invested in one of the other AIM Funds and
there is no sales charge for these investments; initial investment minimums
apply. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions" in the Prospectus. To effect this option, please contact your
authorized dealer. For more information concerning AIM Funds other than the
Funds, please obtain a current prospectus by contacting your authorized dealer,
by writing to A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
TAXES
GENERAL
Each Fund is treated as a separate corporation for federal income tax
purposes. To continue to qualify for treatment as a RIC under the Code, each
Fund must distribute to its shareholders for each taxable year at least 90% of
its investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, Futures or Forward
Contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); and (2) the Diversification
Requirements.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
FOREIGN TAXES
Dividends and interest received by a Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If more than 50% of the value of a Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, the
Fund will be eligible to, and may, file an election with the Internal Revenue
Service that will enable its shareholders, in effect, to receive the benefit of
the foreign tax credit with respect to any foreign taxes paid by it. Pursuant to
the election, a Fund would treat those taxes as dividends paid to its
shareholders and each shareholder would be
29
<PAGE> 908
required to (1) include in gross income, and treat as paid by him, his share of
those taxes, (2) treat his share of those taxes and of any dividend paid by the
Fund that represents its income from foreign and U.S. possessions sources as his
own income from those sources, and (3) either deduct the taxes deemed paid by
him in computing his taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against his federal income
tax. Each Fund will report to its shareholders shortly after each taxable year
their respective shares of the Fund's foreign taxes and income from sources
within foreign countries and U.S. possessions if it makes this election.
Pursuant to the Taxpayer Relief Act of 1997 ("Tax Act"), individuals who have no
more than $300 ($600 for married persons filing jointly) of creditable foreign
taxes included on Forms 1099 and all of whose foreign source income is
"qualified passive income" may elect each year to be exempt from the extremely
complicated foreign tax credit limitation and will be able to claim a foreign
tax credit without having to file the detailed Form 1116 that otherwise is
required.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund (other than the Mid Cap Fund) may invest in the stock of "passive
foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation -- other than a "controlled foreign corporation" (i.e., a foreign
corporation in which, on any day during its taxable year, more than 50% of the
total voting power of all voting stock therein or the total value of all stock
therein is owned, directly, indirectly or constructively, by "U.S.
shareholders," defined as U.S. persons that individually own, directly,
indirectly or constructively, at least 10% of that voting power) as to which a
Fund is a U.S. shareholder -- that, in general, meets either of the following
tests: (1) at least 75% of its gross income is passive or (2) an average of at
least 50% of its assets produce, or are held for the production of, passive
income. Under certain circumstances, a Fund will be subject to federal income
tax on a portion of any "excess distribution" received on, or of any gain from
disposition of, stock of a PFIC (collectively "PFIC income"), plus interest
thereon, even if the Fund distributes the PFIC income as a taxable dividend to
its shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to the
Fund to the extent it distributes that income to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances, it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
A Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, a Fund also will be allowed to deduct (as ordinary, not capital, loss)
the excess, if any, of its adjusted basis in PFIC stock over the fair market
value thereof as of the taxable year-end, but only to the extent of any net
mark-to-market gains with respect to that stock included in income by the Fund
for prior taxable years. A Fund's adjusted basis in each PFIC's stock subject to
the election will be adjusted to reflect the amounts of income included and
deductions taken thereunder. Regulations proposed in 1992 provided a similar
election with respect to the stock of certain PFICs.
NON-U.S. SHAREHOLDERS
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to foreign shareholders generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS
Each Fund's use of hedging transactions, such as selling (writing) and
purchasing options and Futures Contracts and entering into Forward Contracts,
involves complex rules that will determine, for federal income tax purposes, the
amount, character and timing of recognition of the gains and losses a Fund
realizes in connection therewith. Gains from the disposition of foreign
currencies (except certain gains that may be excluded by future regulations),
and gains from
30
<PAGE> 909
options, Futures and Forward Contracts derived by a Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by a Fund at the end of its taxable year generally
will be deemed to have been sold at that time at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net realized gain or loss from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. That 60% portion
will qualify for the reduced maximum tax rates on noncorporate taxpayers' net
capital gain enacted by the Tax Act - 20% (10% for taxpayers in the 15% marginal
tax bracket) for gain recognized on capital assets held for more than 18
months -- instead of the 28% rate in effect before that legislation, which now
applies to gain on capital assets held for more than one year but no more than
18 months.
Section 988 of the Code also may apply to gains and losses from transactions
in foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. Each Fund attempts to monitor section 988 transactions to minimize
any adverse tax impact.
If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted
basis -- and enters into a "constructive sale" of the same or substantially
similar property, the Fund will be treated as having made an actual sale
thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract or Futures or Forward Contract entered into by a Fund or a
related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds and their shareholders. Investors are urged
to consult their own tax advisers for more detailed information and for
information regarding any foreign, state and local taxes applicable to
distributions received from a Fund.
MISCELLANEOUS INFORMATION
AIM was organized in 1976, and together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. 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, 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
independent investment management groups that have a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110, acts as custodian of the Funds' assets. State Street is
authorized to establish and has established separate accounts in foreign
currencies and to cause securities of the Company to be held in separate
accounts outside the United States in the custody of non-U.S. banks.
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and 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 Transfer Agency and Service Agreement became effective on
September 8, 1998. The Sub-advisor also serves as each Fund's pricing and
accounting agent. For the fiscal years ended December 31, 1995, December 31,
1996 and December 31, 1997, the accounting services fees paid by the Mid Cap
Fund, Europe Fund, International Fund, Japan Fund, Pacific Fund and Worldwide
Fund were $79,918, $173,767 and $142,274, $62,660,
31
<PAGE> 910
$139,442 and $138,072, $40,655, $77,934 and $59,416, $14,483, $35,119 and
$26,210, $53,724, $135,182 and $99,321, and $22,092, $48,430 and $41,680,
respectively.
INDEPENDENT ACCOUNTANTS
The Trust's and the Funds' independent accountants are PricewaterhouseCoopers
LLP. PricewaterhouseCoopers LLP conducts annual audits of the Funds, assists in
the preparation of the Funds' federal and state income tax returns and consults
with the Trust and the Funds as to matters of accounting, regulatory filings and
federal and state income taxation.
The audited financial statements of the Trust included in this Statement of
Additional Information have been examined by PricewaterhouseCoopers LLP as
stated in their opinion appearing herein and are included in reliance upon such
opinion given upon the authority of that firm as experts in accounting and
auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
of liability extended to shareholders of private, for-profit corporations. There
is a remote possibility, however, that under certain circumstances shareholders
of the Trust may be held personally liable for the Trust's obligations. However,
the Trust's Agreement and Declaration of Trust 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 a trustee. If a shareholder is held personally liable for the
obligations of the Trust, the Trust Agreement provides that the shareholder
shall be entitled out of the assets belonging to the applicable Fund (or
allocable to the applicable Class), to be held harmless from and indemnified
against all loss and expense arising from such liability in accordance with the
Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring
financial loss on account of such liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM New Pacific Growth Fund operated under the name of
GT Global New Pacific Growth Fund; AIM Europe Growth Fund operated under the
name GT Global Europe Growth Fund; AIM Japan Growth Fund operated under the name
of GT Global Japan Growth Fund; AIM International Growth Fund operated under the
name of GT Global International Growth Fund; AIM Worldwide Growth Fund operated
under the name of GT Global Worldwide Growth Fund and AIM Mid Cap Growth Fund
operated under the name of GT Global America Mid Cap Growth Fund.
32
<PAGE> 911
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of August 10, 1998, the Trustees and officers of the Trust, as a group,
owned less than 1% of the outstanding shares of any class of the Trust.
To the best knowledge of the Trust, the names and addresses of the holders of
5% or more of the outstanding shares of any class of each Fund's equity
securities as of August 10, 1998, and the percentage of the outstanding shares
held by such holders are set forth below.
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
---- ------------------------- -------- ------------
<S> <C> <C> <C>
Europe Growth Fund -- Advisor Class Charles Schwab & Co. Inc. 50.99% -0-
For the Excl Benef of Our Custs
Reinvest Account
101 Montgomery St.
San Francisco, CA 94104-4122
Attn: Mutual Funds
MLPF&S for the Sole Benefit of Its 14.67% -0-
Customers, Security #
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
International Fund -- Advisor Class G.T. Capital Holdings, Inc. 401(k) FBO 7.93% -0-
Account: 565-59-1255
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 7.14% -0-
Account: 217-64-6674
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 5.98% -0-
Account: 545-91-4793
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) P/S 5.82% -0-
A/C ###-##-#### P
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 5.58% -0-
Account: 562-04-5693
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
G.T. Capital Holdings, Inc. 401(k) FBO 5.47% -0-
Account: 546-33-3477
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
Charles Schwab & Co. Inc. 67.51% -0-
For the Excl Benef of Our Custs
Reinvest Account
101 Montgomery St.
San Francisco, CA 94104-4122
Attn: Mutual Funds
</TABLE>
33
<PAGE> 912
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
---- ------------------------- -------- ------------
<S> <C> <C> <C>
Europe Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 13.71% -0-
Customers, Security #974U7
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Mid Cap Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 11.15% -0-
Customers, Security #974U8
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Pacific Fund -- Advisor Class Wells Fargo Bank NA TTEE FBO 28.04% -0-
LGT Asset Management AC 5000201000
Serp Prft Shr Pln ###-##-####
P O Box 9800 MAC 9137-027
Calabasas, CA 91372-0800
G.T. Capital Holdings, Inc. 401(k) FBO 10.31% -0-
Account: 045-46-2854
50 California Street, 27th Floor
San Francisco, California 94111-4624
Attn: Human Resources
Pacific Fund -- Class A MLPF&S for the Sole Benefit of Its 5.71% -0-
Customers, Security #97043
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Japan Fund -- Advisor Class Donaldson Lufkin Jenrette Securities 56.36% -0-
Corp. Inc.
P.O. Box 2052
Jersey City, New Jersey 07303-2052
MLPF&S for the Sole Benefit of Its 6.24% -0-
Customers, Security #97K48
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Japan Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 12.54% -0-
Customers, Security #974U9
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Worldwide Growth Fund -- Advisor GT Cap Holdings, Inc. 401(k) FBO 5.42% -0-
Class Acct #548985183
Attn: Human Resources
50 California St. 27th Floor
San Francisco, CA 94111-4624
GT Cap Holdings, Inc. 401(k) PS
FBO A/C 548 98 5183 P 5.21% -0-
Attn: Human Resources
50 California St. 27th Floor
San Francisco, CA 94111-4624
Worldwide Growth Fund -- Class A MLPF&S for the Sole Benefit of Its 6.96% -0-
Customers, Security #974W0
Attn: Fund Administration
4800 Deer lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
34
<PAGE> 913
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
P(1+T)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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
portions of such period).
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the Mid
Cap Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
MID CAP FUND MID CAP FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ------------ ---------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 7.78% 14.54%
For the five years ended December 31, 1997.................. 14.00% n/a
For the ten years ended December 31, 1997................... 17.03% n/a
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a 13.69%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 14.36% n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Europe Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ----------- ---------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... 5.08% 11.64%
For the five years ended December 31, 1997.................. 10.78% n/a
For the ten years ended December 31, 1997................... 7.49% n/a
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a 15.04%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
International Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ------------------ ------------------
<S> <C> <C>
Fiscal year ended December 31, 1997................... 2.54% 8.53%
For the five years ended December 31, 1997............ 7.58% n/a
For the ten years ended December 31, 1997............. 8.10% n/a
June 1, 1995 (commencement of operations) through
December 31, 1997................................... n/a 11.43%
April 1, 1993 (commencement of operations) through
December 31, 1997................................... n/a n/a
</TABLE>
35
<PAGE> 914
The standardized returns for the Class A and Advisor Class shares of the Japan
Fund, stated as average annualized total returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ---------- ---------------
<S> <C> <C>
Fiscal year ended December 31, 1997......................... (13.05)% (7.54)%
For the five years ended December 31, 1997.................. 3.13% n/a
For the ten years ended December 31, 1997................... 2.19% n/a
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a 0.30%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Pacific Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ------------ ---------------
<S> <C> <C>
Fiscal year ended December 31, 1997........................ (47.31)% (44.26)%
For the five years ended December 31, 1997................. (2.61)% n/a
For the ten years ended December 31, 1997.................. 4.01% n/a
June 1, 1995 (commencement of operations) through December
31, 1997................................................. n/a (14.44)%
April 1, 1993 (commencement of operations) through December
31, 1997................................................. n/a n/a
</TABLE>
The standardized returns for the Class A and Advisor Class shares of the
Worldwide Fund, stated as average annualized total returns for the periods
shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ -------------- ---------------
<S> <C> <C>
Fiscal year ended December 31, 1997...................... 3.97% 10.43%
For the five years ended December 31, 1997............... 8.84% n/a
For the ten years ended December 31, 1997................ 10.26% n/a
June 1, 1995 (commencement of operations) through
December 31, 1997...................................... n/a 13.20%
April 1, 1993 (commencement of operations) through
December 31, 1997...................................... n/a n/a
June 9, 1987 (commencement of operations) through
December 31, 1997...................................... 8.42% n/a
</TABLE>
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, cumulative total return across a
stated period may be calculated as follows:
P(1+V)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Mid Cap Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
MID CAP FUND MID CAP FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ------------ ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a 39.29%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
June 9, 1987 (commencement of operations) through December
31, 1997.................................................. 336.53% n/a
</TABLE>
36
<PAGE> 915
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Europe Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
EUROPE FUND EUROPE FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ----------- ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a 43.62%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 346.74% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the International Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
INTERNATIONAL FUND INTERNATIONAL FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ------------------ ------------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through
December 31, 1997................................... n/a 32.25%
April 1, 1993 (commencement of operations) through
December 31, 1997................................... n/a n/a
July 19, 1985 (commencement of operations) through
December 31, 1997................................... 368.84% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Japan Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
JAPAN FUND JAPAN FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ---------- ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a .77%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 300.11% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Pacific Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
PACIFIC FUND PACIFIC FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ ------------ ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through December
31, 1997.................................................. n/a (32.08)%
April 1, 1993 (commencement of operations) through December
31, 1997.................................................. n/a n/a
July 19, 1985 (commencement of operations) through December
31, 1997.................................................. 630.06% n/a
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Class A and Advisor Class shares of the Worldwide Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
WORLDWIDE FUND WORLDWIDE FUND
PERIOD (CLASS A) (ADVISOR CLASS)
------ -------------- ---------------
<S> <C> <C>
June 1, 1995 (commencement of operations) through December
31, 1997............................................... n/a 37.76%
April 1, 1993 (commencement of operations) through
December 31, 1997...................................... n/a n/a
June 9, 1987 (commencement of operations) through December
31, 1997............................................... 148.37% n/a
</TABLE>
37
<PAGE> 916
Each Fund's investment results will vary from time to time depending upon
market conditions, the composition of each Fund's portfolio and operating
expenses of each Fund, so that current or past yield or total return should not
be considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
Total return figures for the Funds are neither fixed nor guaranteed, and no
Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. 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. Such
publications or media entities may include the following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
38
<PAGE> 917
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All Country
(AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index-Non-U.S.
Salomon Brothers World Government Bond
Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associates
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
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
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference 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.
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.
39
<PAGE> 918
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment Grade Ratings are the first
four categories: 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 edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
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 some time 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.
Standard & Poor's, a division of the McGraw Hill Companies, Inc. ("S&P") rates
the securities debt of various entities in categories ranging from "AAA" to "D"
according to quality. Investment grade ratings are the first four categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong. AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong. A -- An obligation rated "A" is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than obligations in higher rated categories. BBB -- An
obligation rated "BBB" exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation. BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and
"C" are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major exposures to adverse
conditions. BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to the obligor's inadequate capacity to meet its financial commitment on the
obligation. B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation. CCC -- An obligation rated "CCC" is
currently vulnerable to nonpayment, and is dependent upon favorable business,
financial and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity to meet its
financial commitment on the obligation. CC -- An obligation rated "CC" is
currently highly vulnerable to nonpayment. C -- The "C" rating may be used to
cover a situation where a bankruptcy petition has been filed or similar action
has been taken, but payments on this obligation are being continued. D -- An
obligation rated "D" is in payment default. The "D" rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such payments will be
made during such grace period. The "D" rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to
40
<PAGE> 919
show relative standing within the major rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having
a superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 will be denoted with a plus sign
(+) designation. "A-2" -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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.
41
<PAGE> 920
FINANCIAL STATEMENTS
FS
<PAGE> 921
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (34.0%)
ING Groep N.V. ............................................ NETH 405,354 $ 26,560,976 4.3
BANKS-MONEY CENTER
ForeningsSparbanken AB .................................... SWDN 732,160 22,046,095 3.6
BANKS-REGIONAL
Axa - UAP ................................................. FR 161,800 18,200,225 2.9
INSURANCE - MULTI-LINE
UBS AG - Registered ....................................... SWTZ 48,397 18,009,939 2.9
BANKS-MONEY CENTER
CGU PLC ................................................... UK 899,843 16,797,871 2.7
INSURANCE - MULTI-LINE
Banque Nationale de Paris ................................. FR 203,000 16,588,698 2.7
BANKS-MONEY CENTER
National Westminster Bank PLC ............................. UK 847,000 15,146,719 2.4
BANKS-MONEY CENTER
Zurich Versicherungsgesellschaft .......................... SWTZ 23,350 14,913,434 2.4
INSURANCE - MULTI-LINE
Nordbanken Holding AB ..................................... SWDN 1,948,623 14,302,044 2.3
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 949,000 13,286,634 2.1
BANKS-REGIONAL
BPI-SGPS S.A. ............................................. PORT 288,520 9,318,746 1.5
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 865,500 8,952,701 1.4
INSURANCE - MULTI-LINE
Abbey National PLC ........................................ UK 489,353 8,701,969 1.4
BANKS-SUPER REGIONAL
Halifax PLC ............................................... UK 656,800 8,532,149 1.4
BANKS-REGIONAL
------------
211,358,200
------------
Services (19.8%)
Vodafone Group PLC ........................................ UK 1,650,000 20,952,162 3.4
WIRELESS COMMUNICATIONS
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 573,300 20,841,632 3.4
BROADCASTING & PUBLISHING
Orange PLC-/- ............................................. UK 1,953,000 20,707,213 3.3
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 103,383 18,373,225 3.0
WIRELESS COMMUNICATIONS
Telecom Italia SpA ........................................ ITLY 2,465,000 18,023,283 2.9
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 386,359 12,411,080 2.0
RETAILERS-FOOD
Helsingin Puhelin Oyj (Helsinki Telephone Corp.) .......... FIN 152,600 7,104,413 1.1
TELEPHONE NETWORKS
STET Hellas Telecommunications S.A. - ADR-/- {\/} ......... GREC 110,940 4,604,010 0.7
TELECOM - OTHER
------------
123,017,018
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-1
<PAGE> 922
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (13.6%)
Glaxo Wellcome PLC ........................................ UK 559,639 $ 16,810,662 2.7
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 1,600 15,724,466 2.5
PHARMACEUTICALS
SmithKline Beecham PLC .................................... UK 975,500 11,914,815 1.9
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 6,540 10,891,370 1.8
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 1,309,561 9,757,749 1.6
PHARMACEUTICALS
Genset - ADR-/- {\/} ...................................... FR 322,467 9,472,468 1.5
BIOTECHNOLOGY
Astra AB "A" .............................................. SWDN 459,510 9,397,168 1.5
PHARMACEUTICALS
Nearmedic Ltd.-/- ......................................... ASTRI 618,200 633,601 0.1
PHARMACEUTICALS
------------
84,602,299
------------
Consumer Non-Durables (13.0%)
Cadbury Schweppes PLC ..................................... UK 1,236,700 19,152,434 3.1
BEVERAGES - NON-ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 8,100 17,347,981 2.8
FOOD
Heineken N.V. ............................................. NETH 401,500 15,781,115 2.5
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 289,950 15,367,350 2.5
TEXTILES & APPAREL
Reckitt & Colman PLC ...................................... UK 686,640 13,115,982 2.1
HOUSEHOLD PRODUCTS
------------
80,764,862
------------
Capital Goods (9.3%)
Nokia Oyj "A" ............................................. FIN 404,380 29,900,480 4.8
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 79,820 16,253,957 2.6
TELECOM EQUIPMENT
Coflexip - ADR{\/} ........................................ FR 193,500 11,827,688 1.9
CONSTRUCTION
------------
57,982,125
------------
Energy (7.4%)
Viag AG ................................................... GER 26,590 18,314,541 3.0
ELECTRICAL & GAS UTILITIES
Petroleum Geo-Services ASA-/- ............................. NOR 499,600 15,589,059 2.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 1,790,700 11,674,533 1.9
OIL
------------
45,578,133
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-2
<PAGE> 923
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (6.9%)
Baan Company N.V.-/- {\/} ................................. NETH 478,400 $ 17,102,800 2.8
SOFTWARE
Misys PLC ................................................. UK 246,228 13,999,104 2.3
SOFTWARE
Computacenter PLC-/- ...................................... UK 906,400 11,335,675 1.8
COMPUTERS & PERIPHERALS
------------
42,437,579
------------
Consumer Durables (2.7%)
Volvo AB "B" .............................................. SWDN 564,970 16,834,625 2.7
------------
AUTOMOBILES
Materials/Basic Industry (2.0%)
Akzo Nobel N.V. ........................................... NETH 55,500 12,346,074 2.0
CHEMICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $498,518,909) ................ 674,920,915 108.7
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%,
collateralized by $1,515,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $1,516,894,
including accrued interest). (cost $1,484,000) .......... 1,484,000 0.3
------------ -----
TOTAL INVESTMENTS (cost $500,002,909) * .................... 676,404,915 109.0
Other Assets and Liabilities ................................ (55,576,739) (9.0)
------------ -----
NET ASSETS .................................................. $620,828,176 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $500,002,909 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 185,254,268
Unrealized depreciation: (8,852,262)
-------------
Net unrealized appreciation: $ 176,402,006
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-3
<PAGE> 924
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.1 0.1
Finland (FIN/FIM) .................... 5.9 5.9
France (FR/FRF) ...................... 11.6 11.6
Germany (GER/DEM) .................... 3.0 3.0
Greece (GREC/GRD) .................... 0.7 0.7
Italy (ITLY/ITL) ..................... 4.8 4.8
Netherlands (NETH/NLG) ............... 19.5 19.5
Norway (NOR/NOK) ..................... 2.5 2.5
Portugal (PORT/PTE) .................. 4.5 4.5
Sweden (SWDN/SEK) .................... 10.1 10.1
Switzerland (SWTZ/CHF) ............... 12.4 12.4
United Kingdom (UK/GBP) .............. 33.6 33.6
United States (US/USD) ............... (8.7) (8.7)
------ ----- -----
Total ............................... 108.7 (8.7) 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $620,828,176.
The accompanying notes are an integral part of the financial statements.
FS-4
<PAGE> 925
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $500,002,909) (Note 1).......................... $676,404,915
U.S. currency................................................................. $1,199,170
Foreign currencies (cost $14,575,413)......................................... 14,576,258 15,775,428
----------
Receivable for Fund shares sold........................................................... 4,235,397
Dividends and dividend withholding tax reclaims receivable................................ 1,233,641
Other receivable.......................................................................... 148,420
-----------
Total assets............................................................................ 697,797,801
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 70,714,356
Payable for securities purchased.......................................................... 5,029,902
Payable for investment management and administration fees (Note 2)........................ 505,934
Payable for transfer agent fees (Note 2).................................................. 329,805
Payable for service and distribution expenses (Note 2).................................... 243,898
Payable for printing and postage expenses................................................. 80,413
Payable for custodian fees................................................................ 33,888
Payable for fund accounting fees (Note 2)................................................. 14,487
Payable for registration and filing fees.................................................. 6,892
Payable for professional fees............................................................. 5,021
Payable for Trustees' fees and expenses (Note 2).......................................... 2,296
Other accrued expenses.................................................................... 2,733
-----------
Total liabilities....................................................................... 76,969,625
-----------
Net assets.................................................................................. $620,828,176
-----------
-----------
Class A:
Net asset value and redemption price per share ($493,758,256 DIVIDED BY 27,062,196 shares
outstanding)............................................................................... $ 18.25
-----------
-----------
Maximum offering price per share (100/94.5 of $18.25) *..................................... $ 19.31
-----------
-----------
Class B:+
Net asset value and offering price per share ($119,843,766 DIVIDED BY 6,715,341 shares
outstanding)............................................................................... $ 17.85
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($7,226,154
DIVIDED BY 392,184 shares outstanding)..................................................... $ 18.43
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $405,152,368
Undistributed net investment income....................................................... 948,480
Accumulated net realized gain on investments and foreign currency transactions............ 38,345,574
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (20,252)
Net unrealized appreciation of investments................................................ 176,402,006
-----------
Total -- representing net assets applicable to capital shares outstanding................... $620,828,176
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-5
<PAGE> 926
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,392,889)............................ $ 6,744,459
Securities lending income................................................................. 351,896
Interest income........................................................................... 237,576
-----------
Total investment income................................................................. 7,333,931
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,917,028
Service and distribution expenses:(Note 2)
Class A.................................................................... $ 855,821
Class B.................................................................... 533,998 1,389,819
-----------
Interest expense (Note 1)................................................................. 848,608
Transfer agent fees....................................................................... 764,001
Custodian fees............................................................................ 205,616
Fund accounting fees (Note 2)............................................................. 81,435
Printing and postage expenses............................................................. 59,911
Registration and filing fees.............................................................. 56,110
Legal fees................................................................................ 44,747
Audit fees................................................................................ 30,883
Trustees' fees and expenses (Note 2)...................................................... 7,964
Other expenses............................................................................ 6,608
-----------
Total expenses before reductions........................................................ 6,412,730
-----------
Expense reductions (Note 5)........................................................... (27,279)
-----------
Total net expenses...................................................................... 6,385,451
-----------
Net investment income....................................................................... 948,480
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note
1)
Net realized gain on investments............................................. 33,308,247
Net realized gain on foreign currency transactions........................... 509,373
-----------
Net realized gain during the period..................................................... 33,817,620
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... 185,566
Net change in unrealized appreciation of investments......................... 117,058,616
-----------
Net unrealized appreciation during the period........................................... 117,244,182
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 151,061,802
-----------
Net increase in net assets resulting from operations........................................ $152,010,282
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-6
<PAGE> 927
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
--------------- ---------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)........................................... $ 948,480 $ (2,163,876)
Net realized gain on investments and foreign currency transactions..... 33,817,620 107,144,938
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies.......................... 185,566 (237,701)
Net change in unrealized appreciation (depreciation) of investments.... 117,058,616 (31,970,694)
--------------- ---------------
Net increase in net assets resulting from operations................. 152,010,282 72,772,667
--------------- ---------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................. -- (368,261)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................. -- (76,445)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................. -- (1,099)
--------------- ---------------
Total distributions.................................................. -- (445,805)
--------------- ---------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested....................... 2,449,988,999 2,415,165,409
Decrease from capital shares repurchased............................... (2,472,424,916) (2,538,538,626)
--------------- ---------------
Net decrease from capital share transactions......................... (22,435,917) (123,373,217)
--------------- ---------------
Total increase (decrease) in net assets.................................. 129,574,365 (51,046,355)
Net assets:
Beginning of period.................................................... 491,253,811 542,300,166
--------------- ---------------
End of period *........................................................ $ 620,828,176 $ 491,253,811
--------------- ---------------
--------------- ---------------
* Includes undistributed net investment income of....................... $ 948,480 $ --
--------------- ---------------
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-7
<PAGE> 928
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.04) (0.03) 0.04 0.06 0.05
Net realized and unrealized gain
(loss) on investments................ 3.90 1.48 2.16 0.95 (0.69) 2.36
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 3.93 1.44 2.13 0.99 (0.63) 2.41
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- (0.10) (0.05) (0.06)
From net realized gain on
investments.......................... -- (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.13) --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (0.01) (0.12) (0.14) (0.18) (0.08)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 18.25 $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 27.44%(b) 11.20% 19.61% 9.86% (5.8)% 28.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 493,758 $ 407,004 $ 453,792 $ 483,375 $ 646,313 $ 854,701
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.42%(a) (0.29)% (0.26)% 0.38% 0.61% 0.6%
Without expense reductions............ 0.41%(a) (0.43)% (0.32)% 0.32% 0.53% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.73%(a) 1.75% 1.82% 1.83% 1.73% 1.9%
Without expense reductions............ 1.74%(a) 1.89% 1.88% 1.89% 1.81% N/A
Ratio of interest expense to average net
assets++++............................. 0.28%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 40%(a) 107% 123% 108% 91% 67%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-8
<PAGE> 929
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.01) (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain
(loss) on investments................ 3.80 1.47 2.15 0.94 (0.69) 1.85
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 3.79 1.34 2.04 0.91 (0.69) 1.85
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.03) -- (0.06)
From net realized gain on
investments.......................... -- (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.13) --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (0.01) (0.12) (0.07) (0.13) (0.08)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 17.85 $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 26.96%(b) 10.55% 18.79% 9.20% (6.38)% 20.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 119,844 $ 81,011 $ 87,092 $ 73,025 $ 81,602 $ 34,048
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.23)%(a) (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%(a)
Without expense reductions............ (0.24)%(a) (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.38%(a) 2.40% 2.47% 2.48% 2.38% 2.6%(a)
Without expense reductions............ 2.39%(a) 2.54% 2.53% 2.54% 2.46% N/A
Ratio of interest expense to average net
assets++++............................. 0.28%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 40%(a) 107% 123% 108% 91% 67%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-9
<PAGE> 930
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ------------------------ DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D)
-------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.41 $ 12.92 $ 10.85 $ 10.24
-------------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.06 0.01 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 3.96 1.49 2.18 0.71
-------------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. 4.02 1.50 2.19 0.79
-------------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.14)
From net realized gain on
investments.......................... -- (0.01) (0.12) (0.04)
In excess of net investment income.... -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- --
-------------- ----------- ----------- -------------
Total distributions................. -- (0.01) (0.12) (0.18)
-------------- ----------- ----------- -------------
Net asset value, end of period.......... $ 18.43 $ 14.41 $ 12.92 $ 10.85
-------------- ----------- ----------- -------------
-------------- ----------- ----------- -------------
Total investment return (c)............. 27.83 %(b) 11.64% 20.21% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,226 $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.77 %(a) 0.06% 0.09% 0.73%(a)
Without expense reductions............ 0.76 %(a) (0.08)% 0.03% 0.67%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.38 %(a) 1.40% 1.47% 1.48%(a)
Without expense reductions............ 1.39 %(a) 1.54% 1.53% 1.54%(a)
Ratio of interest expense to average net
assets++++............................. 0.28 %(a) N/A N/A N/A
Portfolio turnover rate++++............. 40 %(a) 107% 123% 108%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-10
<PAGE> 931
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Europe Growth Fund (the "Fund" formerly, GT Global Europe Growth Fund), is a
separate series of AIM Growth Series (the "Trust" formerly, G.T. Global Growth
Series). The Trust is organized as a Delaware business trust and is registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as a
diversified, open-end management investment company. The Trust has eight series
of shares in operation, each series corresponding to a distinct portfolio of
investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-11
<PAGE> 932
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $51,984,881
were on loan to brokers. The loans were secured by cash collateral of
$54,717,285, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $351,896.
FS-12
<PAGE> 933
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $39,796,615 with a weighted average interest rate of 6.29%. Interest expense
for the period ended June 30, 1998, was $848,608.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales are made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $7,717 and $789, respectively, of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for the period ended
June 30, 1998. AIM Distributors also makes ongoing
FS-13
<PAGE> 934
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
shareholder servicing and trail commission payments to dealers whose clients
hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $26,482 and $178,096,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, a Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $175,430,452 and $119,926,341, respectively. There were no purchases
or sales of U.S. government obligations by the Fund during the period.
FS-14
<PAGE> 935
AIM EUROPE GROWTH FUND
(FORMERLY GT GLOBAL EUROPE GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
----------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 122,644,726 $ 2,087,003,868 146,863,882 $ 2,008,141,712
Shares issued in connection with
reinvestment of distributions ........ -- -- 20,229 286,488
------------ --------------- ------------ ---------------
122,644,726 2,087,003,868 146,884,111 2,008,428,200
Shares repurchased ..................... (124,003,141) (2,126,049,350) (153,681,853) (2,115,903,158)
------------ --------------- ------------ ---------------
Net decrease............................ (1,358,415) $ (39,045,482) (6,797,742) $ (107,474,958)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 17,592,826 $ 293,337,166 25,162,463 $ 340,605,118
Shares issued in connection with
reinvestment of distributions ........ -- -- 4,768 66,175
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
------------ --------------- ------------ ---------------
17,592,826 293,337,166 25,167,231 340,671,293
Shares repurchased ..................... (16,641,134) (279,103,045) (26,243,592) (357,657,223)
------------ --------------- ------------ ---------------
Net increase (decrease)................. 951,692 $ 14,234,121 (1,076,361) $ (16,985,930)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,058,228 $ 69,647,965 4,798,844 $ 66,064,822
Shares issued in connection with
reinvestment of distributions ........ -- -- 77 1,094
------------ --------------- ------------ ---------------
4,058,228 69,647,965 4,798,921 66,065,916
Shares repurchased ..................... (3,890,891) (67,272,521) (4,683,709) (64,978,245)
------------ --------------- ------------ ---------------
Net increase............................ 167,337 $ 2,375,444 115,212 $ 1,087,671
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period then ended June 30, 1998, the
Fund's expenses were reduced by $27,279 under these arrangements.
FS-15
<PAGE> 936
GT GLOBAL EUROPE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Europe Growth Fund, one of the funds organized as a series of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the 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 the 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, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Europe Growth Fund as of December 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-16
<PAGE> 937
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (29.2%)
ING Groep N.V. ............................................ NETH 449,610 $ 18,940,753 3.9
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 732,160 16,649,643 3.4
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 44,940 13,968,753 2.8
BANKS-MONEY CENTER
General Accident PLC ...................................... UK 729,800 12,642,677 2.6
INSURANCE - PROPERTY-CASUALTY
Axa - UAP ................................................. FR 161,800 12,519,774 2.6
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 949,000 12,263,760 2.5
BANKS-REGIONAL
National Westminster Bank PLC ............................. UK 658,000 10,934,253 2.2
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 203,000 10,790,014 2.2
BANKS-MONEY CENTER
Unidanmark AS "A" ......................................... DEN 136,300 10,007,284 2.0
BANKS-REGIONAL
Svenska Handelsbanken, Inc. "A" Free ...................... SWDN 288,900 9,991,061 2.0
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 1,344,033 7,602,878 1.5
OTHER FINANCIAL
Abbey National PLC ........................................ UK 419,253 7,510,756 1.5
BANKS-SUPER REGIONAL
------------
143,821,606
------------
Energy (14.3%)
Petroleum Geo-Services ASA-/- ............................. NOR 249,800 15,735,300 3.2
ENERGY EQUIPMENT & SERVICES
Total S.A. "B" ............................................ FR 118,000 12,842,070 2.6
OIL
Shell Transport & Trading Co., PLC ........................ UK 1,534,000 11,083,087 2.3
OIL
Viag AG ................................................... GER 19,990 10,770,259 2.2
ELECTRICAL & GAS UTILITIES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 1,790,700 10,231,703 2.1
OIL
Coflexip - ADR{\/} ........................................ FR 171,610 9,524,355 1.9
ENERGY EQUIPMENT & SERVICES
------------
70,186,774
------------
Services (14.0%)
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 573,300 16,176,381 3.3
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 2,465,000 15,777,115 3.2
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 1,650,000 11,894,089 2.4
WIRELESS COMMUNICATIONS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 103,383 11,018,156 2.2
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-17
<PAGE> 938
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Koninklijke Ahold N.V. .................................... NETH 386,359 $ 10,082,079 2.1
RETAILERS-FOOD
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 1,061 3,977,116 0.8
LEISURE & TOURISM
------------
68,924,936
------------
Health Care (10.6%)
Roche Holding AG .......................................... SWTZ 1,600 15,889,361 3.2
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 253,300 9,408,286 1.9
PHARMACEUTICALS
Genset: ................................................... FR -- -- 1.8
BIOTECHNOLOGY
ADR-/- {\/} ............................................. -- 393,667 7,774,923 --
Common-/- ............................................... -- 14,900 891,252 --
Glaxo Wellcome PLC ........................................ UK 363,639 8,598,361 1.8
PHARMACEUTICALS
Schering AG ............................................... GER 63,630 6,138,340 1.3
PHARMACEUTICALS
Incentive AB "A" .......................................... SWDN 15,760 1,419,659 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Nearmedic Ltd.-/- ......................................... ASTRI 618,200 1,272,722 0.3
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 141,507 191,697 --
PHARMACEUTICALS
------------
51,584,601
------------
Technology (7.6%)
Baan Company N.V.-/- {\/} ................................. NETH 478,400 15,787,200 3.2
SOFTWARE
TT Tieto Oy "B" ........................................... FIN 101,828 11,460,254 2.3
COMPUTERS & PERIPHERALS
Misys PLC ................................................. UK 337,828 10,151,482 2.1
SOFTWARE
------------
37,398,936
------------
Consumer Non-Durables (7.2%)
Cadbury Schweppes PLC ..................................... UK 1,236,700 12,458,382 2.5
BEVERAGES - NON-ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 8,100 12,139,463 2.5
FOOD
Gucci Group - NY Registered Shares{\/} .................... NETH 260,550 10,910,531 2.2
TEXTILES & APPAREL
------------
35,508,376
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-18
<PAGE> 939
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (7.1%)
Nokia AB "A" .............................................. FIN 269,400 $ 18,844,695 3.8
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 127,200 16,168,148 3.3
TELECOM EQUIPMENT
------------
35,012,843
------------
Materials/Basic Industry (6.0%)
Ciba Specialty Chemicals AG-/- ............................ SWTZ 166,000 19,775,431 4.0
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 55,500 9,571,231 2.0
CHEMICALS
------------
29,346,662
------------ -----
TOTAL EQUITY INVESTMENTS (cost $412,654,262) ................ 471,784,734 96.0
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Union Bank of Switzerland Roche Warrants "C", expire 7/98
(cost $3,431,328) ........................................ SWTZ 481,700 3,644,246 0.8
------------ -----
PHARMACEUTICALS
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $15,920,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $15,934,933,
including accrued interest). (cost $15,622,000) .......... 15,622,000 3.2
------------ -----
TOTAL INVESTMENTS (cost $431,707,590) * .................... 491,050,980 100.0
Other Assets and Liabilities ................................ 202,831 --
------------ -----
NET ASSETS .................................................. $491,253,811 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $431,707,590 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 65,811,221
Unrealized depreciation: (6,467,831)
-------------
Net unrealized appreciation: $ 59,343,390
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-19
<PAGE> 940
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.3 0.3
Denmark (DEN/DKK) .................... 2.0 2.0
Finland (FIN/FIM) .................... 6.1 6.1
France (FR/FRF) ...................... 14.4 14.4
Germany (GER/DEM) .................... 3.5 3.5
Italy (ITLY/ITL) ..................... 5.3 5.3
Netherlands (NETH/NLG) ............... 16.7 16.7
Norway (NOR/NOK) ..................... 3.2 3.2
Portugal (PORT/PTE) .................. 2.2 2.2
Sweden (SWDN/SEK) .................... 7.2 7.2
Switzerland (SWTZ/CHF) ............... 13.3 0.8 14.1
United Kingdom (UK/GBP) .............. 21.8 21.8
United States (US/USD) ............... 3.2 3.2
------ ----- ----- -----
Total ............................... 96.0 0.8 3.2 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $491,253,811.
The accompanying notes are an integral part of the financial statements.
FS-20
<PAGE> 941
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $431,707,590) (Note 1).......................... $491,050,980
U.S. currency................................................................. $ 317
Foreign currencies (cost $18,334,892)......................................... 18,199,857 18,200,174
----------
Receivable for securities sold............................................................ 19,572,716
Receivable for Fund shares sold........................................................... 1,953,987
Dividends and dividend withholding tax reclaims receivable................................ 186,252
Interest receivable....................................................................... 2,517
-----------
Total assets............................................................................ 530,966,626
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 33,388,567
Payable for securities purchased.......................................................... 5,169,750
Payable for investment management and administration fees (Note 2)........................ 415,152
Payable for transfer agent fees (Note 2).................................................. 256,798
Payable for service and distribution expenses (Note 2).................................... 195,095
Payable for printing and postage expenses................................................. 113,320
Payable for custodian fees................................................................ 26,846
Payable for registration and filing fees.................................................. 17,663
Payable for professional fees............................................................. 17,272
Payable for fund accounting fees (Note 2)................................................. 10,165
Payable for Trustees' fees and expenses (Note 2).......................................... 3,013
Other accrued expenses.................................................................... 99,174
-----------
Total liabilities....................................................................... 39,712,815
-----------
Net assets.................................................................................. $491,253,811
-----------
-----------
Class A:
Net asset value and redemption price per share ($407,003,587 DIVIDED BY 28,420,611 shares
outstanding)............................................................................... $ 14.32
-----------
-----------
Maximum offering price per share (100/95.25 of $14.32) *.................................... $ 15.03
-----------
-----------
Class B:+
Net asset value and offering price per share ($81,010,803 DIVIDED BY 5,763,649 shares
outstanding)............................................................................... $ 14.06
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,239,421
DIVIDED BY 224,847 shares outstanding)..................................................... $ 14.41
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $427,588,285
Accumulated net realized gain on investments and foreign currency transactions............ 4,527,954
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (205,818)
Net unrealized appreciation of investments................................................ 59,343,390
-----------
Total -- representing net assets applicable to capital shares outstanding................... $491,253,811
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-21
<PAGE> 942
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,472,615)............................ $ 6,804,153
Interest income........................................................................... 1,008,013
-----------
Total investment income................................................................. 7,812,166
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 5,228,246
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 1,554,410
Class B.................................................................... 910,363 2,464,773
-----------
Transfer agent fees (Note 2).............................................................. 1,655,972
Custodian fees............................................................................ 433,551
Fund accounting fees (Note 2)............................................................. 138,072
Registration and filing fees.............................................................. 126,714
Printing and postage expenses............................................................. 112,239
Audit fees................................................................................ 38,142
Legal fees................................................................................ 20,986
Trustees' fees and expenses (Note 2)...................................................... 8,387
Other expenses (Note 1)................................................................... 497,313
-----------
Total expenses before reductions........................................................ 10,724,395
-----------
Expense reductions (Notes 1 & 5)...................................................... (748,353)
-----------
Total net expenses...................................................................... 9,976,042
-----------
Net investment loss......................................................................... (2,163,876)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 107,873,761
Net realized loss on foreign currency transactions........................... (728,823)
-----------
Net realized gain during the year....................................................... 107,144,938
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... (237,701)
Net change in unrealized appreciation of investments......................... (31,970,694)
-----------
Net unrealized depreciation during the year............................................. (32,208,395)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 74,936,543
-----------
Net increase in net assets resulting from operations........................................ $72,772,667
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-22
<PAGE> 943
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- --------------
Decrease in net assets
Operations:
Net investment loss...................................................... $ (2,163,876) $ (1,938,485)
Net realized gain on investments and foreign currency transactions....... 107,144,938 86,541,400
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies....................................... (237,701) (218,619)
Net change in unrealized appreciation (depreciation) of investments...... (31,970,694) 23,691,090
-------------- --------------
Net increase in net assets resulting from operations................... 72,772,667 108,075,386
-------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (368,261) (4,360,146)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (76,445) (815,186)
Advisor Class: (Note 1)
Distributions to shareholders:
From net realized gain on investments.................................... (1,099) (29,590)
-------------- --------------
Total distributions.................................................... (445,805) (5,204,922)
-------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 2,415,165,409 3,224,591,371
Decrease from capital shares repurchased................................. (2,538,538,626) (3,342,278,802)
-------------- --------------
Net decrease from capital share transactions........................... (123,373,217) (117,687,431)
-------------- --------------
Total decrease in net assets............................................... (51,046,355) (14,816,967)
Net assets:
Beginning of year........................................................ 542,300,166 557,117,133
-------------- --------------
End of year *............................................................ $ 491,253,811 $ 542,300,166
-------------- --------------
-------------- --------------
* Includes undistributed net investment income of......................... $ -- $ --
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-23
<PAGE> 944
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.04) (0.03) 0.04 0.06 0.05
Net realized and unrealized gain
(loss) on investments................ 1.48 2.16 0.95 (0.69) 2.36
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.44 2.13 0.99 (0.63) 2.41
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.10) (0.05) (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.01) (0.12) (0.14) (0.18) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.32 $ 12.89 $ 10.88 $ 10.03 $ 10.84
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.20% 19.61% 9.86% (5.8)% 28.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 407,004 $ 453,792 $ 483,375 $ 646,313 $ 854,701
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.29)% (0.26)% 0.38% 0.61% 0.6%
Without expense reductions............ (0.43)% (0.32)% 0.32% 0.53% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.75% 1.82% 1.83% 1.73% 1.9%
Without expense reductions............ 1.89% 1.88% 1.89% 1.81% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-24
<PAGE> 945
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 9.02
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.13) (0.11) (0.03) -- --
Net realized and unrealized gain
(loss) on investments................ 1.47 2.15 0.94 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.34 2.04 0.91 (0.69) 1.85
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.03) -- (0.06)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04) -- --
In excess of net investment income.... -- -- -- -- (0.02)
In excess of net realized gain on
investments.......................... -- -- -- (0.13) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.07) (0.13) (0.08)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 14.06 $ 12.73 $ 10.81 $ 9.97 $ 10.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.55% 18.79% 9.20% (6.38)% 20.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 81,011 $ 87,092 $ 73,025 $ 81,602 $ 34,048
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.94)% (0.91)% (0.27)% (0.04)% (0.1)%(a)
Without expense reductions............ (1.08)% (0.97)% (0.33)% (0.12)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.40% 2.47% 2.48% 2.38% 2.6%(a)
Without expense reductions............ 2.54% 2.53% 2.54% 2.46% N/A
Portfolio turnover rate++++............. 107% 123% 108% 91% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-25
<PAGE> 946
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.92 $ 10.85 $ 10.24
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 1.49 2.18 0.71
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.50 2.19 0.79
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.14)
From net realized gain on
investments.......................... (0.01) (0.12) (0.04)
In excess of net investment income.... -- -- --
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.01) (0.12) (0.18)
---------- ---------- -------------
Net asset value, end of period.......... $ 14.41 $ 12.92 $ 10.85
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 11.64% 20.21% 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,239 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.06% 0.09% 0.73%(a)
Without expense reductions............ (0.08)% 0.03% 0.67%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.40% 1.47% 1.48%(a)
Without expense reductions............ 1.54% 1.53% 1.54%(a)
Portfolio turnover rate++++............. 107% 123% 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0533 $ 0.0277 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-26
<PAGE> 947
GT GLOBAL EUROPE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Europe Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
FS-27
<PAGE> 948
GT GLOBAL EUROPE GROWTH FUND
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$19,959,963 were on loan to brokers. The loans were secured by cash collateral
of $20,701,800, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $541,865. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
FS-28
<PAGE> 949
GT GLOBAL EUROPE GROWTH FUND
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $21,092,373 with a weighted average interest rate of 6.31%. Interest expense
for the year ended December 31, 1997, was $465,718, included in "Other expenses"
on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $4,461
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $15,594 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $501,201. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For
FS-29
<PAGE> 950
GT GLOBAL EUROPE GROWTH FUND
performing shareholder servicing, reporting, and general transfer agent
services, GT Services receives an annual maintenance fee of $17.50 per account,
a new account fee of $4.00 per account, a per transaction fee of $1.75 for all
transactions other than exchanges and a per exchange fee of $2.25. GT Services
also is reimbursed by the Fund for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $540,359,758 and $667,512,449, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 146,863,882 $ 2,008,141,712 247,661,557 $ 2,968,073,960
Shares issued in connection with
reinvestment of distributions......... 20,229 286,488 261,336 3,297,924
---------------- -------------------- ---------------- --------------------
146,884,111 2,008,428,200 247,922,893 2,971,371,884
Shares repurchased...................... (153,681,853) (2,115,903,158) (257,136,969) (3,090,222,730)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (6,797,742) $ (107,474,958) (9,214,076) $ (118,850,846)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,162,463 $ 340,605,118 15,643,994 $ 188,596,754
Shares issued in connection with
reinvestment of distributions......... 4,768 66,175 53,171 663,732
---------------- -------------------- ---------------- --------------------
25,167,231 340,671,293 15,697,165 189,260,486
Shares repurchased...................... (26,243,592) (357,657,223) (15,609,973) (188,238,304)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. (1,076,361) $ (16,985,930) 87,192 $ 1,022,182
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,798,844 $ 66,064,822 5,230,224 $ 63,929,457
Shares issued in connection with
reinvestment of distributions......... 77 1,094 2,336 29,544
---------------- -------------------- ---------------- --------------------
4,798,921 66,065,916 5,232,560 63,959,001
Shares repurchased...................... (4,683,709) (64,978,245) (5,189,081) (63,817,768)
---------------- -------------------- ---------------- --------------------
Net increase............................ 115,212 $ 1,087,671 43,479 $ 141,233
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $206,488 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2362 per share (representing an approximate total of
$8,046,337). The total amount of taxes paid by the Fund to such countries was
approximately $.0432 per share (representing an approximate total of
$1,472,615).
FS-30
<PAGE> 951
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (32.3%)
UBS AG - Registered-/- .................................... SWTZ 16,213 $ 6,033,399 3.1
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 640,020 4,697,468 2.4
BANKS-REGIONAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,327,073 2.2
BANKS-REGIONAL
Abbey National PLC ........................................ UK 235,000 4,178,911 2.1
BANKS-SUPER REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 387,000 4,003,114 2.1
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 254,400 3,561,770 1.8
BANKS-REGIONAL
ForeningsSparbanken AB .................................... SWDN 116,030 3,493,783 1.8
BANKS-REGIONAL
ING Groep N.V. ............................................ NETH 51,236 3,357,259 1.7
BANKS-MONEY CENTER
Axa - UAP ................................................. FR 28,350 3,188,976 1.6
INSURANCE - MULTI-LINE
Schroders PLC ............................................. UK 114,000 2,942,795 1.5
BANKS-MONEY CENTER
Zurich Versicherungsgesellschaft .......................... SWTZ 4,439 2,835,149 1.5
INSURANCE - MULTI-LINE
National Westminster Bank PLC ............................. UK 136,000 2,432,059 1.2
BANKS-MONEY CENTER
M & G Group PLC ........................................... UK 83,500 2,255,155 1.2
INVESTMENT MANAGEMENT
Royal Bank of Canada ...................................... CAN 34,200 2,056,601 1.1
BANKS-REGIONAL
CGU PLC ................................................... UK 110,000 2,053,431 1.1
INSURANCE - MULTI-LINE
Banque Nationale de Paris ................................. FR 24,379 1,992,196 1.0
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 79,520 1,945,020 1.0
BANKS-MONEY CENTER
Safra Republic Holdings S.A.{\/} .......................... LUX 24,400 1,830,000 0.9
OTHER FINANCIAL
State Bank of India Ltd. - Reg. S GDR-/- {c} {\/} ......... IND 144,410 1,704,038 0.9
BANKS-REGIONAL
BPI-SGPS S.A. ............................................. PORT 44,210 1,427,914 0.7
BANKS-MONEY CENTER
Nichiei Co., Ltd. ......................................... JPN 18,000 1,228,900 0.6
OTHER FINANCIAL
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 691,190 0.4
BANKS-MONEY CENTER
Kokusai Securities Co., Ltd. .............................. JPN 41,000 406,234 0.2
SECURITIES BROKER
Kookmin Bank-/- ........................................... KOR 99,604 370,789 0.2
BANKS-MONEY CENTER
------------
63,013,224
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-31
<PAGE> 952
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (22.9%)
Telecom Italia SpA ........................................ ITLY 708,900 $ 5,183,248 2.7
TELEPHONE NETWORKS
Orange PLC-/- ............................................. UK 468,000 4,962,097 2.6
WIRELESS COMMUNICATIONS
EMI Group PLC ............................................. UK 540,000 4,724,662 2.4
LEISURE & TOURISM
Vodafone Group PLC ........................................ UK 366,500 4,653,920 2.4
WIRELESS COMMUNICATIONS
Telecom Corporation of New Zealand Ltd.: .................. NZ -- -- 2.0
TELEPHONE NETWORKS
Common .................................................. -- 891,300 3,679,954 --
Installment Receipts .................................... -- 52,600 112,415 --
Woolworths Ltd. ........................................... AUSL 1,029,000 3,354,185 1.7
RETAILERS-OTHER
EMAP PLC .................................................. UK 154,000 3,116,514 1.6
BROADCASTING & PUBLISHING
Reuters Group PLC ......................................... UK 272,000 3,111,037 1.6
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 182,000 2,400,735 1.2
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,336,613 1.2
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 11,746 2,087,499 1.1
WIRELESS COMMUNICATIONS
Koninklijke Ahold N.V. .................................... NETH 59,119 1,899,090 1.0
RETAILERS-FOOD
Ezaki Glico Co., Ltd. ..................................... JPN 270,000 1,536,776 0.8
RETAILERS-FOOD
Telstra Corp. Ltd. - Installment Receipts ................. AUSL 437,200 1,123,810 0.6
TELEPHONE NETWORKS
Vendex International N.V. ................................. NETH 62 2,333 --
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. JPN 44 414 --
RETAILERS-APPAREL
------------
44,285,302
------------
Consumer Non-Durables (10.8%)
Nestle S.A. - Registered .................................. SWTZ 1,881 4,028,587 2.1
FOOD
Diageo PLC ................................................ UK 278,000 3,295,709 1.7
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 47,900 2,538,700 1.3
TEXTILES & APPAREL
Foster's Brewing Group Ltd. ............................... AUSL 970,600 2,290,004 1.2
BEVERAGES - ALCOHOLIC
Asahi Breweries Ltd. ...................................... JPN 180,000 2,278,151 1.2
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 35,800 2,203,158 1.1
HOUSEHOLD PRODUCTS
United Biscuits (Holdings) PLC ............................ UK 509,000 2,039,740 1.0
FOOD
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-32
<PAGE> 953
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Amway Japan Ltd. .......................................... JPN 125,000 $ 1,328,922 0.7
HOUSEHOLD PRODUCTS
South African Breweries Ltd. .............................. SAFR 44,200 910,878 0.5
BEVERAGES - ALCOHOLIC
------------
20,913,849
------------
Energy (9.8%)
Viag AG ................................................... GER 5,792 3,989,388 2.1
ELECTRICAL & GAS UTILITIES
Petroleum Geo-Services ASA-/- ............................. NOR 100,600 3,139,030 1.6
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 412,000 2,903,056 1.5
OIL
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 147,900 2,736,150 1.4
GAS PRODUCTION & DISTRIBUTION
Burmah Castrol PLC ........................................ UK 130,000 2,322,591 1.2
OIL
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 315,300 2,055,610 1.1
OIL
Coflexip - ADR{\/} ........................................ FR 30,260 1,849,643 0.9
OIL
------------
18,995,468
------------
Health Care (8.9%)
Roche Holding AG .......................................... SWTZ 409 4,019,567 2.1
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 535,095 3,987,079 2.1
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,945 3,239,100 1.7
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 97,313 1,990,091 1.0
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 70,000 1,868,084 1.0
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR-/- {c} {\/} ................ HGRY 23,400 1,866,150 1.0
PHARMACEUTICALS
------------
16,970,071
------------
Capital Goods (4.6%)
Nokia Oyj "A" ............................................. FIN 52,600 3,889,325 2.0
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 14,440 2,940,455 1.5
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 90,000 2,050,336 1.1
OFFICE EQUIPMENT
------------
8,880,116
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-33
<PAGE> 954
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.6%)
Volvo AB "B" .............................................. SWDN 106,320 $ 3,168,057 1.6
AUTOMOBILES
Mabuchi Motor Co., Ltd. ................................... JPN 31,000 1,972,951 1.0
AUTOMOBILES
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 1,962,573 1.0
AUTO PARTS
------------
7,103,581
------------
Technology (1.6%)
Baan Company N.V.-/- {\/} ................................. NETH 42,920 1,534,390 0.8
SOFTWARE
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 60,000 1,501,410 0.8
COMPUTERS & PERIPHERALS
------------
3,035,800
------------
Materials/Basic Industry (1.3%)
Akzo Nobel N.V. ........................................... NETH 11,570 2,573,767 1.3
------------
CHEMICALS
Multi-Industry/Miscellaneous (0.6%)
Shanghai Industrial Holdings Ltd. ......................... HK 486,000 1,144,821 0.6
MULTI-INDUSTRY
Vedior .................................................... NETH 61 1,731 --
MISCELLANEOUS
------------
1,146,552
------------ -----
TOTAL EQUITY INVESTMENTS (cost $161,426,444) ................ 186,917,730 96.4
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%,
collateralized by $10,640,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $10,653,300,
including accrued interest) (cost $10,444,000) .......... 10,444,000 5.4
------------ -----
TOTAL INVESTMENTS (cost $171,870,444) * .................... 197,361,730 101.8
Other Assets and Liabilities ................................ (3,584,545) (1.8)
------------ -----
NET ASSETS .................................................. $193,777,185 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $172,933,198 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 35,868,141
Unrealized depreciation: (11,439,609)
-------------
Net unrealized appreciation: $ 24,428,532
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-34
<PAGE> 955
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
----------------------------
SHORT-TERM
&
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY OTHER TOTAL
- -------------------------------------- ------------- ----- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.7 6.7
Brazil (BRZL/BRL) .................... 2.6 2.6
Canada (CAN/CAD) ..................... 1.1 1.1
Finland (FIN/FIM) .................... 2.0 2.0
France (FR/FRF) ...................... 5.0 5.0
Germany (GER/DEM) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 1.6 1.6
Hungary (HGRY/HUF) ................... 1.0 1.0
India (IND/INR) ...................... 0.9 0.9
Italy (ITLY/ITL) ..................... 3.8 3.8
Japan (JPN/JPY) ...................... 7.4 7.4
Korea (KOR/KRW) ...................... 0.2 0.2
Luxembourg (LUX/LUF) ................. 0.9 0.9
Netherlands (NETH/NLG) ............... 7.2 7.2
New Zealand (NZ/NZD) ................. 2.0 2.0
Norway (NOR/NOK) ..................... 1.6 1.6
Portugal (PORT/PTE) .................. 1.8 1.8
Singapore (SING/SGD) ................. 0.4 0.4
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 6.8 6.8
Switzerland (SWTZ/CHF) ............... 10.5 10.5
United Kingdom (UK/GBP) .............. 30.3 30.3
United States (US/USD) ............... 3.6 3.6
----- ----- -----
Total ............................... 96.4 3.6 100.0
----- ----- -----
----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,777,185.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- ------------
<S> <C> <C> <C> <C>
British Pounds.......................... 5,170,795 0.59400 7/20/98 $ 48,055
British Pounds.......................... 4,771,542 0.60196 10/2/98 46,083
Deutsche Marks.......................... 2,198,262 1.74900 8/26/98 60,171
French Francs........................... 5,057,106 5.94360 8/6/98 74,464
Japanese Yen............................ 3,616,113 133.29000 7/7/98 135,106
Japanese Yen............................ 727,347 130.50000 8/6/98 38,937
Japanese Yen............................ 7,279,847 131.10000 8/12/98 347,918
Swiss Francs............................ 5,655,612 1.47700 9/21/98 96,571
-------------- ------------
Total Contracts to Sell (Receivable
amount $35,323,929).................. 34,476,624 847,305
-------------- ------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 17.79%.
Total Open Forward Foreign Currency Contracts................................... $ 847,305
------------
------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-35
<PAGE> 956
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,870,444) (Note 1)....................... $197,361,730
U.S. currency................................................................. $ 42
Foreign currencies (cost $43,627)............................................. 43,621 43,663
-------
Receivable for open forward foreign currency contracts (Note 1)........................ 847,305
Dividends and dividend withholding tax reclaims receivable............................. 611,952
Receivable for Fund shares sold........................................................ 44,949
Interest receivable.................................................................... 1,654
------------
Total assets......................................................................... 198,911,253
------------
Liabilities:
Payable for Fund shares repurchased.................................................... 4,495,643
Payable for securities purchased....................................................... 167,496
Payable for investment management and administration fees (Note 2)..................... 157,585
Payable for transfer agent fees (Note 2)............................................... 87,461
Payable for service and distribution expenses (Note 2)................................. 84,627
Payable for printing and postage expenses.............................................. 61,636
Payable for custodian fees............................................................. 29,469
Payable for professional fees.......................................................... 25,276
Payable for Trustees' fees and expenses (Note 2)....................................... 3,505
Payable for registration and filing fees............................................... 3,270
Payable for fund accounting fees (Note 2).............................................. 2,807
Other accrued expenses................................................................. 15,293
------------
Total liabilities.................................................................... 5,134,068
------------
Net assets............................................................................... $193,777,185
------------
------------
Class A:
Net asset value and redemption price per share ($143,957,678 DIVIDED BY 16,887,447 shares
outstanding)............................................................................ $ 8.52
------------
------------
Maximum offering price per share (100/94.5 of $8.52) *................................... $ 9.02
------------
------------
Class B:+
Net asset value and offering price per share ($49,567,348 DIVIDED BY 6,072,995 shares
outstanding)............................................................................ $ 8.16
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($252,159
DIVIDED BY 29,471 shares outstanding)................................................... $ 8.56
------------
------------
Net assets consist of:
Paid in capital (Note 4)............................................................... $147,699,757
Undistributed net investment income.................................................... 736,445
Accumulated net realized gain on investments and foreign currency transactions......... 19,005,373
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................ 844,324
Net unrealized appreciation of investments............................................. 25,491,286
------------
Total -- representing net assets applicable to capital shares outstanding................ $193,777,185
------------
------------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-36
<PAGE> 957
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $288,274)............................... $ 2,361,211
Interest income............................................................................ 322,812
Securities lending income.................................................................. 171,562
-----------
Total investment income.................................................................. 2,855,585
-----------
Expenses:
Investment management and administration fees (Note 2)..................................... 996,492
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 261,811
Class B..................................................................... 270,170 531,981
-----------
Transfer agent fees (Note 2)............................................................... 325,600
Custodian fees............................................................................. 81,050
Professional Fees.......................................................................... 55,029
Registration and filing fees............................................................... 51,200
Printing and postage expenses.............................................................. 42,250
Fund accounting fees (Note 2).............................................................. 27,640
Trustees' fees and expenses (Note 2)....................................................... 6,516
Other expenses (Note 1).................................................................... 8,219
-----------
Total expenses before reductions......................................................... 2,125,977
-----------
Expense reductions (Note 5)............................................................ (6,837)
-----------
Total net expenses....................................................................... 2,119,140
-----------
Net investment income........................................................................ 736,445
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 13,546,039
Net realized gain on foreign currency transactions............................ 2,112,549
-----------
Net realized gain during the period...................................................... 15,658,588
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (710,893)
Net change in unrealized appreciation of investments.......................... 8,535,197
-----------
Net unrealized appreciation during the period............................................ 7,824,304
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 23,482,892
-----------
Net increase in net assets resulting from operations......................................... $24,219,337
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-37
<PAGE> 958
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.04 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.81 0.69 0.84 0.32 (0.82) 2.78
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.85 0.72 0.83 0.35 (0.86) 2.81
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- -- (0.20) -- --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (1.97) (0.99) (0.44) (0.99) --
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.52 $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.08%(b) 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 143,958 $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.89%(a) 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.88%(a) 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.90%(a) 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.91%(a) 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 51%(a) 72% 74% 75% 96% 90%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-38
<PAGE> 959
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.79 0.65 0.83 0.32 (0.82) 2.25
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.80 0.62 0.76 0.28 (0.92) 2.24
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- (0.04) --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- -- (0.20) -- --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (1.94) (0.99) (0.44) (0.99) --
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.16 $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.72%(b) 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 49,567 $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.24%(a) (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ 0.23%(a) (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.55%(a) 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.56%(a) 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 51%(a) 72% 74% 75% 96% 90%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-39
<PAGE> 960
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ------------------------ DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995
-------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.72 $ 9.01 $ 9.11 $ 8.49
-------------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.79 0.65 0.87 1.03
-------------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. 0.84 0.72 0.89 1.06
-------------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- -- (0.20)
-------------- ----------- ----------- -------------
Total distributions................. -- (2.01) (0.99) (0.44)
-------------- ----------- ----------- -------------
Net asset value, end of period.......... $ 8.56 $ 7.72 $ 9.01 $ 9.11
-------------- ----------- ----------- -------------
-------------- ----------- ----------- -------------
Total investment return (c)............. 10.75 %(b) 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 252 $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 1.24 %(a) 0.70% 0.21% 0.59%(a)
Without expense reductions............ 1.23 %(a) 0.57% 0.10% 0.51%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.55 %(a) 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.56 %(a) 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 51 %(a) 72% 74% 75%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-40
<PAGE> 961
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------- -----------------
Decrease in net assets
Operations:
Net investment income......................................................... $ 736,445 $ 427,766
Net realized gain on investments and foreign currency transactions............ 15,658,588 38,105,893
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies........................................ (710,893) 286,534
Net change in unrealized appreciation (depreciation) of investments........... 8,535,197 (14,668,685)
---------------- -----------------
Net increase in net assets resulting from operations........................ 24,219,337 24,151,508
---------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.................................................... -- (425,877)
From net realized gain on investments......................................... -- (29,789,043)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... -- (10,955,953)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.................................................... -- (1,888)
From net realized gain on investments......................................... -- (56,864)
---------------- -----------------
Total distributions......................................................... -- (41,229,625)
---------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 479,246,906 663,662,225
Decrease from capital shares repurchased...................................... (514,139,082) (703,298,069)
---------------- -----------------
Net decrease from capital share transactions................................ (34,892,176) (39,635,844)
---------------- -----------------
Total decrease in net assets.................................................... (10,672,839) (56,713,961)
Net assets:
Beginning of period........................................................... 204,450,024 261,163,985
---------------- -----------------
End of period *............................................................... $ 193,777,185 $ 204,450,024
---------------- -----------------
---------------- -----------------
* Includes undistributed net investment income of.............................. $ 736,445 $ --
---------------- -----------------
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-41
<PAGE> 962
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM International Growth Fund (the "Fund" formerly, GT Global International
Growth Fund), is a separate series of AIM Growth Series (the "Trust" formerly,
G.T. Global Growth Series ). The Trust is organized as a Delaware business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The Trust has
eight series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-42
<PAGE> 963
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $21,489,285
were on loan to brokers. The loans were secured by cash collateral of
$22,551,564, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $171,562.
FS-43
<PAGE> 964
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $1,201,545 with a weighted average interest rate of 6.26%. Interest expense
for the period ended June 30, 1998 was $2,297, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $2,985 and $2,625, respectively, of such
sales charges. Purchases of Class A shares exceeding $500,000 may be subject to
a contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for the period ended
June 30, 1998. AIM Distributors also
FS-44
<PAGE> 965
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $12,093 and $118,618,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $48,153,983 and $72,265,377, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
FS-45
<PAGE> 966
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 40,426,588 $335,523,591 40,276,923 $372,306,238
Shares issued in connection with reinvestment of
distributions................................................ -- -- 3,306,465 24,897,200
----------- ------------ ----------- ------------
40,426,588 335,523,591 43,583,388 397,203,438
Shares repurchased............................................. (42,859,903) (357,980,924) (46,298,211) (433,072,839)
----------- ------------ ----------- ------------
Net decrease................................................... (2,433,315) $(22,457,333) (2,714,823) $(35,869,401)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
CLASS B
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 15,955,626 $125,312,223 25,433,444 $233,714,318
Shares issued in connection with reinvestment of
distributions................................................ -- -- 1,311,193 9,480,349
----------- ------------ ----------- ------------
15,955,626 125,312,223 26,744,637 243,194,667
Shares repurchased............................................. (17,489,434) (137,511,761) (26,525,397) (246,915,890)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (1,533,808) $(12,199,538) 219,240 $ (3,721,223)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,272,018 $ 18,411,092 2,419,305 $ 23,205,242
Shares issued in connection with reinvestment of
distributions................................................ -- -- 7,757 58,878
----------- ------------ ----------- ------------
2,272,018 18,411,092 2,427,062 23,264,120
Shares repurchased............................................. (2,279,344) (18,646,397) (2,441,431) (23,309,340)
----------- ------------ ----------- ------------
Net decrease................................................... (7,326) $ (235,305) (14,369) $ (45,220)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $6,837 under these arrangements.
FS-46
<PAGE> 967
GT GLOBAL INTERNATIONAL GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global International Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the 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 the 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, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global International Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-47
<PAGE> 968
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.7%)
HSBC Holdings PLC ......................................... HK 180,100 $ 4,439,453 2.2
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................. SWDN 772,120 4,367,701 2.1
OTHER FINANCIAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,132,897 2.0
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 405,000 4,076,601 2.0
INSURANCE - MULTI-LINE
M & G Group PLC ........................................... UK 175,000 4,044,540 2.0
INVESTMENT MANAGEMENT
ForeningsSparbanken AB .................................... SWDN 145,230 3,302,595 1.6
BANKS-REGIONAL
Abbey National PLC ........................................ UK 182,400 3,267,626 1.6
BANKS-SUPER REGIONAL
ING Groep N.V. ............................................ NETH 76,097 3,205,744 1.6
OTHER FINANCIAL
National Westminster Bank PLC ............................. UK 162,000 2,692,020 1.3
BANKS-MONEY CENTER
Lloyds TSB Group PLC ...................................... UK 196,000 2,532,874 1.2
BANKS-REGIONAL
Unidanmark AS "A" ......................................... DEN 34,300 2,518,341 1.2
BANKS-REGIONAL
Axa - UAP ................................................. FR 32,050 2,479,968 1.2
INSURANCE - MULTI-LINE
Nichiei Co., Ltd. ......................................... JPN 22,800 2,428,506 1.2
OTHER FINANCIAL
Schroders PLC ............................................. UK 76,000 2,387,323 1.2
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} ........................ IND 125,000 2,234,375 1.1
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 6,554 2,037,187 1.0
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 35,379 1,880,492 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 1,235,000 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ...................................................... THAI 320,000 588,800 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 84,910 448,345 0.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ........................ SWTZ 275 397,645 0.2
BANKS-MONEY CENTER
------------
54,698,033
------------
Services (20.0%)
EMI Group PLC ............................................. UK 578,000 4,821,412 2.4
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 1,279,000 4,274,721 2.1
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-48
<PAGE> 969
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Italia SpA ........................................ ITLY 609,900 $ 3,903,636 1.9
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 725,500 3,515,509 1.7
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 305,000 3,330,460 1.6
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. .................................... NETH 117,919 3,077,109 1.5
RETAILERS-FOOD
EMAP PLC .................................................. UK 180,000 2,682,266 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 208,000 2,619,639 1.3
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,491,763 1.2
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 370,000 2,390,115 1.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ........................ PORT 46,400 2,153,565 1.0
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 17,619 1,877,764 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................. NETH 31,755 1,752,853 0.9
RETAILERS-OTHER
Vodafone Group PLC ........................................ UK 165,928 1,196,098 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 437,200 922,880 0.4
TELEPHONE NETWORKS
Fast Retailing Co., Ltd. .................................. JPN 44 705 --
RETAILERS-APPAREL
------------
41,010,495
------------
Energy (10.5%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 197,900 4,724,863 2.3
GAS PRODUCTION & DISTRIBUTION
Shell Transport & Trading Co., PLC ........................ UK 478,000 3,453,530 1.7
OIL
Viag AG ................................................... GER 5,792 3,120,627 1.5
ELECTRICAL & GAS UTILITIES
Total S.A. "B" ............................................ FR 28,580 3,110,393 1.5
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 47,990 3,022,967 1.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 355,200 2,029,542 1.0
OIL
Coflexip - ADR{\/} ........................................ FR 35,230 1,955,265 1.0
ENERGY EQUIPMENT & SERVICES
------------
21,417,187
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-49
<PAGE> 970
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (8.7%)
Roche Holding AG .......................................... SWTZ 543 $ 5,392,449 2.6
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,709 2,773,059 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 23,400 2,688,075 1.3
PHARMACEUTICALS
Schering AG ............................................... GER 26,700 2,575,730 1.3
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 80,000 2,280,460 1.1
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 115,313 1,997,573 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 21,368 28,947 --
PHARMACEUTICALS
------------
17,736,293
------------
Materials/Basic Industry (7.1%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 829,400 4,060,647 2.0
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- ............................ SWTZ 31,880 3,797,837 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 15,210 2,623,035 1.3
CHEMICALS
BOC Group PLC ............................................. UK 136,000 2,235,402 1.1
CHEMICALS
CRH PLC ................................................... UK 138,600 1,604,483 0.8
BUILDING MATERIALS & COMPONENTS
------------
14,321,404
------------
Consumer Non-Durables (6.0%)
Asahi Breweries Ltd. ...................................... JPN 210,000 3,057,471 1.5
BEVERAGES - ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 1,771 2,654,196 1.3
FOOD
Amway Japan Ltd. .......................................... JPN 125,000 2,394,636 1.2
HOUSEHOLD PRODUCTS
Diageo PLC ................................................ UK 235,000 2,158,990 1.0
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 42,000 1,036,184 0.5
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 24,500 1,013,985 0.5
HOUSEHOLD PRODUCTS
------------
12,315,462
------------
Capital Goods (4.9%)
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 31,500 4,003,905 2.0
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 120,000 2,795,402 1.4
OFFICE EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-50
<PAGE> 971
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Nokia AB "A" .............................................. FIN 28,300 $ 1,979,602 1.0
TELECOM EQUIPMENT
Kurita Water Industries Ltd. .............................. JPN 95,000 968,199 0.5
ENVIRONMENTAL
------------
9,747,108
------------
Multi-Industry/Miscellaneous (3.3%)
BBA Group PLC ............................................. UK 395,000 2,646,305 1.3
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 686,000 2,549,758 1.2
MULTI-INDUSTRY
Hutchison Whampoa ......................................... HK 279,000 1,749,939 0.8
MULTI-INDUSTRY
------------
6,946,002
------------
Technology (3.3%)
Cap Gemini N.V. ........................................... NETH 69,120 2,356,054 1.1
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 88,000 2,211,801 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................. NETH 65,360 2,156,880 1.0
SOFTWARE
Koei Co., Ltd. ............................................ JPN 43,300 205,716 0.1
SOFTWARE
------------
6,930,451
------------
Consumer Durables (1.9%)
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 2,436,432 1.2
AUTO PARTS
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,388,527 0.7
HOUSING
------------
3,824,959
------------ -----
TOTAL EQUITY INVESTMENTS (cost $171,991,305) ................ 188,947,394 92.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-51
<PAGE> 972
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,795,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $20,814,506,
including accrued interest).
(cost $20,403,000) ...................................... $ 20,403,000 10.0
------------ -----
TOTAL INVESTMENTS (cost $192,394,305) * .................... 209,350,394 102.4
Other Assets and Liabilities ................................ (4,900,370) (2.4)
------------ -----
NET ASSETS .................................................. $204,450,024 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $193,457,059 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 27,995,828
Unrealized depreciation: (12,102,493)
-------------
Net unrealized appreciation: $ 15,893,335
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-52
<PAGE> 973
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.7 5.7
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.2 1.2
Finland (FIN/FIM) .................... 1.0 1.0
France (FR/FRF) ...................... 6.6 6.6
Germany (GER/DEM) .................... 2.8 2.8
Hong Kong (HK/HKD) ................... 4.9 4.9
Hungary (HGRY/HUF) ................... 1.3 1.3
India (IND/INR) ...................... 1.1 1.1
Italy (ITLY/ITL) ..................... 2.9 2.9
Japan (JPN/JPY) ...................... 9.3 9.3
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 2.0 2.0
Netherlands (NETH/NLG) ............... 7.9 7.9
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.5 1.5
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 4.7 4.7
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... 7.6 7.6
------ --- ----------
Total ............................... 92.4 7.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $204,450,024.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,904,418 1.72492 2/23/98 $ 153,742
French Francs........................... 5,079,036 5.72800 2/6/98 245,685
French Francs........................... 1,998,309 5.77490 2/6/98 79,649
Japanese Yen............................ 4,528,736 120.70000 1/7/98 367,702
Japanese Yen............................ 770,321 118.82300 2/4/98 71,267
Japanese Yen............................ 8,992,174 122.40000 2/12/98 533,970
Swiss Francs............................ 5,872,843 1.42180 3/19/98 105,494
-------------- --------------
Total Contracts to Sell (Receivable
amount $32,703,346).................. 31,145,837 1,557,509
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.23%.
Total Open Forward Foreign Currency Contracts................................... $ 1,557,509
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-53
<PAGE> 974
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,991,305) (Note 1).......................... $188,947,394
Repurchase agreement, at value and cost................................................... 20,403,000
U.S. currency.................................................................. $ 518
Foreign currencies (cost $2,476,057)........................................... 2,469,130 2,469,648
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 1,557,509
Receivable for securities sold............................................................ 409,819
Dividends and dividend withholding tax reclaims receivable................................ 280,212
Receivable for Fund shares sold........................................................... 36,825
Interest receivable....................................................................... 3,502
-----------
Total assets............................................................................ 214,107,909
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 8,454,213
Payable for securities purchased.......................................................... 746,544
Payable for investment management and administration fees (Note 2)........................ 164,822
Payable for service and distribution expenses (Note 2).................................... 88,263
Payable for printing and postage expenses................................................. 67,943
Payable for transfer agent fees (Note 2).................................................. 45,803
Payable for professional fees............................................................. 32,257
Payable for registration and filing fees.................................................. 17,314
Payable for custodian fees................................................................ 16,939
Payable for Trustees' fees and expenses (Note 2).......................................... 5,340
Payable for fund accounting fees (Note 2)................................................. 2,463
Other accrued expenses.................................................................... 15,984
-----------
Total liabilities....................................................................... 9,657,885
-----------
Net assets.................................................................................. $204,450,024
-----------
-----------
Class A:
Net asset value and redemption price per share ($148,143,474 DIVIDED BY 19,320,762 shares
outstanding)............................................................................... $ 7.67
-----------
-----------
Maximum offering price per share (100/95.25 of $7.67) *..................................... $ 8.05
-----------
-----------
Class B:+
Net asset value and offering price per share ($56,022,575 DIVIDED BY 7,606,803 shares
outstanding)............................................................................... $ 7.36
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($283,975 DIVIDED
BY 36,797 shares outstanding).............................................................. $ 7.72
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $182,591,933
Accumulated net realized gain on investments and foreign currency transactions............ 3,346,785
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 1,555,217
Net unrealized appreciation of investments................................................ 16,956,089
-----------
Total -- representing net assets applicable to capital shares outstanding................... $204,450,024
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-54
<PAGE> 975
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $720,333).............................. $ 4,147,307
Interest income........................................................................... 693,646
-----------
Total investment income................................................................. 4,840,953
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,309,873
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 607,400
Class B.................................................................... 625,899 1,233,299
-----------
Transfer agent fees (Note 2).............................................................. 645,736
Custodian fees............................................................................ 199,701
Professional fees......................................................................... 82,923
Registration and filing fees.............................................................. 78,995
Fund accounting fees (Note 2)............................................................. 59,416
Printing and postage expenses............................................................. 42,984
Trustees' fees and expenses (Note 2)...................................................... 13,387
Other expenses (Note 1)................................................................... 44,923
-----------
Total expenses before reductions........................................................ 4,711,237
-----------
Expense reductions (Notes 1 & 5)...................................................... (298,050)
-----------
Total net expenses...................................................................... 4,413,187
-----------
Net investment income....................................................................... 427,766
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 32,730,836
Net realized gain on foreign currency transactions........................... 5,375,057
-----------
Net realized gain during the year....................................................... 38,105,893
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 286,534
Net change in unrealized appreciation of investments......................... (14,668,685)
-----------
Net unrealized depreciation during the year............................................. (14,382,151)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 23,723,742
-----------
Net increase in net assets resulting from operations........................................ $24,151,508
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-55
<PAGE> 976
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 427,766 $ (860,684)
Net realized gain on investments and foreign currency transactions....... 38,105,893 37,931,580
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies....................................... 286,534 205,239
Net change in unrealized depreciation of investments..................... (14,668,685) (7,070,173)
------------- -------------
Net increase in net assets resulting from operations................... 24,151,508 30,205,962
------------- -------------
Class A:
Distributions to shareholders:
From net investment income............................................... (425,877) --
From net realized gain on investments.................................... (29,789,043) (20,343,820)
Class B:
Distributions to shareholders:
From net investment income............................................... -- --
From net realized gain on investments.................................... (10,955,953) (6,672,791)
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (1,888) --
From net realized gain on investments.................................... (56,864) (46,941)
------------- -------------
Total distributions.................................................... (41,229,625) (27,063,552)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 663,662,225 1,289,311,201
Decrease from capital shares repurchased................................. (703,298,069) (1,410,140,865)
------------- -------------
Net decrease from capital share transactions........................... (39,635,844) (120,829,664)
------------- -------------
Total decrease in net assets............................................... (56,713,961) (117,687,254)
Net assets:
Beginning of year........................................................ 261,163,985 378,851,239
------------- -------------
End of year *............................................................ $204,450,024 $ 261,163,985
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-56
<PAGE> 977
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.69 0.84 0.32 (0.82) 2.78
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.72 0.83 0.35 (0.86) 2.81
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.97) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-57
<PAGE> 978
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.65 0.83 0.32 (0.82) 2.25
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.62 0.76 0.28 (0.92) 2.24
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- -------------
Total distributions................. (1.94) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-58
<PAGE> 979
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.01 $ 9.11 $ 8.49
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.65 0.87 1.03
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.72 0.89 1.06
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- (0.20)
---------- ---------- -------------
Total distributions................. (2.01) (0.99) (0.44)
---------- ---------- -------------
Net asset value, end of period.......... $ 7.72 $ 9.01 $ 9.11
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.70% 0.21% 0.59%(a)
Without expense reductions............ 0.57% 0.10% 0.51%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 72% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-59
<PAGE> 980
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global International Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
FS-60
<PAGE> 981
GT GLOBAL INTERNATIONAL GROWTH FUND
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$13,985,826 were on loan to brokers. The loans were secured by cash collateral
of $14,709,765, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $277,743. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
FS-61
<PAGE> 982
GT GLOBAL INTERNATIONAL GROWTH FUND
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $3,563,759 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997 was $18,147, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $11,166
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. During the year ended December
31, 1997, GT Global collected CDSC's in the amount of $6,515. GT Global also
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $351,900. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer
FS-62
<PAGE> 983
GT GLOBAL INTERNATIONAL GROWTH FUND
agent services, GT Services receives an annual maintenance fee of $17.50 per
account, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. GT
Services also is reimbursed by the Fund for its out-of-pocket expenses for such
items as postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $157,702,649 and $236,135,186, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 40,276,923 $ 372,306,238 122,327,179 $ 1,141,723,541
Shares issued in connection with
reinvestment of distributions......... 3,306,465 24,897,200 1,912,490 16,848,644
--------------- ------------------ ---------------- --------------------
43,583,388 397,203,438 124,239,669 1,158,572,185
Shares repurchased...................... (46,298,211) (433,072,839) (136,198,803) (1,274,970,792)
--------------- ------------------ ---------------- --------------------
Net decrease............................ (2,714,823) $ (35,869,401) (11,959,134) $ (116,398,607)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,433,444 $ 233,714,318 11,345,619 $ 103,852,840
Shares issued in connection with
reinvestment of distributions......... 1,311,193 9,480,349 678,796 5,819,941
--------------- ------------------ ---------------- --------------------
26,744,637 243,194,667 12,024,415 109,672,781
Shares repurchased...................... (26,525,397) (246,915,890) (12,451,843) (114,133,394)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. 219,240 $ (3,721,223) (427,428) $ (4,460,613)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,419,305 $ 23,205,242 2,233,829 $ 21,033,137
Shares issued in connection with
reinvestment of distributions......... 7,757 58,878 3,723 33,098
--------------- ------------------ ---------------- --------------------
2,427,062 23,264,120 2,237,552 21,066,235
Shares repurchased...................... (2,441,431) (23,309,340) (2,228,201) (21,036,679)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. (14,369) $ (45,220) 9,351 $ 29,556
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $20,307 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2321 per share (representing an approximate total of
$4,876,007). The total amount of taxes paid by the Fund to such countries was
approximately $.0343 per share (representing an approximate total of $720,333).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$26,594,230 as a capital gain dividend for the fiscal year ended December 31,
1997.
FS-63
<PAGE> 984
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (18.3%)
Ito-Yokado Co., Ltd. ............................................... 65,000 $ 3,069,719 4.5
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ........................................ 1,048,200 2,882,550 4.2
RETAILERS-OTHER
Yoshinoya D&C Co., Ltd. ............................................ 200 1,735,734 2.5
RESTAURANTS
Secom .............................................................. 26,000 1,506,184 2.2
CONSUMER SERVICES
Fuji Photo Film .................................................... 31,000 1,082,881 1.6
CONSUMER SERVICES
Ezaki Glico Co., Ltd. .............................................. 150,000 853,764 1.3
RETAILERS-FOOD
Fast Retailing Co., Ltd. ........................................... 87,000 817,965 1.2
RETAILERS-APPAREL
Tsutsumi Jewelry Co., Ltd. ......................................... 41,800 553,222 0.8
RETAILERS-OTHER
------------
12,502,019
------------
Consumer Durables (15.9%)
Sony Corp. ......................................................... 42,000 3,629,855 5.3
CONSUMER ELECTRONICS
Bridgestone Corp. .................................................. 127,000 3,012,656 4.4
AUTO PARTS
Citizen Watch Co., Ltd. ............................................ 325,000 2,691,292 3.9
CONSUMER ELECTRONICS
Hitachi Ltd. ....................................................... 240,000 1,570,840 2.3
CONSUMER ELECTRONICS
------------
10,904,643
------------
Health Care (11.8%)
Takeda Chemical Industries{z} ...................................... 190,000 5,070,514 7.4
PHARMACEUTICALS
Yamanouchi Pharmaceutical .......................................... 105,000 2,194,619 3.2
PHARMACEUTICALS
Taisho Pharmaceuticals ............................................. 43,000 805,453 1.2
PHARMACEUTICALS
------------
8,070,586
------------
Technology (9.9%)
Matsushita-Kotobuki Electronics Ltd. ............................... 110,000 2,752,586 4.0
COMPUTERS & PERIPHERALS
NEC Corp. .......................................................... 230,000 2,150,792 3.1
SEMICONDUCTORS
Murata Manufacturing Co., Ltd. ..................................... 58,000 1,887,611 2.8
INSTRUMENTATION & TEST
------------
6,790,989
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-64
<PAGE> 985
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Finance (7.8%)
Nichiei Co., Ltd. .................................................. 47,500 $ 3,242,930 4.7
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................ 154,000 991,249 1.5
OTHER FINANCIAL
Jafco Co., Ltd. .................................................... 22,000 588,703 0.9
INVESTMENT MANAGEMENT
Kokusai Securities Co., Ltd. ....................................... 47,000 465,683 0.7
SECURITIES BROKER
------------
5,288,565
------------
Capital Goods (7.2%)
Canon, Inc. ........................................................ 140,000 3,189,412 4.7
OFFICE EQUIPMENT
Kurita Water Industries Ltd. ....................................... 80,000 948,868 1.4
ENVIRONMENTAL
Tsudakoma Corp. .................................................... 300,000 559,774 0.8
MACHINERY & ENGINEERING
Higashi Nihon House ................................................ 50,000 192,016 0.3
CONSTRUCTION
------------
4,890,070
------------
Consumer Non-Durables (4.6%)
Amway Japan Ltd.{z} ................................................ 125,000 1,328,923 1.9
HOUSEHOLD PRODUCTS
Asahi Breweries Ltd. ............................................... 100,000 1,265,640 1.9
BEVERAGES - ALCOHOLIC
Paris Miki, Inc. ................................................... 42,000 553,135 0.8
OTHER CONSUMER GOODS
------------
3,147,698
------------
Materials/Basic Industry (3.1%)
Sekisui Chemical Co., Ltd. ......................................... 285,000 1,463,441 2.1
CHEMICALS
Toyo Exterior ...................................................... 70,000 698,633 1.0
BUILDING MATERIALS & COMPONENTS
------------
2,162,074
------------ -----
TOTAL EQUITY INVESTMENTS (cost $69,791,818) .......................... 53,756,644 78.6
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Corporate Bonds (1.1%)
Japan (1.1%)
Higashi Nihon House Co., Convertible Bond, 0.375% due 4/30/00
(cost $1,089,201){=} ............................................ 1,150,000 768,260 1.1
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-65
<PAGE> 986
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF VALUE % OF NET
OPTIONS CONTRACTS (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY14,500 expire 9/98 ............. 80 $ 95,465 0.2
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY15,000 expire 9/98 ............. 40 66,536 0.1
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY13,500, expire 9/98 ............ 20 11,572 --
INDEX OPTIONS
------------ -----
TOTAL OPTIONS (cost $312,378) ........................................ 173,573 0.3
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENTS (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co., due July 1,
1998, for an effective yield of 5.70%, collateralized by $8,970,000
U.S. Treasury Bills, 5.75% due 12/31/98 (market value of collateral
is $8,981,213, including accrued interest). ...................... 8,805,000 12.9
Dated June 30, 1998, with BankAmerica Robertson Stephens, due July
1, 1998, for an effective yield of 5.20%, collateralized by
$3,010,000 U.S. Treasury Notes, 5.50% due 2/15/08 (market value of
the collateral is $3,102,296, including accrued interest). ....... 3,000,000 4.4
------------ -----
TOTAL REPURCHASE AGREEMENTS (cost $11,805,000) ....................... 11,805,000 17.3
------------ -----
TOTAL INVESTMENTS (cost $82,998,397) * .............................. 66,503,477 97.3
Other Assets and Liabilities ......................................... 1,874,670 2.7
------------ -----
NET ASSETS ........................................................... $ 68,378,147 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{=} Security denominated in Swiss Francs.
* For Federal income tax purposes, cost is $85,518,436 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,274,621
Unrealized depreciation: (21,289,580)
-------------
Net unrealized depreciation: $ (19,014,959)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-66
<PAGE> 987
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 727,985 131.03600 8/12/98 $ 5,118
-------------- --------------
Total Contracts to Buy (Payable amount
$722,867)............................ 727,985 5,118
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS A
PERCENTAGE OF NET ASSETS IS 1.06%.
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 16,015,664 131.00000 8/12/98 778,229
Japanese Yen............................ 16,015,664 131.10000 8/12/98 765,420
Japanese Yen............................ 12,375,740 131.03600 8/12/98 597,793
-------------- --------------
Total Contracts to Sell (Receivable
amount $46,548,510).................. 44,407,068 2,141,442
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 64.94%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 2,146,560
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURE CONTRACT OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
EXPIRATION NO. OF
DESCRIPTION DATE CONTRACTS CURRENCY MARKET VALUE
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$5,623,919)............................ 9/11/98 100 JPY $ 5,559,703
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-67
<PAGE> 988
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $71,193,397) (Note 1)............................. $54,698,477
Repurchase agreement, at value and cost..................................................... 11,805,000
U.S. currency.................................................................... $ 331
Foreign currencies (cost $293,481)............................................... 293,481 293,812
---------
Receivable for Fund shares sold............................................................. 3,622,288
Receivable for open forward foreign currency contracts, net (Note 1)........................ 2,146,560
Receivable for initial and variation margin (Note 1)........................................ 347,204
Receivable from A I M Advisors, Inc......................................................... 106,467
Dividends receivable........................................................................ 20,588
Interest receivable......................................................................... 2,310
-----------
Total assets.............................................................................. 73,042,706
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 4,184,044
Payable for securities purchased............................................................ 173,033
Payable for investment management and administration fees (Note 2).......................... 133,734
Payable for transfer agent fees (Note 2).................................................... 60,101
Payable for service and distribution expenses (Note 2)...................................... 30,734
Payable for registration and filing fees.................................................... 27,989
Payable for custodian fees.................................................................. 21,209
Payable for professional fees............................................................... 14,426
Payable for printing and postage expenses................................................... 12,900
Payable for Trustees' fees and expenses (Note 2)............................................ 3,651
Payable for fund accounting fees............................................................ 710
Other accrued expenses...................................................................... 2,028
-----------
Total liabilities......................................................................... 4,664,559
-----------
Net assets.................................................................................... $68,378,147
-----------
-----------
Class A:
Net asset value and redemption price per share ($43,219,218 DIVIDED BY 4,783,487 shares
outstanding)................................................................................. $ 9.04
-----------
-----------
Maximum offering price per share (100/94.5 of $9.04) *........................................ $ 9.57
-----------
-----------
Class B:
Net asset value and offering price per share ($23,237,481 DIVIDED BY 2,668,709 shares
outstanding)................................................................................. $ 8.71
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,921,448 DIVIDED
BY 210,451 shares outstanding)............................................................... $ 9.13
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $92,686,210
Accumulated net investment loss............................................................. (81,971)
Accumulated net realized loss on investments and foreign currency transactions.............. (9,808,762)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 2,141,806
Net unrealized depreciation of investments.................................................. (16,559,136)
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $68,378,147
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-68
<PAGE> 989
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 474,076
Dividend income (net of foreign withholding tax of $54,913)................................ 311,172
Securities lending income.................................................................. 41,203
----------
Total investment income.................................................................. 826,451
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 424,257
Transfer agent fees (Note 2)............................................................... 206,700
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 79,225
Class B...................................................................... 122,163 201,388
----------
Registration and filing fees............................................................... 53,200
Custodian fees............................................................................. 36,820
Printing and postage expenses.............................................................. 27,150
Audit fees................................................................................. 19,444
Legal fees................................................................................. 18,825
Fund accounting fees (Note 2).............................................................. 11,719
Trustees' fees and expenses (Note 2)....................................................... 6,516
Other expenses............................................................................. 22,913
----------
Total expenses before reductions......................................................... 1,028,932
----------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)................................... (106,467)
Expense reductions (Note 5)............................................................ (14,043)
----------
Total net expenses....................................................................... 908,422
----------
Net investment loss.......................................................................... (81,971)
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (9,001,687)
Net realized gain on foreign currency transactions............................. 5,062,824
----------
Net realized loss during the period...................................................... (3,938,863)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... (606,853)
Net change in unrealized depreciation of investments........................... 5,058,306
----------
Net unrealized appreciation during the period............................................ 4,451,453
----------
Net realized and unrealized gain on investments and foreign currencies....................... 512,590
----------
Net increase in net assets resulting from operations......................................... $ 430,619
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-69
<PAGE> 990
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss....................................................... $ (81,971) $ (801,848)
Net realized loss on investments and foreign currency transactions........ (3,938,863) (1,309,551)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (606,853) 630,890
Net change in unrealized appreciation (depreciation) of investments....... 5,058,306 (8,170,261)
------------- -------------
Net increase (decrease) in net assets resulting from operations......... 430,619 (9,650,770)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (110,678)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (61,407)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (71,057)
------------- -------------
Total distributions..................................................... -- (243,142)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 145,883,696 280,419,107
Decrease from capital shares repurchased.................................. (177,120,451) (267,455,599)
------------- -------------
Net increase (decrease) from capital share transactions................. (31,236,755) 12,963,508
------------- -------------
Total increase (decrease) in net assets..................................... (30,806,136) 3,069,596
Net assets:
Beginning of period....................................................... 99,184,283 96,114,687
------------- -------------
End of period *........................................................... $68,378,147 $99,184,283
------------- -------------
------------- -------------
* Includes accumulated net investment loss of............................ $ (81,971) $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-70
<PAGE> 991
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.00) * (0.08) (0.04) (0.04) (0.04) (0.14)
Net realized and unrealized gain
(loss) on investments................ 0.08 (0.70) (0.77) 0.26 0.79 3.05
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.08 (0.78) (0.81) 0.22 0.75 2.91
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.02) (0.43) (1.37) (0.21) --
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.04 $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 0.78%(b) (7.99)% (7.43)% 1.94% 6.56% 33.45%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 43,219 $ 44,583 $ 63,585 $ 111,105 $ 98,066 $ 88,487
Ratio of net investment loss to average
net assets
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.07)%(a) (0.61)% (0.40)% (0.40)% (0.32)% (0.3)%
Without expense reductions and/or
reimbursement........................ (0.35)%(a) (0.68)% (0.50)% (0.55)% (0.44)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.97%(a) 1.99% 1.84% 1.99% 1.91% 2.1%
Without expense reductions and/or
reimbursement........................ 2.25%(a) 2.06% 1.94% 2.14% 2.03% N/A
Portfolio turnover rate++++............. 38%(a) 58% 31% 67% 49% 104%
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) Calculated based upon average shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* Without reimbursement, the net investment income (loss) per share
would have been reduced (increased) by $0.01 for Class A, Class B, and
Advisor Class.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-71
<PAGE> 992
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.04) * (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain
(loss) on investments................ 0.08 (0.66) (0.75) 0.25 0.79 1.90
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.04 (0.80) (0.86) 0.13 0.66 1.72
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.02) (0.43) (1.37) (0.21) --
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.71 $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 0.46%(b) (8.42)% (8.05)% 1.20% 5.81% 17.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 23,237 $ 24,250 $ 32,116 $ 41,274 $ 27,355 $ 3,699
Ratio of net investment loss to average
net assets
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.72)%(a) (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%(a)
Without expense reductions and/or
reimbursement........................ (1.00)%(a) (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.62%(a) 2.64% 2.49% 2.64% 2.56% 2.7%(a)
Without expense reductions and/or
reimbursement........................ 2.90%(a) 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate++++............. 38%(a) 58% 31% 67% 49% 104%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) Calculated based upon average shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* Without reimbursement, the net investment income (loss) per share
would have been reduced (increased) by $0.01 for Class A, Class B, and
Advisor Class.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-72
<PAGE> 993
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ----------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D)
-------------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.05 $ 9.81 $ 11.02 $ 10.50
-------------- ---------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01* (0.01) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ 0.07 (0.73) (0.77) 1.89
-------------- ---------- ----------- -------------
Net increase (decrease) from
investment operations.............. 0.08 (0.74) (0.78) 1.89
-------------- ---------- ----------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.02) (0.43) (1.37)
-------------- ---------- ----------- -------------
Net asset value, end of period.......... $ 9.13 $ 9.05 $ 9.81 $ 11.02
-------------- ---------- ----------- -------------
-------------- ---------- ----------- -------------
Total investment return (c)............. 0.88 %(b) (7.54)% (7.14)% 18.14%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,921 $ 30,351 $ 413 $ 558
Ratio of net investment loss to average
net assets
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.28 %(a) (0.26)% (0.05)% (0.05)%(a)
Without expense reductions and/or
reimbursement........................ 0.00 %(a) (0.33)% (0.15)% (0.20)%(a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.62 %(a) 1.64% 1.49% 1.64%(a)
Without expense reductions and/or
reimbursement........................ 1.90 %(a) 1.71% 1.59% 1.79%(a)
Portfolio turnover rate++++............. 38 %(a) 58% 31% 67%(a)
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) Calculated based upon average shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
* Without reimbursement, the net investment income (loss) per share
would have been reduced (increased) by $0.01 for Class A, Class B, and
Advisor Class.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-73
<PAGE> 994
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Japan Growth Fund (the "Fund" formerly, GT Global Japan Growth Fund), is a
separate series of AIM Growth Series (the "Trust" formerly, G.T. Global Growth
Series). The Trust is organized as a Delaware business trust and is registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as a
diversified, open-end management investment company. The Trust has eight series
of shares in operation, each series corresponding to a distinct portfolio of
investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-74
<PAGE> 995
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counter party is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" 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. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At June 30,
1998, the Fund had segregated securities valued at $5,974,181 and cash of
$481,000 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of $3,290,562 were on loan to
brokers. The loans were secured by cash collateral of $3,404,600 received by the
Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
FS-75
<PAGE> 996
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. The
cash collateral is invested in a securities lending trust which consists of a
portfolio of high quality short duration securities whose average effective
duration is restricted to 120 days or less. For the period ended June 30, 1998,
the Fund received securities lending fees of $41,203.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and unrealized appreciation of securities held, or for excise tax on
income and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first served basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $4,412,250 with a weighted average interest rate of 6.33%. Interest expense
for the period ended June 30, 1998, was $3,103, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% of the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average net asset value of the
Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales are made. For the
FS-76
<PAGE> 997
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
period ended June 30, 1998, AIM Distributors and GT Global retained $1,034 and
$8,184, respectively, of such sales charges. Purchases of Class A shares
exceeding $500,000 may be subject to a contingent deferred sales charge ("CDSC")
upon redemption, in accordance with the Fund's current prospectus. GT Global
collected such CDSCs in the amount of $1,128 for the period ended June 30, 1998.
AIM Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $14,289 and $98,773,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, a Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $12,620,542 and $26,435,339, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
FS-77
<PAGE> 998
AIM JAPAN GROWTH FUND
(FORMERLY GT GLOBAL JAPAN GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
----------------------------------- -----------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,202,303 $ 118,957,767 18,880,969 $ 187,727,101
Shares issued in connection with
reinvestment of distributions......... -- -- 9,319 84,712
--------------- ------------------ --------------- ------------------
13,202,303 118,957,767 18,890,288 187,811,813
Shares repurchased...................... (13,392,072) (120,751,220) (20,434,942) (203,841,370)
--------------- ------------------ --------------- ------------------
Net decrease............................ (189,769) $ (1,793,453) (1,544,654) $ (16,029,557)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,914,601 $ 16,766,520 5,059,734 $ 49,439,098
Shares issued in connection with
reinvestment of distributions......... -- -- 4,729 41,630
--------------- ------------------ --------------- ------------------
1,914,601 16,766,520 5,064,463 49,480,728
Shares repurchased...................... (2,044,364) (17,839,618) (5,648,959) (54,991,415)
--------------- ------------------ --------------- ------------------
Net decrease............................ (129,763) $ (1,073,098) (584,496) $ (5,510,687)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,122,667 $ 10,159,409 4,149,684 $ 43,125,403
Shares issued in connection with
reinvestment of distributions......... -- -- 126 1,163
--------------- ------------------ --------------- ------------------
1,122,667 10,159,409 4,149,810 43,126,566
Shares repurchased...................... (4,265,077) (38,529,613) (839,053) (8,622,814)
--------------- ------------------ --------------- ------------------
Net increase (decrease)................. (3,142,410) $ (28,370,204) 3,310,757 $ 34,503,752
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $14,043 under these arrangements.
FS-78
<PAGE> 999
GT GLOBAL JAPAN GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Japan Growth Fund, a series of shares of beneficial interest of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the 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, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Japan Growth Fund, as of December 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-79
<PAGE> 1000
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Services (17.3%)
Ito-Yokado Co., Ltd. ................................................ 90,000 $ 4,586,207 4.6
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ......................................... 1,048,200 2,227,425 2.3
RETAILERS-OTHER
DDI Corp. ........................................................... 763 2,017,126 2.0
WIRELESS COMMUNICATIONS
Yoshinoya D&C Co., Ltd. ............................................. 200 1,823,755 1.8
RESTAURANTS
Secom ............................................................... 25,000 1,597,701 1.6
CONSUMER SERVICES
Fast Retailing Co., Ltd. ............................................ 99,000 1,585,517 1.6
RETAILERS-APPAREL
Aoyama Trading Co., Ltd. ............................................ 75,200 1,342,651 1.4
RETAILERS-APPAREL
Ezaki Glico Co., Ltd. ............................................... 167,000 1,078,782 1.1
RETAILERS-FOOD
Tsutsumi Jewelry Co., Ltd. .......................................... 31,800 389,885 0.4
RETAILERS-OTHER
Fujitsu Business Systems ............................................ 15,000 241,379 0.3
BUSINESS & PUBLIC SERVICES
Xebio Co., Ltd. ..................................................... 25,000 199,234 0.2
RETAILERS-APPAREL
Nitori Co. .......................................................... 400 2,066 --
RETAILERS-OTHER
-----------
17,091,728
-----------
Consumer Durables (11.7%)
Sony Corp. .......................................................... 55,000 4,888,889 4.9
CONSUMER ELECTRONICS
Bridgestone Corp. ................................................... 165,000 3,578,161 3.6
AUTO PARTS
Citizen Watch Co., Ltd. ............................................. 240,000 1,609,195 1.6
CONSUMER ELECTRONICS
Hitachi Ltd. ........................................................ 220,000 1,567,816 1.6
CONSUMER ELECTRONICS
-----------
11,644,061
-----------
Health Care (11.5%)
Takeda Chemical Industries{z} ....................................... 250,000 7,126,437 7.2
PHARMACEUTICALS
Yamanouchi Pharmaceutical ........................................... 135,000 2,896,552 2.9
PHARMACEUTICALS
Taisho Pharmaceuticals .............................................. 55,000 1,403,448 1.4
PHARMACEUTICALS
-----------
11,426,437
-----------
Technology (9.3%)
NEC Corp. ........................................................... 300,000 3,195,402 3.2
SEMICONDUCTORS
Matsushita-Kotobuki Electronics Ltd. ................................ 120,000 3,016,092 3.0
COMPUTERS & PERIPHERALS
Murata Manufacturing Co., Ltd. ...................................... 105,000 2,639,080 2.7
INSTRUMENTATION & TEST
Koei Co., Ltd. ...................................................... 87,400 415,234 0.4
SOFTWARE
-----------
9,265,808
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-80
<PAGE> 1001
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Capital Goods (7.7%)
Canon, Inc. ......................................................... 200,000 $ 4,659,004 4.7
OFFICE EQUIPMENT
Tsudakoma Corp. ..................................................... 494,000 1,082,636 1.1
MACHINERY & ENGINEERING
Kurita Water Industries Ltd. ........................................ 80,000 815,326 0.8
ENVIRONMENTAL
Shima Seiki Manufacturing Ltd. ...................................... 20,000 749,425 0.8
MACHINE TOOLS
Higashi Nihon House ................................................. 73,000 332,835 0.3
CONSTRUCTION
NEC System Integration & Construction ............................... 60 920 --
CONSTRUCTION
Japan Foundation Engineering ........................................ 90 503 --
CONSTRUCTION
-----------
7,640,649
-----------
Finance (7.5%)
Nichiei Co., Ltd. ................................................... 60,000 6,390,805 6.5
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................. 175,000 942,720 1.0
OTHER FINANCIAL
-----------
7,333,525
-----------
Consumer Non-Durables (4.6%)
Amway Japan Ltd. .................................................... 160,000 3,065,134 3.1
HOUSEHOLD PRODUCTS
Asahi Breweries Ltd. ................................................ 105,000 1,528,736 1.5
BEVERAGES - ALCOHOLIC
-----------
4,593,870
-----------
Materials/Basic Industry (1.8%)
Sekisui Chemical Co., Ltd. .......................................... 200,000 1,016,092 1.0
CHEMICALS
Toyo Exterior ....................................................... 80,000 524,138 0.5
BUILDING MATERIALS & COMPONENTS
Gakken .............................................................. 240,000 336,552 0.3
PAPER/PACKAGING
-----------
1,876,782
----------- -----
TOTAL EQUITY INVESTMENTS (cost $92,954,815) ........................... 70,872,860 71.4
----------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-81
<PAGE> 1002
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C>
Corporate Bonds (0.8%)
Japan (0.8%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) ............................... CHF 1,150,000 $ 771,601 0.8
----------- -----
<CAPTION>
NUMBER OF
OPTIONS CONTRACTS
- -------------------------------------------------------------- -----------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY15,500, expire 3/98 .... JPY 120 455,172 0.5
INDEX OPTIONS
Simex Nikkei Put Options, strike JPY14,000, expire 3/98 .... JPY 20 30,651 --
INDEX OPTIONS
----------- -----
TOTAL OPTIONS (cost $334,778) ................................ 485,823 0.5
----------- -----
<CAPTION>
REPURCHASE AGREEMENT
- --------------------------------------------------------------
<S> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $23,430,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $23,451,977,
including accrued interest). (cost $22,989,000) .......... 22,989,000 23.2
----------- -----
TOTAL INVESTMENTS (cost $117,367,794) * ..................... 95,119,284 95.9
Other Assets and Liabilities ................................. 4,064,999 4.1
----------- -----
NET ASSETS ................................................... $99,184,283 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $119,887,833 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,797,228
Unrealized depreciation: (31,565,777)
-------------
Net unrealized depreciation: $ (24,768,549)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-82
<PAGE> 1003
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 21,593,557 122.50000 2/12/98 $ 1,263,586
Japanese Yen............................ 16,966,366 122.40000 2/12/98 1,007,490
Japanese Yen............................ 8,483,183 122.50500 2/12/98 496,042
-------------- --------------
Total Contracts to Sell (Receivable
amount $49,810,224).................. 47,043,106 $ 2,767,118
-------------- --------------
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 47.43%.
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$7,173,761)............................ 3/16/98 100 JPY $6,542,693
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-83
<PAGE> 1004
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $94,378,794) (Note 1)........................... $72,130,284
Repurchase agreement, at value and cost................................................... 22,989,000
U.S. currency.................................................................. $ 124
Foreign currencies (cost $2,767,554)........................................... 2,751,171 2,751,295
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 2,767,118
Receivable for miscellaneous, initial and variation margin (Note 1)....................... 826,113
Receivable for Fund shares sold........................................................... 275,360
Dividends receivable...................................................................... 53,462
Interest receivable....................................................................... 4,204
-----------
Total assets............................................................................ 101,796,836
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,364,729
Payable for investment management and administration fees (Note 2)........................ 83,695
Payable for transfer agent fees (Note 2).................................................. 44,494
Payable for service and distribution expenses (Note 2).................................... 35,023
Payable for printing and postage expenses................................................. 31,839
Payable for professional fees............................................................. 23,063
Payable for custodian fees................................................................ 12,832
Payable for registration and filing fees.................................................. 6,592
Payable for Trustees' fees and expenses (Note 2).......................................... 5,377
Payable for fund accounting fees.......................................................... 1,383
Other accrued expenses.................................................................... 3,526
-----------
Total liabilities....................................................................... 2,612,553
-----------
Net assets.................................................................................. $99,184,283
-----------
-----------
Class A:
Net asset value and redemption price per share ($44,582,914 DIVIDED BY 4,973,256 shares
outstanding)............................................................................... $ 8.96
-----------
-----------
Maximum offering price per share (100/95.25 of $8.96) *..................................... $ 9.41
-----------
-----------
Class B:+
Net asset value and offering price per share ($24,250,220 DIVIDED BY 2,798,472 shares
outstanding)............................................................................... $ 8.67
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($30,351,149
DIVIDED BY 3,352,861 shares outstanding)................................................... $ 9.05
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $123,922,965
Accumulated net realized loss on investments and foreign currency transactions............ (5,869,899)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 2,748,659
Net unrealized depreciation of investments................................................ (21,617,442)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $99,184,283
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-84
<PAGE> 1005
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 916,186
Dividend income (net of foreign withholding tax of $92,217)................................ 523,661
----------
Total investment income.................................................................. 1,439,847
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 1,017,788
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 212,419
Class B...................................................................... 317,148 529,567
----------
Transfer agent fees (Note 2)............................................................... 407,750
Registration and filing fees............................................................... 107,110
Custodian fees............................................................................. 78,324
Printing and postage expenses.............................................................. 53,056
Audit fees................................................................................. 45,260
Legal fees................................................................................. 31,455
Fund accounting fees (Note 2).............................................................. 26,210
Trustees' fees and expenses (Note 2)....................................................... 13,140
Other expenses............................................................................. 4,283
----------
Total expenses before reductions......................................................... 2,313,943
----------
Expense reductions (Notes 1 & 5)....................................................... (72,248)
----------
Total net expenses....................................................................... 2,241,695
----------
Net investment loss.......................................................................... (801,848)
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (8,229,791)
Net realized gain on foreign currency transactions............................. 6,920,240
----------
Net realized loss during the year........................................................ (1,309,551)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies......................................................... 630,890
Net change in unrealized depreciation of investments........................... (8,170,261)
----------
Net unrealized depreciation during the year.............................................. (7,539,371)
----------
Net realized and unrealized loss on investments and foreign currencies....................... (8,848,922)
----------
Net decrease in net assets resulting from operations......................................... $(9,650,770)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-85
<PAGE> 1006
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Increase (Decrease) in net assets
Operations:
Net investment loss...................................................... $ (801,848) $ (841,456)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (1,309,551) 3,852,937
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 630,890 (464,975)
Net change in unrealized depreciation of investments..................... (8,170,261) (11,261,238)
------------- -------------
Net decrease in net assets resulting from operations................... (9,650,770) (8,714,732)
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (110,678) (2,883,812)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (61,407) (1,472,016)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (71,057) (18,593)
------------- -------------
Total distributions.................................................... (243,142) (4,374,421)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 280,419,107 510,718,392
Decrease from capital shares repurchased................................. (267,455,599) (554,451,474)
------------- -------------
Net increase (decrease) from capital share transactions................ 12,963,508 (43,733,082)
------------- -------------
Total increase (decrease) in net assets.................................... 3,069,596 (56,822,235)
Net assets:
Beginning of year........................................................ 96,114,687 152,936,922
------------- -------------
End of year *............................................................ $99,184,283 $96,114,687
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-86
<PAGE> 1007
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.08) (0.04) (0.04) (0.04) (0.14)
Net realized and unrealized gain
(loss) on investments................ (0.70) (0.77) 0.26 0.79 3.05
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.78) (0.81) 0.22 0.75 2.91
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.96 $ 9.76 $ 11.00 $ 12.15 $ 11.61
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (7.99)% (7.43)% 1.94% 6.56% 33.45%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 44,583 $ 63,585 $ 111,105 $ 98,066 $ 88,487
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.61)% (0.40)% (0.40)% (0.32)% (0.3)%
Without expense reductions............ (0.68)% (0.50)% (0.55)% (0.44)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.99% 1.84% 1.99% 1.91% 2.1%
Without expense reductions............ 2.06% 1.94% 2.14% 2.03% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-87
<PAGE> 1008
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.85
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.14) (0.11) (0.12) (0.13) (0.18)
Net realized and unrealized gain
(loss) on investments................ (0.66) (0.75) 0.25 0.79 1.90
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.80) (0.86) 0.13 0.66 1.72
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37) (0.21) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.67 $ 9.49 $ 10.78 $ 12.02 $ 11.57
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (8.42)% (8.05)% 1.20% 5.81% 17.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 24,250 $ 32,116 $ 41,274 $ 27,355 $ 3,699
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (1.26)% (1.05)% (1.05)% (0.97)% (0.9)%(a)
Without expense reductions............ (1.33)% (1.15)% (1.20)% (1.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.64% 2.49% 2.64% 2.56% 2.7%(a)
Without expense reductions............ 2.71% 2.59% 2.79% 2.68% N/A
Portfolio turnover rate++++............. 58% 31% 67% 49% 104%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-88
<PAGE> 1009
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.81 $ 11.02 $ 10.50
---------- ---------- -------------
Income from investment operations:
Net investment loss................... (0.01) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.73) (0.77) 1.89
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (0.74) (0.78) 1.89
---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.02) (0.43) (1.37)
---------- ---------- -------------
Net asset value, end of period.......... $ 9.05 $ 9.81 $ 11.02
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (7.54)% (7.14)% 18.14%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 30,351 $ 413 $ 558
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.26)% (0.05)% (0.05)%(a)
Without expense reductions............ (0.33)% (0.15)% (0.20)%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.64% 1.49% 1.64%(a)
Without expense reductions............ 1.71% 1.59% 1.79%(a)
Portfolio turnover rate++++............. 58% 31% 67%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0416 $ 0.0971 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All Capital Shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-89
<PAGE> 1010
GT GLOBAL JAPAN GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Japan Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The Company has
eight series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if
FS-90
<PAGE> 1011
GT GLOBAL JAPAN GROWTH FUND
the value of the currency changes unfavorably. The Fund may enter into Forward
Contracts in connection with planned purchases or sales of securities, or to
hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" 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. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At December
31, 1997, the Fund had segregated securities valued at $7,126,437 and cash of
$824,000 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of $5,491,954 were on loan
to brokers. The loans were secured by cash collateral of $5,811,500 received by
the Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended December 31, 1997, the Fund received securities lending fees of
$53,675 which were used to reduce custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and
FS-91
<PAGE> 1012
GT GLOBAL JAPAN GROWTH FUND
unrealized appreciation of securities held, or for excise tax on income and
capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets. For
the year ended December 31, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees to
the Manager at the following annualized rates: 0.975% on the first $500 million
of average daily net assets of the Fund; 0.95% on the next $500 million; 0.925%
of the next $500 million and 0.90% on amounts thereafter. These fees are
computed daily and paid monthly, and are subject to reduction in any period to
the extent that the Fund's expenses (exclusive of brokerage commissions, taxes,
interest, distribution-related expenses and extraordinary expenses) exceed the
most stringent limits prescribed by the laws or regulations of any state in
which the Fund's shares are offered for sale, based on the average net asset
value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $23,200
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $24,083 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected such
CDSCs in the amount of $260,311. In addition, GT Global makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for GT Global's expenditures incurred in providing services as distributor.
Expenses incurred under the Class B Plan in excess of 1.00% annually may be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan
FS-92
<PAGE> 1013
GT GLOBAL JAPAN GROWTH FUND
and/or reimbursements by the Manager or GT Global of portions of the Fund's
other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services is also reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $53,454,101 and $47,110,095, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 18,880,969 $ 187,727,101 39,042,903 $ 423,073,924
Shares issued in connection with
reinvestment of distributions......... 9,319 84,712 225,741 2,221,785
---------------- -------------------- ---------------- --------------------
18,890,288 187,811,813 39,268,644 425,295,709
Shares repurchased...................... (20,434,942) (203,841,370) (42,853,058) (464,603,203)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (1,544,654) $ (16,029,557) (3,584,414) $ (39,307,494)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,059,734 $ 49,439,098 7,303,169 $ 77,038,650
Shares issued in connection with
reinvestment of distributions......... 4,729 41,630 111,715 1,070,181
---------------- -------------------- ---------------- --------------------
5,064,463 49,480,728 7,414,884 78,108,831
Shares repurchased...................... (5,648,959) (54,991,415) (7,859,944) (82,438,811)
---------------- -------------------- ---------------- --------------------
Net decrease............................ (584,496) $ (5,510,687) (445,060) $ (4,329,980)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ---------------- -------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,149,684 $ 43,125,403 666,196 $ 7,296,458
Shares issued in connection with
reinvestment of distributions......... 126 1,163 1,759 17,394
---------------- -------------------- ---------------- --------------------
4,149,810 43,126,566 667,955 7,313,852
Shares repurchased...................... (839,053) (8,622,814) (676,463) (7,409,460)
---------------- -------------------- ---------------- --------------------
Net increase (decrease)................. 3,310,757 $ 34,503,752 (8,508) $ (95,608)
---------------- -------------------- ---------------- --------------------
---------------- -------------------- ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $18,573 under these arrangements.
FS-93
<PAGE> 1014
GT GLOBAL JAPAN GROWTH FUND
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $194,123 as a capital gain dividend for the fiscal year ended
December 31, 1997.
FS-94
<PAGE> 1015
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (28.3%)
Hong Kong Telecommunications Ltd. ......................... HK 3,300,200 $ 6,197,859 5.0
TELEPHONE NETWORKS
News Corp., Ltd. Preferred ................................ AUSL 761,650 5,409,957 4.4
BROADCASTING & PUBLISHING
Telstra Corp., Ltd. - Installment Receipts ................ AUSL 1,627,300 4,182,927 3.4
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- ......................... HK 1,800,000 3,124,879 2.5
WIRELESS COMMUNICATIONS
Brambles Industries Ltd. .................................. AUSL 149,050 2,932,692 2.4
BUSINESS & PUBLIC SERVICES
Singapore Press Holdings Ltd. ............................. SING 385,352 2,578,903 2.1
BROADCASTING & PUBLISHING
Woolworths Ltd. ........................................... AUSL 704,950 2,297,894 1.8
RETAILERS-OTHER
TABCORP Holdings Ltd. ..................................... AUSL 426,400 2,184,155 1.8
LEISURE & TOURISM
Philippine Long Distance Telephone Co. .................... PHIL 85,290 1,952,422 1.6
TELEPHONE - LONG DISTANCE
Telecom Corporation of New Zealand Ltd. ................... NZ 431,200 1,780,317 1.4
TELEPHONE NETWORKS
Telekom Malaysia Bhd. ..................................... MAL 700,000 1,182,005 1.0
TELEPHONE NETWORKS
Malaysia International Shipping Bhd. - Foreign ............ MAL 458,000 668,412 0.5
TRANSPORTATION - SHIPPING
Berjaya Sports Toto Bhd. .................................. MAL 300,000 445,061 0.4
LEISURE & TOURISM
------------
34,937,483
------------
Finance (23.4%)
National Australia Bank Ltd. .............................. AUSL 386,050 5,105,467 4.1
BANKS-REGIONAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 683,350 4,726,511 3.8
BANKS-REGIONAL
HSBC Holdings PLC ......................................... HK 183,021 4,476,603 3.6
BANKS-MONEY CENTER
Development Bank of Singapore - Foreign ................... SING 728,000 4,031,270 3.2
BANKS-MONEY CENTER
Hang Seng Bank ............................................ HK 550,000 3,109,390 2.5
BANKS-MONEY CENTER
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 800,000 2,724,312 2.2
BANKS-REGIONAL
State Bank of India Ltd. - Reg. S GDR{c} {\/} ............. IND 146,070 1,723,626 1.4
BANKS-REGIONAL
AMP Ltd.-/- ............................................... AUSL 91,800 1,077,251 0.9
INSURANCE-LIFE
Cathay Life Insurance Co., Ltd. ........................... TWN 300,000 917,004 0.7
INSURANCE-BROKER
First Commercial Bank ..................................... TWN 350,000 646,997 0.5
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-95
<PAGE> 1016
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
China Development Corp.-/- ................................ TWN 270,000 $ 624,873 0.5
BANKS-MONEY CENTER
------------
29,163,304
------------
Multi-Industry/Miscellaneous (10.2%)
Hutchison Whampoa ......................................... HK 1,150,000 6,070,991 4.9
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 829,000 1,952,791 1.6
MULTI-INDUSTRY
Ocean-Land Group Ltd. ..................................... HK 9,358,000 1,811,810 1.5
MULTI-INDUSTRY
Beijing Enterprises Holdings Ltd.-/- ...................... HK 1,165,000 1,766,860 1.4
MULTI-INDUSTRY
Pacific Dunlop Ltd. ....................................... AUSL 616,200 998,561 0.8
MULTI-INDUSTRY
------------
12,601,013
------------
Consumer Durables (7.9%)
Cheung Kong (Holdings) Ltd. ............................... HK 942,000 4,632,488 3.7
HOUSING
New World Development Co., Ltd. ........................... HK 2,000,000 3,872,217 3.1
HOUSING
City Developments Ltd. .................................... SING 500,000 1,397,690 1.1
HOUSING
------------
9,902,395
------------
Materials/Basic Industry (7.8%)
Broken Hill Proprietary Co., Ltd. ......................... AUSL 434,300 3,680,737 3.0
MISC. MATERIALS & COMMODITIES
CSR Ltd. .................................................. AUSL 899,300 2,601,973 2.1
BUILDING MATERIALS & COMPONENTS
Rio Tinto Ltd. ............................................ AUSL 212,100 2,528,449 2.0
MISC. MATERIALS & COMMODITIES
Capral Aluminum Ltd. ...................................... AUSL 634,500 894,272 0.7
METALS - NON-FERROUS
------------
9,705,431
------------
Energy (6.7%)
CLP Holdings Ltd. ......................................... HK 1,059,000 4,825,131 3.9
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 500,000 1,325,301 1.1
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign-/- ............................................... THAI 164,600 1,249,632 1.0
OIL
Electricity Generating Public Co., Ltd. - Foreign-/- ...... THAI 535,900 832,775 0.7
ELECTRICAL & GAS UTILITIES
------------
8,232,839
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-96
<PAGE> 1017
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (3.5%)
New World Infrastructure Ltd.-/- .......................... HK 2,000,000 $ 2,297,515 1.8
CONSTRUCTION
Cheung Kong Infrastructure Holdings ....................... HK 1,000,000 1,890,933 1.5
CONSTRUCTION
Taiwan Semiconductor Manufacturing Co.-/- ................. TWN 125,000 258,362 0.2
MACHINERY & ENGINEERING
------------
4,446,810
------------
Consumer Non-Durables (1.9%)
Foster's Brewing Group Ltd. ............................... AUSL 1,012,600 2,389,097 1.9
------------
BEVERAGES - ALCOHOLIC
Technology (1.6%)
Asustek Computer Inc. - Reg. S GDR-/- {c} {\/} ............ TWN 131,700 1,055,244 0.8
COMPUTERS & PERIPHERALS
Compeq Manufacturing Co., Ltd.-/- ......................... TWN 191,200 1,018,590 0.8
COMPUTERS & PERIPHERALS
------------
2,073,834
------------
Health Care (0.5%)
Cochlear Ltd. ............................................. AUSL 150,900 587,448 0.5
HEALTH CARE SERVICES
------------ -----
TOTAL EQUITY INVESTMENTS (cost $143,745,670) ................ 114,039,654 91.8
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an efffective yield of 5.70%,
collateralized by $7,030,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $7,038,788,
including accrued interest). (cost $6,898,000) .......... 6,898,000 5.5
------------ -----
TOTAL INVESTMENTS (cost $150,643,670) * .................... 120,937,654 97.3
Other Assets and Liabilities ................................ 3,355,046 2.7
------------ -----
NET ASSETS .................................................. $124,292,700 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $151,742,022 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,617,724
Unrealized depreciation: (35,422,092)
-------------
Net unrealized depreciation: $ (30,804,368)
-------------
-------------
</TABLE>
Abbreviations:
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-97
<PAGE> 1018
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 33.6 33.6
Hong Kong (HK/HKD) ................... 37.0 37.0
India (IND/INR) ...................... 1.4 1.4
Malaysia (MAL/MYR) ................... 1.9 1.9
New Zealand (NZ/NZD) ................. 1.4 1.4
Philippines (PHIL/PHP) ............... 2.7 2.7
Singapore (SING/SGD) ................. 8.6 8.6
Taiwan (TWN/TWD) ..................... 3.5 3.5
Thailand (THAI/THB) .................. 1.7 1.7
United States (US/USD) ............... 8.2 8.2
------ --- -----
Total ............................... 91.8 8.2 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $124,292,700.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
JUNE 30, 1998
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 5,792,879 1.52036 07/14/98 $ 343,835
------------ -------------
Total Contract to Sell (Receivable
amount $6,136,714)................... 5,792,879 343,835
------------ -------------
THE VALUE OF CONTRACT TO SELL AS
PERCENTAGE OF NET ASSETS IS 4.66%
Total Open Forward Foreign Currency
Contract............................. $ 343,835
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-98
<PAGE> 1019
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $150,643,670) (Note 1).......................... $120,937,654
U.S. currency.................................................................. $ 189
Foreign currencies (cost $8,517,849)........................................... 8,259,284 8,259,473
---------
Receivable for securities sold............................................................ 7,665,166
Dividends receivable...................................................................... 596,708
Receivable for open forward foreign currency contracts.................................... 343,835
Receivable from A I M Advisors, Inc....................................................... 337,887
Receivable for Fund shares sold........................................................... 145,782
Interest receivable....................................................................... 1,092
-----------
Total assets............................................................................ 138,287,597
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 9,408,146
Payable for securities purchased.......................................................... 3,757,964
Payable for investment management and administration fees (Note 2)........................ 366,742
Payable for transfer agent fees (Note 2).................................................. 163,275
Payable for custodian fees................................................................ 76,620
Payable for printing and postage expenses................................................. 68,011
Payable for service and distribution expenses (Note 2).................................... 58,543
Payable for professional fees............................................................. 38,892
Payable for registration and filing fees.................................................. 18,624
Payable for fund accounting fees (Note 2)................................................. 2,078
Payable for Trustees' fees and expenses (Note 2).......................................... 1,694
Other accrued expenses.................................................................... 34,308
-----------
Total liabilities....................................................................... 13,994,897
-----------
Net assets.................................................................................. $124,292,700
-----------
-----------
Class A:
Net asset value and redemption price per share ($86,769,083 DIVIDED BY 17,308,641 shares
outstanding)............................................................................... $ 5.01
-----------
-----------
Maximum offering price per share (100/94.5 of $5.01) *...................................... $ 5.30
-----------
-----------
Class B:+
Net asset value and offering price per share ($36,779,247 DIVIDED BY 7,593,164 shares
outstanding)............................................................................... $ 4.84
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($744,370 DIVIDED
BY 148,367 shares outstanding)............................................................. $ 5.02
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $218,876,228
Undistributed net investment income....................................................... 903,288
Accumulated net realized loss on investments and foreign currency transactions............ (65,853,447)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 72,647
Net unrealized depreciation of investments................................................ (29,706,016)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $124,292,700
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-99
<PAGE> 1020
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $89,177) (Note 1)...................... $ 2,353,281
Interest income........................................................................... 316,124
Securities lending income................................................................. 144,671
-----------
Total investment income................................................................. 2,814,076
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 848,177
Transfer agent fees (Note 2).............................................................. 588,000
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 216,644
Class B..................................................................... 241,418 458,062
----------
Custodian fees............................................................................ 113,500
Registration and filing fees.............................................................. 72,400
Printing and postage expenses............................................................. 52,075
Legal fees................................................................................ 39,760
Audit fees................................................................................ 25,929
Fund accounting fees (Note 2)............................................................. 22,357
Trustees' fees and expenses (Note 2)...................................................... 6,516
Other expenses (Note 1)................................................................... 82,578
-----------
Total expenses before reductions........................................................ 2,309,354
-----------
Expenses reimbursed by A I M Advisors, Inc. (Note 2).................................. (337,887)
Expense reductions (Note 5)........................................................... (60,679)
-----------
Total net expenses...................................................................... 1,910,788
-----------
Net investment income....................................................................... 903,288
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments.............................................. (19,697,597)
Net realized gain on foreign currency transactions............................ 2,092,223
----------
Net realized loss during the period..................................................... (17,605,374)
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (1,217,598)
Net change in unrealized depreciation of investments.......................... (10,343,511)
----------
Net unrealized depreciation during the period........................................... (11,561,109)
-----------
Net realized and unrealized loss on investments and foreign currencies...................... (29,166,483)
-----------
Net decrease in net assets resulting from operations........................................ $(28,263,195)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-100
<PAGE> 1021
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- --------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income..................................................... $ 903,288 $ 864,307
Net realized loss on investments and foreign currency transactions........ (17,605,374) (48,653,550)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (1,217,598) 1,286,651
Net change in unrealized depreciation of investments...................... (10,343,511) (113,591,619)
------------- --------------
Net decrease in net assets resulting from operations.................... (28,263,195) (160,094,211)
------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (427,042)
From net realized gain on investments..................................... -- (15,152,919)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- --
From net realized gain on investments..................................... -- (6,636,532)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (13,447)
From net realized gain on investments..................................... -- (179,887)
------------- --------------
Total distributions..................................................... -- (22,409,827)
------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 768,827,723 1,697,761,633
Decrease from capital shares repurchased.................................. (809,387,115) (1,836,766,167)
------------- --------------
Net decrease from capital share transactions............................ (40,559,392) (139,004,534)
------------- --------------
Total decrease in net assets................................................ (68,822,587) (321,508,572)
Net assets:
Beginning of period....................................................... 193,115,287 514,623,859
------------- --------------
End of period *.......................................................... $124,292,700 $ 193,115,287
------------- --------------
------------- --------------
* Includes undistributed net investment income of.......................... $ 903,288 $ --
------------- --------------
------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-101
<PAGE> 1022
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03* 0.05 0.02 0.11 0.02 (0.03)
Net realized and unrealized gain
(loss) on investments................ (1.50) (5.84) 2.44 0.79 (3.15) 6.23
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (1.47) (5.79) 2.46 0.90 (3.13) 6.20
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.03) -- (0.10) (0.01) --
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.07) --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (0.85) (1.81) (0.53) (0.63) (0.65)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 5.01 $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (22.69)%(b) (44.24)% 20.04% 7.45% (19.73)% 60.61%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 86,769 $ 135,807 $ 361,244 $ 383,722 $ 404,680 $ 498,898
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.21%(a) 0.41% 0.17% 0.91% 0.11% (0.3)%
Without expense reductions and/or
reimbursement........................ 0.75%(a) 0.14% 0.04% 0.86% N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.92%(a) 1.66% 1.86% 1.89% 1.81% 1.9%
Without expense reductions and/or
reimbursement........................ 2.38%(a) 1.93% 1.99% 1.94% N/A N/A
Ratio of interest expense to average net
assets++++............................. 0.09%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 92%(a) 80% 93% 63% 87% 117%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement of Fund operating expenses per share of $0.01.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-102
<PAGE> 1023
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D) 1994 1993
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.02* (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain
(loss) on investments................ (1.46) (5.67) 2.38 0.75 (3.15) 5.27
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (1.44) (5.70) 2.32 0.78 (3.21) 5.17
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.02) -- --
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- -- (0.07) --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (0.82) (1.81) (0.45) (0.62) (0.65)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 4.84 $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (22.77)%(b) (44.65)% 19.28% 6.54% (20.30)% 46.30%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 36,779 $ 55,820 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.56%(a) (0.24)% (0.48)% 0.26% (0.54)% (0.9)%(a)
Without expense reductions and/or
reimbursement........................ 0.10%(a) (0.51)% (0.61)% 0.21% N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.57%(a) 2.31% 2.51% 2.54% 2.46% 2.5%(a)
Without expense reductions and/or
reimbursement........................ 3.03%(a) 2.58% 2.64% 2.59% N/A N/A
Ratio of interest expense to average net
assets++++............................. 0.09%(a) N/A N/A N/A N/A N/A
Portfolio turnover rate++++............. 92%(a) 80% 93% 63% 87% 117%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement of Fund operating expenses per share of $0.01.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-103
<PAGE> 1024
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ----------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 (D)
-------------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 6.45 $ 13.16 $ 12.45 $ 12.89
-------------- ----------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.04* 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (1.47) (5.89) 2.45 0.05
-------------- ----------- ---------- -------------
Net increase (decrease) from
investment operations.............. (1.43) (5.81) 2.52 0.14
-------------- ----------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- (0.08) -- (0.15)
From net realized gain on
investments.......................... -- (0.82) (1.81) (0.43)
In excess of net realized gain on
investments.......................... -- -- -- --
-------------- ----------- ---------- -------------
Total distributions................. -- (0.90) (1.81) (0.58)
-------------- ----------- ---------- -------------
Net asset value, end of period.......... $ 5.02 $ 6.45 $ 13.16 $ 12.45
-------------- ----------- ---------- -------------
-------------- ----------- ---------- -------------
Total investment return (c)............. (22.17)%)(b) (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 744 $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.56 %(a) 0.76% 0.52% 1.26%(a)
Without expense reductions and/or
reimbursement........................ 1.10 %(a) 0.49% 0.39% 1.21%(a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.57 %(a) 1.31% 1.51% 1.54%(a)
Without expense reductions and/or
reimbursement........................ 2.03 %(a) 1.58% 1.64% 1.59%(a)
Ratio of interest expense to average net
assets++++............................. 0.09 %(a) N/A N/A N/A
Portfolio turnover rate++++............. 92 %(a) 80% 93% 63%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* Includes reimbursement of Fund operating expenses per share of $0.01.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-104
<PAGE> 1025
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM New Pacific Growth Fund (the "Fund" formerly, GT Global New Pacific Growth
Fund), is a separate series of AIM Growth Series (the "Trust" formerly, G.T.
Global Growth Series ). The Trust is organized as a Delaware business trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Trust has eight
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income securities are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for securities of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-105
<PAGE> 1026
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" 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. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option in extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S.government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $26,982,549
were on loan to brokers. The loans were secured by cash collateral of
$28,586,659, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to
FS-106
<PAGE> 1027
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
120 days or less. For the period ended June 30, 1998, the Fund received
securities lending fees of $144,671.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$3,081,427 which expires in 2005.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $6,571,267 with a weighted average interest rate of 6.33%. Interest expense
for the period ended June 30, 1998, was $69,364, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets on the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors retained $3,202 of such sales charges. Purchases of Class A shares
exceeding $500,000 may be subject to a contingent deferred sales charge ("CDSC")
upon
FS-107
<PAGE> 1028
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
redemption, in accordance with the Fund's current prospectus. AIM Distributors
and GT Global collected such CDSCs in the amount of $10,090 and $2,399,
respectively for the period ended June 30, 1998. AIM Distributors also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $13,651 and $124,324,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Funds. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% of the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $73,078,048 and $101,866,381, respectively. There were no purchases
or sales of U.S. government obligations during the period.
FS-108
<PAGE> 1029
AIM NEW PACIFIC GROWTH FUND
(FORMERLY GT GLOBAL NEW PACIFIC GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------------ ---------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ------------ ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 112,119,757 $ 661,452,247 110,903,994 $ 1,213,154,082
Shares issued in connection with reinvestment of
distributions............................................. -- -- 2,058,341 13,577,615
------------ ------------- ------------- ---------------
112,119,757 661,452,247 112,962,335 1,226,731,697
Shares repurchased.......................................... (115,779,632) (692,548,182) (119,529,679) (1,324,924,362)
------------ ------------- ------------- ---------------
Net decrease................................................ (3,659,875) $ (31,095,935) (6,567,344) $ (98,192,665)
------------ ------------- ------------- ---------------
------------ ------------- ------------- ---------------
<CAPTION>
CLASS B
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................. 14,719,157 $ 83,694,422 37,888,593 $ 423,842,967
Shares issued in connection with reinvestment of
distributions............................................. -- -- 856,732 5,478,474
------------ ------------- ------------- ---------------
14,719,157 83,694,422 38,745,325 429,321,441
Shares repurchased.......................................... (16,021,430) (92,123,012) (41,705,872) (470,119,000)
------------ ------------- ------------- ---------------
Net decrease................................................ (1,302,273) $ (8,428,590) (2,960,547) $ (40,797,559)
------------ ------------- ------------- ---------------
------------ ------------- ------------- ---------------
<CAPTION>
ADVISOR CLASS
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold................................................. 4,413,141 $ 23,681,054 4,493,439 $ 41,526,678
Shares issued in connection with reinvestment of
distributions............................................. -- -- 25,872 181,817
------------ ------------- ------------- ---------------
4,413,141 23,681,054 4,519,311 41,708,495
Shares repurchased.......................................... (4,495,633) (24,715,921) (4,408,085) (41,722,805)
------------ ------------- ------------- ---------------
Net increase (decrease)..................................... (82,492) $ (1,034,867) 111,226 $ (14,310)
------------ ------------- ------------- ---------------
------------ ------------- ------------- ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $60,679 under these arrangements.
FS-109
<PAGE> 1030
GT GLOBAL NEW PACIFIC GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global New Pacific Growth Fund, a series of shares of beneficial interest of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
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, 1997 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 GT
Global New Pacific Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-110
<PAGE> 1031
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (26.5%)
Hong Kong Telecommunications Ltd. ......................... HK 7,039,964 $ 14,491,505 7.5
TELEPHONE NETWORKS
Brambles Industries Ltd. .................................. AUSL 250,000 4,959,606 2.6
BUSINESS & PUBLIC SERVICES
Woolworths Ltd. ........................................... AUSL 1,440,000 4,812,822 2.5
RETAILERS-OTHER
Telekom Malaysia Bhd. ..................................... MAL 1,500,000 4,440,154 2.3
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- ......................... HK 2,358,000 4,047,416 2.1
WIRELESS COMMUNICATIONS
Singapore Press Holdings Ltd. - Foreign ................... SING 302,000 3,786,215 2.0
BROADCASTING & PUBLISHING
Qantas Airways Ltd. ....................................... AUSL 1,770,000 3,132,009 1.6
TRANSPORTATION - AIRLINES
Genting Bhd. .............................................. MAL 1,109,000 2,783,205 1.4
LEISURE & TOURISM
Telstra Corp. Ltd. ........................................ AUSL 1,293,300 2,730,010 1.4
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 484,000 2,345,288 1.2
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. .................... PHIL 85,290 1,876,380 1.0
TELEPHONE - LONG DISTANCE
Mahanagar Telephone Nigam Ltd. - GDR-/- {\/} .............. IND 112,850 1,750,304 0.9
TELECOM - OTHER
------------
51,154,914
------------
Finance (22.1%)
Hang Seng Bank ............................................ HK 957,800 9,239,924 4.8
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 1,370,000 9,050,621 4.7
BANKS-REGIONAL
Overseas-Chinese Banking Corp., Ltd. - Foreign ............ SING 1,139,000 6,632,323 3.4
BANKS-REGIONAL
Development Bank of Singapore - Foreign ................... SING 712,000 6,091,979 3.1
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 180,000 4,436,988 2.3
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 773,000 4,294,444 2.2
BANKS-MONEY CENTER
City Developments Ltd. .................................... SING 376,000 1,742,602 0.9
REAL ESTATE
State Bank of India Ltd. - GDR{\/} ........................ IND 76,100 1,360,288 0.7
BANKS-REGIONAL
------------
42,849,169
------------
Multi-Industry/Miscellaneous (10.7%)
Hutchison Whampoa ......................................... HK 1,500,000 9,408,273 4.9
MULTI-INDUSTRY
Pacific Dunlop Ltd. ....................................... AUSL 1,900,000 4,023,063 2.1
MULTI-INDUSTRY
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-111
<PAGE> 1032
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Citic Pacific Ltd. ........................................ HK 950,000 $ 3,776,215 2.0
CONGLOMERATE
China Resources Enterprise Ltd. ........................... HK 1,500,000 3,349,035 1.7
CONGLOMERATE
------------
20,556,586
------------
Consumer Durables (10.0%)
New World Development Co., Ltd. ........................... HK 2,000,000 6,917,468 3.6
HOUSING
Cheung Kong (Holdings) Ltd. ............................... HK 942,000 6,169,775 3.2
HOUSING
Sun Hung Kai Properties Ltd. .............................. HK 880,000 6,132,800 3.2
HOUSING
------------
19,220,043
------------
Capital Goods (7.0%)
Cheung Kong Infrastructure Holdings ....................... HK 2,285,000 6,458,218 3.3
CONSTRUCTION
New World Infrastructure Ltd.-/- .......................... HK 2,000,000 4,504,098 2.3
CONSTRUCTION
Venture Manufacturing Ltd. ................................ SING 640,000 1,787,285 0.9
MACHINERY & ENGINEERING
Harbin Power Equipment Co., Ltd. .......................... HK 7,384,000 895,781 0.5
ELECTRICAL PLANT/EQUIPMENT
------------
13,645,382
------------
Materials/Basic Industry (6.9%)
Leighton Holdings Ltd. .................................... AUSL 1,365,000 4,766,695 2.5
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 370,000 3,435,077 1.8
MISC. MATERIALS & COMMODITIES
Pasminco Ltd. ............................................. AUSL 2,500,000 2,866,636 1.5
METALS - NON-FERROUS
QNI Ltd. .................................................. AUSL 3,160,000 2,099,941 1.1
METALS - NON-FERROUS
------------
13,168,349
------------
Energy (6.4%)
China Light & Power Co., Ltd. ............................. HK 1,059,000 5,876,879 3.0
ELECTRICAL & GAS UTILITIES
Hong Kong Electric Holdings Ltd. .......................... HK 968,000 3,679,112 1.9
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................... PHIL 500,000 1,675,000 0.9
ELECTRICAL & GAS UTILITIES
YTL Power International Bhd.-/- ........................... MAL 1,395,000 1,073,629 0.6
ENERGY SOURCES
------------
12,304,620
------------ -----
TOTAL EQUITY INVESTMENTS (cost $192,261,568) ................ 172,899,063 89.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-112
<PAGE> 1033
GT GLOBAL NEW PACIFIC GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $43,535,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $43,575,836,
including accrued interest). (cost $42,717,000) .......... $ 42,717,000 22.1
------------ -----
TOTAL INVESTMENTS (cost $234,978,568) * .................... 215,616,063 111.7
Other Assets and Liabilities ................................ (22,500,776) (11.7)
------------ -----
NET ASSETS .................................................. $193,115,287 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $236,076,920 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 6,360,873
Unrealized depreciation: (26,821,730)
-------------
Net unrealized depreciation: $ (20,460,857)
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 21.8 21.8
Hong Kong (HK/HKD) ................... 46.3 46.3
India (IND/INR) ...................... 1.6 1.6
Malaysia (MAL/MYR) ................... 4.3 4.3
New Zealand (NZ/NZD) ................. 1.2 1.2
Philippines (PHIL/PHP) ............... 1.9 1.9
Singapore (SING/SGD) ................. 12.5 12.5
United States & Other (US/USD) ....... 10.4 10.4
------ ----- -----
Total ............................... 89.6 10.4 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,115,287.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 20,137,999 1.44937 2/24/98 $ 1,160,974
Singapore Dollars....................... 9,970,754 1.67140 3/17/98 140,530
------------ -------------
Total Contracts to Sell (Receivable
amount $31,410,257).................. 30,108,753 1,301,504
------------ -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.59%
Total Open Forward Foreign Currency
Contracts............................ $ 1,301,504
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-113
<PAGE> 1034
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $192,261,568) (Note 1)............................ $172,899,063
Repurchase agreement, at value and cost..................................................... 42,717,000
U.S. currency.................................................................... $ 896
Foreign currencies (cost $732,774)............................................... 741,289 742,185
---------
Receivable for open forward foreign currency contracts...................................... 1,301,504
Dividends and dividend withholding tax reclaims receivable.................................. 583,258
Receivable for Fund shares sold............................................................. 540,345
Receivable for securities sold.............................................................. 153,396
Miscellaneous receivable.................................................................... 15,083
Interest receivable......................................................................... 6,882
-----------
Total assets.............................................................................. 218,958,716
-----------
Liabilities:
Payable for Fund shares repurchased......................................................... 24,103,460
Payable for securities purchased............................................................ 1,206,279
Payable for investment management and administration fees (Note 2).......................... 163,399
Payable for service and distribution expenses (Note 2)...................................... 89,450
Payable for printing and postage expenses................................................... 86,532
Payable for transfer agent fees (Note 2).................................................... 84,573
Payable for professional fees............................................................... 38,325
Payable for custodian fees.................................................................. 33,378
Payable for registration and filing fees.................................................... 21,314
Payable for fund accounting fees (Note 2)................................................... 4,340
Payable for Trustees' fees and expenses (Note 2)............................................ 3,557
Other accrued expenses...................................................................... 8,822
-----------
Total liabilities......................................................................... 25,843,429
-----------
Net assets.................................................................................... $193,115,287
-----------
-----------
Class A:
Net asset value and redemption price per share ($135,807,280 DIVIDED BY 20,968,516 shares
outstanding)................................................................................. $ 6.48
-----------
-----------
Maximum offering price per share (100/95.25 of $6.48) *....................................... $ 6.80
-----------
-----------
Class B:+
Net asset value and offering price per share ($55,819,596 DIVIDED BY 8,895,437 shares
outstanding)................................................................................. $ 6.28
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,488,411 DIVIDED
BY 230,859 shares outstanding)............................................................... $ 6.45
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $259,435,620
Accumulated net realized loss on investments and foreign currency transactions.............. (48,248,073)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................. 1,290,245
Net unrealized depreciation of investments.................................................. (19,362,505)
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $193,115,287
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-114
<PAGE> 1035
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Dividend income (net of foreign withholding tax of $412,339) (Note 1).................... $ 7,263,612
Interest income.......................................................................... 674,416
------------
Total investment income................................................................ 7,938,028
------------
Expenses:
Investment management and administration fees (Note 2)................................... 3,736,264
Service and distribution expenses: (Note 2)
Class A.................................................................. $ 942,945
Class B.................................................................. 1,119,211 2,062,156
------------
Transfer agent fees (Note 2)............................................................. 1,240,570
Custodian fees........................................................................... 419,674
Registration and filing fees............................................................. 138,810
Printing and postage expenses............................................................ 103,925
Fund accounting fees (Note 2)............................................................ 99,321
Audit fees............................................................................... 58,095
Legal fees............................................................................... 35,175
Trustees' fees and expenses (Note 2)..................................................... 10,532
Other expenses (Note 1).................................................................. 213,092
------------
Total expenses before reductions....................................................... 8,117,614
------------
Expense reductions (Notes 1 & 5)..................................................... (1,043,893)
------------
Total net expenses..................................................................... 7,073,721
------------
Net investment income...................................................................... 864,307
------------
Net realized and unrealized loss on investments and foreign currencies: (Note
1)
Net realized loss on investments........................................... (48,105,392)
Net realized loss on foreign currency transactions......................... (548,158)
------------
Net realized loss during the year...................................................... (48,653,550)
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies......................................... 1,286,651
Net change in unrealized appreciation of investments....................... (113,591,619)
------------
Net unrealized depreciation during the year............................................ (112,304,968)
------------
Net realized and unrealized loss on investments and foreign currencies..................... (160,958,518)
------------
Net decrease in net assets resulting from operations....................................... $(160,094,211)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-115
<PAGE> 1036
GT GLOBAL NEW PACIFIC GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 864,307 $ (26,838)
Net realized gain (loss) on investments and foreign currency
transactions............................................................ (48,653,550) 94,284,448
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 1,286,651 (106)
Net change in unrealized appreciation (depreciation) of investments...... (113,591,619) 36,883,188
------------- -------------
Net increase (decrease) in net assets resulting from operations........ (160,094,211) 131,140,692
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (427,042) --
From net realized gain on investments.................................... (15,152,919) (44,900,913)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................... -- --
From net realized gain on investments.................................... (6,636,532) (18,754,735)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (13,447) --
From net realized gain on investments.................................... (179,887) (250,756)
------------- -------------
Total distributions.................................................... (22,409,827) (63,906,404)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,697,761,633 5,158,291,909
Decrease from capital shares repurchased................................. (1,836,766,167) (5,226,446,724)
------------- -------------
Net decrease from capital share transactions........................... (139,004,534) (68,154,815)
------------- -------------
Total decrease in net assets............................................... (321,508,572) (920,527)
Net assets:
Beginning of year........................................................ 514,623,859 515,544,386
------------- -------------
End of year *............................................................ $ 193,115,287 $ 514,623,859
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-116
<PAGE> 1037
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.12 $ 12.47 $ 12.10 $ 15.86 $ 10.31
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.02 0.11 0.02 (0.03)
Net realized and unrealized gain
(loss) on investments................ (5.84) 2.44 0.79 (3.15) 6.23
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (5.79) 2.46 0.90 (3.13) 6.20
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.10) (0.01) --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.85) (1.81) (0.53) (0.63) (0.65)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 6.48 $ 13.12 $ 12.47 $ 12.10 $ 15.86
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (44.24)% 20.04% 7.45% (19.73)% 60.61%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 135,807 $ 361,244 $ 383,722 $ 404,680 $ 498,898
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.41% 0.17% 0.91% 0.11% (0.3)%
Without expense reductions............ 0.14% 0.04% 0.86% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.66% 1.86% 1.89% 1.81% 1.9%
Without expense reductions............ 1.93% 1.99% 1.94% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-117
<PAGE> 1038
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.80 $ 12.29 $ 11.96 $ 15.79 $ 11.27
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.06) 0.03 (0.06) (0.10)
Net realized and unrealized gain
(loss) on investments................ (5.67) 2.38 0.75 (3.15) 5.27
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.70) 2.32 0.78 (3.21) 5.17
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.02) -- --
From net realized gain on
investments.......................... (0.82) (1.81) (0.43) (0.55) (0.65)
In excess of net realized gain on
investments.......................... -- -- -- (0.07) --
---------- ---------- ---------- ---------- -------------
Total distributions................. (0.82) (1.81) (0.45) (0.62) (0.65)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 15.79
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. (44.65)% 19.28% 6.54% (20.30)% 46.30%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 55,820 $ 151,805 $ 130,887 $ 120,171 $ 72,122
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.24)% (0.48)% 0.26% (0.54)% (0.9)%(a)
Without expense reductions............ (0.51)% (0.61)% 0.21% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.31% 2.51% 2.54% 2.46% 2.5%(a)
Without expense reductions............ 2.58% 2.64% 2.59% N/A N/A
Portfolio turnover rate++++............. 80% 93% 63% 87% 117%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-118
<PAGE> 1039
GT GLOBAL NEW PACIFIC GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.16 $ 12.45 $ 12.89
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.08 0.07 0.09
Net realized and unrealized gain
(loss) on investments................ (5.89) 2.45 0.05
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. (5.81) 2.52 0.14
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.08) -- (0.15)
From net realized gain on
investments.......................... (0.82) (1.81) (0.43)
In excess of net realized gain on
investments.......................... -- -- --
---------- ---------- -------------
Total distributions................. (0.90) (1.81) (0.58)
---------- ---------- -------------
Net asset value, end of period.......... $ 6.45 $ 13.16 $ 12.45
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. (44.26)% 20.56% 1.07%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,488 $ 1,575 $ 935
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.76% 0.52% 1.26%
Without expense reductions............ 0.49% 0.39% 1.21%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.31% 1.51% 1.54%(a)
Without expense reductions............ 1.58% 1.64% 1.59%(a)
Portfolio turnover rate++++............. 80% 93% 63%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0066 $ 0.0032 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-119
<PAGE> 1040
GT GLOBAL NEW PACIFIC GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global New Pacific Growth Fund ("Fund") is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant
accounting policies in conformity with generally accepted accounting principles
consistently followed by the Funds in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market, as of
the close of business on the day the securities are being valued, or, lacking
any sales, at the last available bid price. In cases where securities are traded
on more than one exchange, the securities are valued on the exchange determined
by Chancellor LGT Asset Management, Inc. (the "Manager") to be the primary
market.
Fixed income securities are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for securities of comparative maturity, quality and type. However, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from 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.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and
FS-120
<PAGE> 1041
GT GLOBAL NEW PACIFIC GROWTH FUND
Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund enters into a closing purchase transaction, a gain or loss is realized
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option in extinguished. If a written call option
is exercised, a gain or loss is realized from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. If a written put option is exercised, the cost of the underlying
security purchased would be decreased by the premium originally received. The
Fund can write options only on a covered basis, which, for a call, requires that
the Fund hold the underlying security, and, for a put, requires the Fund to set
aside cash, U.S.government securities or other liquid securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the stock and bond markets and to fluctuations in currency
values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately $9,252,981
were on loan to brokers. The loans were secured by cash collateral of
$9,953,563, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $756,559 which were used to reduce
custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$3,081,427 which expires in 2005.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
FS-121
<PAGE> 1042
GT GLOBAL NEW PACIFIC GROWTH FUND
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $8,681,157 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997, was $193,664, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of average
daily net assets on the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $21,605
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $42,069 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected CDSCs in
the amount of $894,766. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and
FS-122
<PAGE> 1043
GT GLOBAL NEW PACIFIC GROWTH FUND
a per exchange fee of $2.25. GT Services also is reimbursed by the Fund for its
out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% of the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $290,053,136 and $442,944,807, respectively. There were
no purchases or sales of U.S. government obligations during the year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold................................................. 110,903,994 $1,213,154,082 285,658,529 $3,783,795,259
Shares issued in connection with reinvestment of
distributions............................................. 2,058,341 13,577,615 2,934,435 37,677,963
----------- ------------- ----------- -------------
112,962,335 1,226,731,697 288,592,964 3,821,473,222
Shares repurchased.......................................... (119,529,679) (1,324,924,362) (291,833,470) (3,895,314,036)
----------- ------------- ----------- -------------
Net decrease................................................ (6,567,344) $ (98,192,665) (3,240,506) $ (73,840,814)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 37,888,593 $ 423,842,967 96,986,480 $1,263,551,513
Shares issued in connection with reinvestment of
distributions............................................. 856,732 5,478,474 1,241,219 15,565,185
----------- ------------- ----------- -------------
38,745,325 429,321,441 98,227,699 1,279,116,698
Shares repurchased.......................................... (41,705,872) (470,119,000) (97,020,480) (1,273,495,413)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... (2,960,547) $ (40,797,559) 1,207,219 $ 5,621,285
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------- ----------- -------------
Shares sold................................................. 4,493,439 $ 41,526,678 4,311,411 $ 57,463,326
Shares issued in connection with reinvestment of
distributions............................................. 25,872 181,817 18,530 238,663
----------- ------------- ----------- -------------
4,519,311 41,708,495 4,329,941 57,701,989
Shares repurchased.......................................... (4,408,085) (41,722,805) (4,285,455) (57,637,275)
----------- ------------- ----------- -------------
Net increase (decrease)..................................... 111,226 $ (14,310) 44,486 $ 64,714
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $287,334 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2886 per share (representing an approximate total of
$7,701,422). The total amount of taxes paid by the Fund to such countries was
approximately $.0155 per share (representing an approximate total of $412,339).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$20,539,592 as a capital gain dividend for the fiscal year ended December 31,
1997.
FS-123
<PAGE> 1044
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (32.8%)
SLM Holding Corp. ......................................... US 92,000 $ 4,508,001 3.2
OTHER FINANCIAL
Chase Manhattan Corp. ..................................... US 55,600 4,197,797 3.0
BANKS-MONEY CENTER
Citicorp .................................................. US 26,200 3,910,350 2.8
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 58,400 3,540,500 2.6
INSURANCE - MULTI-LINE
ING Groep N.V. ............................................ NETH 39,487 2,587,401 1.9
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,430,832 1.8
INSURANCE - MULTI-LINE
UBS AG - Registered-/- .................................... SWTZ 6,521 2,426,573 1.7
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,420,837 1.7
BANKS-REGIONAL
Nordbanken Holding AB ..................................... SWDN 325,006 2,385,403 1.7
BANKS-REGIONAL
Schroders PLC ............................................. UK 84,000 2,168,375 1.6
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 117,000 2,080,564 1.5
BANKS-SUPER REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,946,093 1.4
BANKS-REGIONAL
ForeningsSparbanken AB .................................... SWDN 59,720 1,798,231 1.3
BANKS-REGIONAL
Royal Bank of Canada ...................................... CAN 27,200 1,635,659 1.2
BANKS-REGIONAL
Bank Hapoalim Ltd.-/- ..................................... ISRL 437,400 1,324,623 1.0
BANKS-REGIONAL
HSBC Holdings PLC ......................................... HK 51,496 1,259,567 0.9
BANKS-MONEY CENTER
Old Mutual South Africa Trust PLC ......................... UK 661,500 1,253,636 0.9
REAL ESTATE INVESTMENT TRUST
State Bank of India Ltd. - Reg. S GDR-/- {c} {\/} ......... IND 104,140 1,228,852 0.9
BANKS-REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 103,000 1,020,540 0.7
SECURITIES BROKER
Nichiei Co., Ltd. ......................................... JPN 9,900 675,895 0.5
OTHER FINANCIAL
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 472,609 0.3
BANKS-MONEY CENTER
Kookmin Bank-/- ........................................... KOR 73,781 274,659 0.2
BANKS-MONEY CENTER
------------
45,546,997
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-124
<PAGE> 1045
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (24.1%)
Federated Department Stores, Inc.-/- ...................... US 67,900 $ 3,653,869 2.6
RETAILERS-APPAREL
Service Corporation International ......................... US 71,400 3,061,275 2.2
CONSUMER SERVICES
EMI Group PLC ............................................. UK 333,000 2,913,541 2.1
LEISURE & TOURISM
CVS Corp. ................................................. US 74,800 2,912,525 2.1
RETAILERS-OTHER
Woolworths Ltd. ........................................... AUSL 813,000 2,650,099 1.9
RETAILERS-OTHER
EMAP PLC .................................................. UK 118,000 2,387,978 1.7
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 321,900 2,353,629 1.7
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 182,000 2,311,087 1.7
WIRELESS COMMUNICATIONS
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,227,000 1.6
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 56,959 1,829,704 1.3
RETAILERS-FOOD
Reuters Group PLC ......................................... UK 155,133 1,774,355 1.3
BROADCASTING & PUBLISHING
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 9,661 1,716,953 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 121,000 1,670,473 1.2
TELEPHONE NETWORKS
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 11,500 1,255,656 0.9
TELEPHONE NETWORKS
Telstra Corp. Ltd. - Installment Receipts ................. AUSL 333,100 856,224 0.6
TELEPHONE NETWORKS
------------
33,574,368
------------
Health Care (10.1%)
Warner-Lambert Co. ........................................ US 59,200 4,107,000 3.0
PHARMACEUTICALS
Bristol Myers Squibb Co. .................................. US 30,900 3,551,569 2.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 286,418 2,134,146 1.5
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 189 1,857,452 1.3
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR-/- {c} {\/} ................ HGRY 16,200 1,291,950 0.9
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 39,000 1,040,790 0.8
PHARMACEUTICALS
------------
13,982,907
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-125
<PAGE> 1046
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (7.0%)
Monsanto Co. .............................................. US 56,200 $ 3,140,175 2.3
CHEMICALS
Millenium Chemicals, Inc. ................................. US 79,400 2,689,675 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 8,790 1,955,351 1.4
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 29,400 1,896,300 1.4
CHEMICALS
------------
9,681,501
------------
Technology (5.1%)
Compaq Computer Corp. ..................................... US 99,200 2,814,800 2.0
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 36,900 2,735,213 2.0
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 25,844 1,507,028 1.1
SEMICONDUCTORS
------------
7,057,041
------------
Consumer Durables (4.6%)
Ford Motor Co. ............................................ US 30,400 1,793,600 1.3
AUTOMOBILES
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 1,763,318 1.3
AUTO PARTS
Volvo AB "B" .............................................. SWDN 51,200 1,525,626 1.1
AUTOMOBILES
Mabuchi Motor Co., Ltd. ................................... JPN 20,000 1,272,872 0.9
AUTOMOBILES
------------
6,355,416
------------
Consumer Non-Durables (4.4%)
Diageo PLC ................................................ UK 164,160 1,946,128 1.4
BEVERAGES - ALCOHOLIC
RJR Nabisco Holdings Corp. ................................ US 61,300 1,455,875 1.1
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,202,358 0.9
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 16,600 879,800 0.6
TEXTILES & APPAREL
Amway Japan Ltd. .......................................... JPN 55,400 588,978 0.4
HOUSEHOLD PRODUCTS
------------
6,073,139
------------
Capital Goods (3.8%)
Textron, Inc. ............................................. US 34,500 2,473,219 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 8,310 1,692,187 1.2
TELECOM EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-126
<PAGE> 1047
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Canon, Inc. ............................................... JPN 50,000 $ 1,139,076 0.8
OFFICE EQUIPMENT
------------
5,304,482
------------
Energy (3.3%)
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,867,257 1.3
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 49,240 1,536,440 1.1
ENERGY EQUIPMENT & SERVICES
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 64,800 1,198,800 0.9
GAS PRODUCTION & DISTRIBUTION
------------
4,602,497
------------
Multi-Industry/Miscellaneous (0.6%)
Shanghai Industrial Holdings Ltd. ......................... HK 370,000 871,571 0.6
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $109,904,796) ................ 133,049,919 95.8
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Co., due July
1, 1998, for an effective yield of 5.70%, collateralized
by $11,960,000 U.S. Treasury Bills, 5.75% due 12/31/98
(market value of collateral is $11,974,950, including
accrued interest). (cost $11,738,000) ................... 11,738,000 8.4
------------ -----
TOTAL INVESTMENTS (cost $121,642,796) * .................... 144,787,919 104.2
Other Assets and Liabilities ................................ (5,861,658) (4.2)
------------ -----
NET ASSETS .................................................. $138,926,261 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $122,098,557 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 30,443,660
Unrealized depreciation: (7,754,298)
-------------
Net unrealized appreciation: $ 22,689,362
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-127
<PAGE> 1048
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
--------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ---------- ----------- ------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.5 5.5
Brazil (BRZL/BRL) .................... 1.8 1.8
Canada (CAN/CAD) ..................... 1.2 1.2
Czech Republic (CZCH/CSK) ............ 1.2 1.2
France (FR/FRF) ...................... 1.2 1.2
Hong Kong (HK/HKD) ................... 1.5 1.5
Hungary (HGRY/HUF) ................... 0.9 0.9
India (IND/INR) ...................... 0.9 0.9
Israel (ISRL/ILS) .................... 1.0 1.0
Italy (ITLY/ITL) ..................... 1.7 1.7
Japan (JPN/JPY) ...................... 5.0 5.0
Korea (KOR/KRW) ...................... 0.2 0.2
Netherlands (NETH/NLG) ............... 5.2 5.2
New Zealand (NZ/NZD) ................. 1.6 1.6
Norway (NOR/NOK) ..................... 1.1 1.1
Portugal (PORT/PTE) .................. 1.2 1.2
Singapore (SING/SGD) ................. 0.3 0.3
Sweden (SWDN/SEK) .................... 4.1 4.1
Switzerland (SWTZ/CHF) ............... 3.0 3.0
United Kingdom (UK/GBP) .............. 19.6 19.6
United States (US/USD) ............... 37.6 4.2 41.8
----- --- ------
Total ............................... 95.8 4.2 100.0
----- --- ------
----- --- ------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $138,926,261.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
British Pounds.......................... 5,337,595 0.59400 7/20/98 $ 49,605
French Francs........................... 1,094,325 5.94360 8/6/98 16,113
Japanese Yen............................ 2,254,774 130.50000 8/6/98 120,705
Japanese Yen............................ 2,256,752 130.86000 8/12/98 112,192
Swiss Francs............................ 1,131,122 1.47770 9/21/98 19,314
---------- -------------
Total Contracts to Sell (Receivable
amount $12,392,497).................. 12,074,568 $ 317,929
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 8.69%
Total Open Forward Foreign Currency
Contracts............................ $ 317,929
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-128
<PAGE> 1049
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $121,642,796) (Note 1)............................. $144,787,919
U.S. currency..................................................................... $ 701
Foreign currencies (cost $11,376)................................................. 11,376 12,077
---------
Receivable for open forward foreign currency contracts (Note 1).............................. 317,929
Dividends and dividend withholding tax reclaims receivable................................... 285,982
Receivable for Fund shares sold.............................................................. 7,508
Interest receivable.......................................................................... 1,859
-----------
Total assets............................................................................... 145,413,274
-----------
Liabilities:
Payable for Fund shares repurchased.......................................................... 5,999,730
Payable for investment management and administration fees (Note 2)........................... 114,066
Payable for transfer agent fees (Note 2)..................................................... 110,943
Payable for printing and postage expenses.................................................... 92,874
Payable for service and distribution expenses (Note 2)....................................... 63,646
Payable for custodian fees................................................................... 30,896
Payable for professional fees................................................................ 28,206
Payable for securities purchased............................................................. 25,005
Payable for registration and filing fees..................................................... 10,549
Payable for Trustees' fees and expenses (Note 2)............................................. 4,581
Payable for fund accounting fees (Note 2).................................................... 2,102
Other accrued expenses....................................................................... 4,415
-----------
Total liabilities.......................................................................... 6,487,013
-----------
Net assets..................................................................................... $138,926,261
-----------
-----------
Class A:
Net asset value and redemption price per share ($95,789,457 DIVIDED BY 6,010,096 shares
outstanding).................................................................................. $ 15.94
-----------
-----------
Maximum offering price per share (100/94.5 of $15.94) *........................................ $ 16.87
-----------
-----------
Class B:+
Net asset value and offering price per share ($41,963,181 DIVIDED BY 2,762,324 shares
outstanding).................................................................................. $ 15.19
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,173,623 DIVIDED
BY 72,854 shares outstanding)................................................................. $ 16.11
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)..................................................................... $103,912,599
Undistributed net investment income.......................................................... 167,690
Accumulated net realized gain on investments and foreign currency transactions............... 11,383,706
Net unrealized appreciation on translation of assets and liabilities in foreign currencies... 317,143
Net unrealized appreciation of investments................................................... 23,145,123
-----------
Total -- representing net assets applicable to capital shares outstanding...................... $138,926,261
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-129
<PAGE> 1050
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $128,555)............................... $1,344,061
Interest income............................................................................ 211,993
Securities lending income.................................................................. 60,268
----------
Total investment income.................................................................. 1,616,322
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 730,851
Service and distribution expenses: (Note 2)
Class A....................................................................... $ 179,462
Class B....................................................................... 224,655 404,117
---------
Transfer agent fees (Note 2)............................................................... 215,028
Custodian fees............................................................................. 49,232
Printing and postage expenses (Note 2)..................................................... 34,933
Registration and filing fees............................................................... 34,503
Audit fees................................................................................. 24,978
Legal fees................................................................................. 20,747
Fund accounting fees....................................................................... 20,266
Trustees' fees and expenses (Note 2)....................................................... 6,154
Other expenses (Note 1).................................................................... 6,048
----------
Total expenses before reductions......................................................... 1,546,857
----------
Expense reductions (Note 5)............................................................ (2,929)
----------
Total net expenses....................................................................... 1,543,928
----------
Net investment income........................................................................ 72,394
----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments................................................ 9,255,158
Net realized gain on foreign currency transactions.............................. 745,466
---------
Net realized gain during the period...................................................... 10,000,624
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies.......................................................... (341,260)
Net change in unrealized appreciation of investments............................ 7,779,189
---------
Net unrealized appreciation during the period............................................ 7,437,929
----------
Net realized and unrealized gain on investments and foreign currencies....................... 17,438,553
----------
Net increase in net assets resulting from operations......................................... $17,510,947
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-130
<PAGE> 1051
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income..................................................... $ 72,394 $ 212,595
Net realized gain on investments and foreign currency transactions........ 10,000,624 28,144,058
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (341,260) 162,616
Net change in unrealized appreciation (depreciation) of investments....... 7,779,189 (11,824,112)
------------- -------------
Net increase in net assets resulting from operations.................... 17,510,947 16,695,157
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (109,138)
From net realized gain on investments..................................... -- (22,666,381)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (10,444,406)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (8,161)
From net realized gain on investments..................................... -- (358,231)
------------- -------------
Total distributions..................................................... -- (33,586,317)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 206,230,402 243,618,368
Decrease from capital shares repurchased.................................. (236,221,895) (256,140,244)
------------- -------------
Net decrease from capital share transactions............................ (29,991,493) (12,521,876)
------------- -------------
Total decrease in net assets................................................ (12,480,546) (29,413,036)
Net assets:
Beginning of period....................................................... 151,406,807 180,819,843
------------- -------------
End of period *........................................................... $138,926,261 $151,406,807
------------- -------------
------------- -------------
* Includes undistributed net investment income of.......................... $ 167,690 $ 95,296
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-131
<PAGE> 1052
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 1996 (D) 1995 (D) 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.02 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.66 1.55 1.79 1.74 (1.16) 3.92
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.68 1.60 1.82 1.74 (1.16) 3.96
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.02) -- -- -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (4.05) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 15.94 $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.78%(b) 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 95,789 $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.28%(a) 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.28%(a) 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.87%(a) 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.87%(a) 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 34%(a) 92% 80% 113% 86% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-132
<PAGE> 1053
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 (D) 1995 (D) 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.58 1.49 1.75 1.73 (1.16) 2.72
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.55 1.44 1.66 1.61 (1.27) 2.68
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 15.19 $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 11.45%(b) 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 41,963 $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.37)%(a) (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.37)%(a) (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.52%(a) 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.52%(a) 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 34%(a) 92% 80% 113% 86% 92%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-133
<PAGE> 1054
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-----------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER JUNE 1, 1995
JUNE 30, 31, TO
1998 ---------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 (D) 1995
-------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.38 $ 16.81 $ 16.86 $ 15.26
-------------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.68 1.57 1.79 2.02
-------------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.73 1.69 1.88 2.05
-------------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- (0.09) -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45)
-------------- ---------- ---------- -------------
Total distributions................. -- (4.12) (1.93) (0.45)
-------------- ---------- ---------- -------------
Net asset value, end of period.......... $ 16.11 $ 14.38 $ 16.81 $ 16.86
-------------- ---------- ---------- -------------
-------------- ---------- ---------- -------------
Total investment return (c)............. 11.96 %(b) 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,174 $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.63 %(a) 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.63 %(a) 0.58% 0.41% 0.23%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.52 %(a) 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.52 %(a) 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 34 %(a) 92% 80% 113%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
FS-134
<PAGE> 1055
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Worldwide Growth Fund (the "Fund" formerly, GT Global Worldwide Growth
Fund), is a separate series of AIM Growth Series (the "Trust" formerly, G.T.
Global Growth Series ). The Trust is organized as a Delaware business trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Trust has eight
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
FS-135
<PAGE> 1056
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counter party is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $9,461,607
were on loan to brokers. The loans were secured by cash collateral of
$9,905,382, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $60,268.
FS-136
<PAGE> 1057
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $12,876,000 with a weighted average interest rate of 6.24%. Interest expense
for the period ended June 30, 1998 was $2,230, and is included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $331 and $2,657, respectively, of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for Class A for the
period ended June 30, 1998. AIM
FS-137
<PAGE> 1058
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $9,640 and $103,837,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which a Fund compensates AIM Distributors for the
purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes,interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $19,806,884 and $43,210,209, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
FS-138
<PAGE> 1059
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 9,222,918 $143,043,076 9,536,130 $163,326,296
Shares issued in connection with reinvestment of
distributions................................................ -- -- 1,372,411 19,227,529
----------- ------------ ----------- ------------
9,222,918 143,043,076 10,908,541 182,553,825
Shares repurchased............................................. (10,488,575) (163,123,097) (11,147,719) (193,303,890)
----------- ------------ ----------- ------------
Net decrease................................................... (1,265,657) $(20,080,021) (239,178) $(10,750,065)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
CLASS B
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,281,310 $ 33,570,859 1,034,341 $ 17,020,574
Shares issued in connection with reinvestment of
distributions................................................ -- -- 688,809 9,238,884
----------- ------------ ----------- ------------
2,281,310 33,570,859 1,723,150 26,259,458
Shares repurchased............................................. (2,819,573) (41,571,005) (1,675,941) (28,047,548)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (538,263) $ (8,000,146) 47,209 $ (1,788,090)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 1,898,297 $ 29,616,467 1,924,783 $ 34,438,694
Shares issued in connection with reinvestment of
distributions................................................ -- -- 25,931 366,391
----------- ------------ ----------- ------------
1,898,297 29,616,467 1,950,714 34,805,085
Shares repurchased............................................. (2,008,114) (31,527,793) (1,914,043) (34,788,806)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (109,817) $ (1,911,326) 36,671 $ 16,279
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5 EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $2,929 under these arrangements.
FS-139
<PAGE> 1060
GT GLOBAL WORLDWIDE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Worldwide Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the 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, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimated
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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Worldwide Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-140
<PAGE> 1061
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.9%)
Student Loan Marketing Association ........................ US 31,800 $ 4,424,175 2.9
OTHER FINANCIAL
Citicorp .................................................. US 31,600 3,995,420 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 70,500 3,798,187 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 33,500 3,668,250 2.4
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 104,000 2,563,593 1.7
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,365,435 1.6
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,312,203 1.5
BANKS-REGIONAL
Nordbanken Holding AB-/- .................................. SWDN 398,006 2,251,426 1.5
OTHER FINANCIAL
Schroders PLC ............................................. UK 70,000 2,198,851 1.5
BANKS-MONEY CENTER
ING Groep N.V. ............................................ NETH 47,300 1,992,610 1.3
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 84,560 1,922,932 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ........................ IND 103,400 1,848,275 1.2
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,796,273 1.2
BANKS-REGIONAL
Old Mutual South Africa Trust PLC ......................... UK 971,000 1,550,571 1.0
REAL ESTATE INVESTMENT TRUST
Nichiei Co., Ltd. ......................................... JPN 10,400 1,107,739 0.7
OTHER FINANCIAL
Union Bank of Switzerland - Bearer ........................ SWTZ 588 850,237 0.6
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 844,444 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/}{=} ..................................... THAI 249,000 458,160 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 62,644 330,775 0.2
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 12,644 226,512 0.2
BANKS-SUPER REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 23,000 160,383 0.1
INVESTMENT MANAGEMENT
Bank Inicjatyw Gospodarczych BIG S.A. - GDR{\/} ........... POL 3,066 46,757 --
BANKS-REGIONAL
------------
40,713,208
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-141
<PAGE> 1062
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (23.2%)
Federated Department Stores, Inc.-/- ...................... US 82,200 $ 3,539,738 2.3
RETAILERS-APPAREL
Service Corporation International ......................... US 86,400 3,191,400 2.1
CONSUMER SERVICES
CVS Corp. ................................................. US 45,100 2,889,219 1.9
RETAILERS-OTHER
EMI Group PLC ............................................. UK 333,000 2,777,734 1.8
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 813,000 2,717,239 1.8
RETAILERS-OTHER
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,635,000 1.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 158,000 2,354,433 1.6
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 308,900 1,977,100 1.3
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 179,000 1,954,598 1.3
BROADCASTING & PUBLISHING
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 16,300 1,897,931 1.3
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 70,359 1,836,026 1.2
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 16,716 1,781,526 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 15,100 1,616,328 1.1
TELEPHONE NETWORKS
Portugal Telecom S.A. - Registered ........................ PORT 33,450 1,552,516 1.0
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 150,000 968,966 0.6
RETAILERS-FOOD
Vodafone Group PLC ........................................ UK 113,586 818,789 0.5
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 333,100 703,136 0.5
TELEPHONE NETWORKS
------------
35,211,679
------------
Health Care (10.3%)
Bristol Myers Squibb Co. .................................. US 37,300 3,529,513 2.3
PHARMACEUTICALS
Warner-Lambert Co. ........................................ US 23,800 2,951,200 1.9
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 239 2,373,473 1.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 55,400 2,057,714 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 15,800 1,815,025 1.2
PHARMACEUTICALS
Schering AG ............................................... GER 16,580 1,599,461 1.1
PHARMACEUTICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-142
<PAGE> 1063
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Takeda Chemical Industries ................................ JPN 40,000 $ 1,140,230 0.8
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,091 1,478 --
PHARMACEUTICALS
------------
15,468,094
------------
Materials/Basic Industry (8.3%)
Monsanto Co. .............................................. US 67,900 2,851,800 1.9
CHEMICALS
Hercules, Inc. ............................................ US 54,000 2,703,375 1.8
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 35,300 2,292,294 1.5
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 11,290 1,947,013 1.3
CHEMICALS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 285,600 1,398,265 0.9
PAPER/PACKAGING
CRH PLC ................................................... UK 114,500 1,325,493 0.9
BUILDING MATERIALS & COMPONENTS
------------
12,518,240
------------
Energy (6.1%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 138,200 3,299,525 2.2
GAS PRODUCTION & DISTRIBUTION
Petroleum Geo-Services ASA-/- ............................. NOR 31,920 2,010,692 1.3
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,914,614 1.3
OIL
Total S.A. "B" ............................................ FR 17,380 1,891,485 1.3
OIL
------------
9,116,316
------------
Technology (5.2%)
Compaq Computer Corp.-/- .................................. US 60,000 3,386,250 2.2
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 44,500 3,126,125 2.1
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 31,144 1,401,480 0.9
SEMICONDUCTORS
------------
7,913,855
------------
Capital Goods (4.0%)
Textron, Inc. ............................................. US 43,800 2,737,500 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 15,440 1,962,549 1.3
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 60,000 1,397,701 0.9
OFFICE EQUIPMENT
------------
6,097,750
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-143
<PAGE> 1064
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.5%)
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 $ 2,189,068 1.4
AUTO PARTS
Ford Motor Co. ............................................ US 36,200 1,762,488 1.2
AUTOMOBILES
Bridgestone Corp. ......................................... JPN 65,000 1,409,579 0.9
AUTO PARTS
------------
5,361,135
------------
Consumer Non-Durables (3.4%)
RJR Nabisco Holdings Corp. ................................ US 73,300 2,748,750 1.8
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,383,142 0.9
BEVERAGES - ALCOHOLIC
Amway Japan Ltd. .......................................... JPN 55,400 1,061,303 0.7
HOUSEHOLD PRODUCTS
------------
5,193,195
------------
Multi-Industry/Miscellaneous (1.2%)
Shanghai Industrial Holdings Ltd. ......................... HK 490,000 1,821,256 1.2
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $124,048,794) ................ 139,414,728 92.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $11,755,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $11,766,026,
including accrued interest). (cost $11,535,000) .......... 11,535,000 7.6
------------ -----
TOTAL INVESTMENTS (cost $135,583,794) * .................... 150,949,728 99.7
Other Assets and Liabilities ................................ 457,079 0.3
------------ -----
NET ASSETS .................................................. $151,406,807 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $136,039,555 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 21,802,933
Unrealized depreciation: (6,892,760)
-------------
Net unrealized appreciation: $ 14,910,173
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-144
<PAGE> 1065
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.2 5.2
Brazil (BRZL/BRL) .................... 3.5 3.5
Czech Republic (CZCH/CSK) ............ 1.1 1.1
France (FR/FRF) ...................... 2.6 2.6
Germany (GER/DEM) .................... 1.1 1.1
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 1.2 1.2
India (IND/INR) ...................... 1.2 1.2
Italy (ITLY/ITL) ..................... 1.3 1.3
Japan (JPN/JPY) ...................... 5.6 5.6
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 0.9 0.9
Netherlands (NETH/NLG) ............... 3.8 3.8
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 2.2 2.2
Singapore (SING/SGD) ................. 0.6 0.6
Sweden (SWDN/SEK) .................... 2.8 2.8
Switzerland (SWTZ/CHF) ............... 2.2 2.2
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 15.8 15.8
United States (US/USD) ............... 34.6 7.9 42.5
------ ----- -----
Total ............................... 92.1 7.9 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $151,406,807.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 613,677 1.76130 2/27/98 $ (10,861)
---------- -------------
Total Contracts to Buy (Payable amount
$624,538)............................ 613,677 (10,861)
---------- -------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.41%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,476,511 0.61245 1/20/98 $ (6,991)
British Pounds.......................... 1,476,511 0.60002 1/20/98 23,429
Deutsche Marks.......................... 1,729,455 1.73540 2/27/98 56,876
French Francs........................... 2,830,938 5.72800 2/6/98 136,939
Japanese Yen............................ 2,310,962 118.82300 2/4/98 213,801
Japanese Yen............................ 4,318,711 122.20000 2/12/98 263,940
Swiss Francs............................ 1,174,569 1.42180 3/19/98 21,099
---------- -------------
Total Contracts to Sell (Receivable
amount $16,026,750).................. 15,317,657 709,093
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.12%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 698,232
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
FS-145
<PAGE> 1066
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,583,794) (Note 1).......................... $150,949,728
U.S. currency.................................................................. $ 48
Foreign currencies (cost $1,578,009)........................................... 1,536,226 1,536,274
---------
Receivable for Fund shares sold........................................................... 1,036,495
Receivable for open forward foreign currency contracts, net (Note 1)...................... 698,232
Dividends and dividend withholding tax reclaims receivable................................ 221,497
Receivable for securities sold............................................................ 194,078
Interest receivable....................................................................... 1,858
Miscellaneous receivable.................................................................. 646
-----------
Total assets............................................................................ 154,638,808
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,788,587
Payable for investment management and administration fees (Note 2)........................ 121,861
Payable for printing and postage expenses................................................. 96,022
Payable for transfer agent fees (Note 2).................................................. 89,810
Payable for service and distribution expenses (Note 2).................................... 67,726
Payable for professional fees............................................................. 37,204
Payable for custodian fees................................................................ 12,019
Payable for Trustees' fees and expenses (Note 2).......................................... 6,727
Payable for registration and filing fees.................................................. 5,626
Payable for fund accounting fees (Note 2)................................................. 1,924
Other accrued expenses.................................................................... 4,495
-----------
Total liabilities....................................................................... 3,232,001
-----------
Net assets.................................................................................. $151,406,807
-----------
-----------
Class A:
Net asset value and redemption price per share ($103,769,443 DIVIDED BY 7,275,753 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($45,009,871 DIVIDED BY 3,300,587 shares
outstanding)............................................................................... $ 13.64
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,627,493
DIVIDED BY 182,671 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $133,904,092
Undistributed net investment income....................................................... 95,296
Accumulated net realized gain on investments and foreign currency transactions............ 1,383,082
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 658,403
Net unrealized appreciation of investments................................................ 15,365,934
-----------
Total -- representing net assets applicable to capital shares outstanding................... $151,406,807
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-146
<PAGE> 1067
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $275,397).............................. $ 2,764,013
Interest income........................................................................... 645,128
-----------
Total investment income................................................................. 3,409,141
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 1,619,691
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 400,318
Class B.................................................................... 496,417 896,735
-----------
Transfer agent fees (Note 2).............................................................. 455,298
Custodian fees............................................................................ 111,017
Printing and postage expenses (Note 2).................................................... 63,005
Registration and filing fees.............................................................. 53,920
Audit fees................................................................................ 47,254
Fund accounting fees...................................................................... 41,680
Legal fees................................................................................ 29,476
Trustees' fees and expenses (Note 2)...................................................... 13,218
Other expenses (Note 1)................................................................... 12,217
-----------
Total expenses before reductions........................................................ 3,343,511
-----------
Expense reductions (Notes 1 & 5)...................................................... (146,965)
-----------
Total net expenses...................................................................... 3,196,546
-----------
Net investment income....................................................................... 212,595
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 25,979,995
Net realized gain on foreign currency transactions........................... 2,164,063
-----------
Net realized gain during the year....................................................... 28,144,058
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 162,616
Net change in unrealized appreciation of investments......................... (11,824,112)
-----------
Net unrealized depreciation during the year............................................. (11,661,496)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 16,482,562
-----------
Net increase in net assets resulting from operations........................................ $16,695,157
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-147
<PAGE> 1068
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 212,595 $ (81,643)
Net realized gain on investments and foreign currency transactions....... 28,144,058 21,499,978
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 162,616 111,081
Net change in unrealized appreciation (depreciation) of investments...... (11,824,112) (1,481,639)
------------- -------------
Net increase in net assets resulting from operations................... 16,695,157 20,047,777
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (109,138) --
From net realized gain on investments.................................... (22,666,381) (13,087,564)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (10,444,406) (5,727,628)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (8,161) --
From net realized gain on investments.................................... (358,231) (175,598)
------------- -------------
Total distributions.................................................... (33,586,317) (18,990,790)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 243,618,368 290,210,249
Decrease from capital shares repurchased................................. (256,140,244) (314,217,462)
------------- -------------
Net decrease from capital share transactions........................... (12,521,876) (24,007,213)
------------- -------------
Total decrease in net assets............................................... (29,413,036) (22,950,226)
Net assets:
Beginning of year........................................................ 180,819,843 203,770,069
------------- -------------
End of year *............................................................ $151,406,807 $180,819,843
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ 95,296 $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-148
<PAGE> 1069
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.55 1.79 1.74 (1.16) 3.92
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.60 1.82 1.74 (1.16) 3.96
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.02) -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Total distributions................. (4.05) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-149
<PAGE> 1070
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.49 1.75 1.73 (1.16) 2.72
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.44 1.66 1.61 (1.27) 2.68
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Total distributions................. (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-150
<PAGE> 1071
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------
JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO
---------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.81 $ 16.86 $ 15.26
------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.57 1.79 2.02
------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.69 1.88 2.05
------------- ------------- -------------
Distributions to shareholders:
From net investment income............ (0.09) -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45)
------------- ------------- -------------
Total distributions................. (4.12) (1.93) (0.45)
------------- ------------- -------------
Net asset value, end of period.......... $ 14.38 $ 16.81 $ 16.86
------------- ------------- -------------
------------- ------------- -------------
Total investment return (c)............. 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.58% 0.41% 0.23%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-151
<PAGE> 1072
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Worldwide Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
FS-152
<PAGE> 1073
GT GLOBAL WORLDWIDE GROWTH FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a counter
party is unable to meet the terms of a contract or if the value of the currency
changes unfavorably. The Fund may enter into Forward Contracts in connection
with planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$12,659,388 were on loan to brokers. The loans were secured by cash collateral
of $13,106,152, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $137,889 which were used to reduce
the Fund's custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
FS-153
<PAGE> 1074
GT GLOBAL WORLDWIDE GROWTH FUND
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with the BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,000,000 with a weighted average interest rate of 6.44%. Interest expense
for the year ended December 31, 1997 was $1,431, included in "Other Expenses" on
the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $8,456
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $3,645 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $272,024. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
FS-154
<PAGE> 1075
GT GLOBAL WORLDWIDE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's Expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B, and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $138,743,808 and $176,373,627, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 9,536,130 $163,326,296 14,357,786 $250,471,583
Shares issued in connection with reinvestment of distributions... 1,372,411 19,227,529 670,053 11,082,654
---------- ------------ ---------- ------------
10,908,541 182,553,825 15,027,839 261,554,237
Shares repurchased............................................... (11,147,719) (193,303,890) (16,192,391) (283,412,820)
---------- ------------ ---------- ------------
Net decrease..................................................... (239,178) $(10,750,065) (1,164,552) $(21,858,583)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,034,341 $ 17,020,574 854,412 $ 14,531,361
Shares issued in connection with reinvestment of distributions... 688,809 9,238,884 308,538 4,961,416
---------- ------------ ---------- ------------
1,723,150 26,259,458 1,162,950 19,492,777
Shares repurchased............................................... (1,675,941) (28,047,548) (1,309,880) (22,330,821)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... 47,209 $ (1,788,090) (146,930) $ (2,838,044)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,924,783 $ 34,438,694 521,049 $ 8,987,637
Shares issued in connection with reinvestment of distributions... 25,931 366,391 10,546 175,598
---------- ------------ ---------- ------------
1,950,714 34,805,085 531,595 9,163,235
Shares repurchased............................................... (1,914,043) (34,788,806) (485,979) (8,473,821)
---------- ------------ ---------- ------------
Net increase..................................................... 36,671 $ 16,279 45,616 $ 689,414
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
FS-155
<PAGE> 1076
GT GLOBAL WORLDWIDE GROWTH FUND
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $9,076 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2723 per share (representing an approximate total of
$2,266,869). The total amount of taxes paid by the Fund to such countries was
approximately $.0331 per share (representing an approximate total of $275,397).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,856,473 as a capital gain dividend for the fiscal year ended December 31,
1997.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 5.14%
of ordinary income dividends paid (including short-term capital gain
distributions, if any) by the Fund as income qualifying for the dividends
received deduction for corporations for the fiscal year ended December 31, 1997.
FS-156
<PAGE> 1077
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (39.7%)
Insight Enterprises, Inc.-/- ............................... US 19,800 $ 792,000 2.2
RETAILERS-OTHER
DM Management Co.-/- ....................................... US 20,500 735,437 2.1
RETAILERS-APPAREL
Service Experts, Inc.-/- ................................... US 20,100 693,450 2.0
CONSUMER SERVICES
Lason Holdings, Inc.-/- .................................... US 12,500 681,250 1.9
CONSUMER SERVICES
Iron Mountain, Inc.-/- ..................................... US 14,700 657,825 1.9
BUSINESS & PUBLIC SERVICES
American Disposal Services, Inc.-/- ........................ US 14,000 656,250 1.9
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- .................................. US 18,900 588,263 1.7
CONSUMER SERVICES
Personnel Group of America, Inc.-/- ........................ US 27,300 546,000 1.5
BUSINESS & PUBLIC SERVICES
Eastern Environmental Services, Inc.-/- .................... US 15,400 523,600 1.5
CONSUMER SERVICES
Central Parking Corp. ...................................... US 10,400 473,200 1.3
CONSUMER SERVICES
Comfort Systems USA, Inc.-/- ............................... US 20,200 472,175 1.3
BUSINESS & PUBLIC SERVICES
99 Cents Only Stores-/- .................................... US 11,100 460,650 1.3
RETAILERS-OTHER
ITT Educational Services, Inc.-/- .......................... US 12,400 399,900 1.1
CONSUMER SERVICES
United Rentals, Inc.-/- .................................... US 9,300 390,600 1.1
BUSINESS & PUBLIC SERVICES
Hagler Bailly, Inc.-/- ..................................... US 14,900 385,538 1.1
BUSINESS & PUBLIC SERVICES
Expeditors International of Washington, Inc. ............... US 8,400 369,600 1.0
TRANSPORTATION - SHIPPING
Superior Services, Inc.-/- ................................. US 12,100 363,756 1.0
CONSUMER SERVICES
Cornell Corrections, Inc.-/- ............................... US 16,300 342,300 1.0
BUSINESS & PUBLIC SERVICES
Fairfield Communities, Inc.-/- ............................. US 17,800 341,537 1.0
LEISURE & TOURISM
ResortQuest International, Inc.-/- ......................... US 20,400 332,775 0.9
LEISURE & TOURISM
United Road Services, Inc.-/- .............................. US 15,800 302,175 0.9
CONSUMER SERVICES
Execustay Corp.-/- ......................................... US 21,900 257,325 0.7
LEISURE & TOURISM
Championship Auto Racing Teams, Inc.-/- .................... US 13,900 253,675 0.7
LEISURE & TOURISM
Cox Radio, Inc.-/- ......................................... US 5,700 246,525 0.7
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-157
<PAGE> 1078
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Duane Reade, Inc.-/- ....................................... US 8,100 $ 243,000 0.7
RETAILERS-OTHER
Lamar Advertising Co.-/- ................................... US 6,500 233,188 0.7
BROADCASTING & PUBLISHING
Ambassadors International, Inc.-/- ......................... US 7,300 221,281 0.6
LEISURE & TOURISM
CompX International, Inc.-/- ............................... US 10,200 220,575 0.6
BUSINESS & PUBLIC SERVICES
Industrial Distribution Group, Inc.-/- ..................... US 13,200 204,600 0.6
WHOLESALE & INTERNATIONAL TRADE
e.spire Communications, Inc.-/- ............................ US 8,700 196,294 0.6
TELEPHONE NETWORKS
CORT Business Services Corp.-/- ............................ US 5,900 185,850 0.5
BUSINESS & PUBLIC SERVICES
Vistana, Inc.-/- ........................................... US 9,500 174,563 0.5
LEISURE & TOURISM
Jevic Transportation, Inc.-/- .............................. US 15,200 172,900 0.5
TRANSPORTATION - SHIPPING
Metzler Group, Inc.-/- ..................................... US 4,500 164,813 0.5
BUSINESS & PUBLIC SERVICES
Restoration Hardware, Inc.-/- .............................. US 6,100 153,263 0.4
RETAILERS-OTHER
Blue Rhino Corp.-/- ........................................ US 8,200 143,500 0.4
RETAILERS-OTHER
Sunglass Hut International, Inc.-/- ........................ US 12,700 140,494 0.4
RETAILERS-APPAREL
Cavanaughs Hospitality Corp.-/- ............................ US 9,700 126,706 0.4
LEISURE & TOURISM
Waste Connections, Inc.-/- ................................. US 6,200 123,225 0.3
CONSUMER SERVICES
ACSYS, Inc.-/- ............................................. US 6,400 88,000 0.2
BUSINESS & PUBLIC SERVICES
-----------
14,058,058
-----------
Technology (16.6%)
Software AG Systems, Inc.-/- ............................... US 21,200 620,100 1.8
SOFTWARE
Metro Information Services, Inc.-/- ........................ US 12,400 485,150 1.4
COMPUTERS & PERIPHERALS
Atlantic Data Services, Inc.-/- ............................ US 24,000 460,500 1.3
COMPUTERS & PERIPHERALS
Computer Management Sciences, Inc.-/- ...................... US 16,200 384,750 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. ..................................... US 13,900 363,138 1.0
INSTRUMENTATION & TEST
Data Processing Resources Corp.-/- ......................... US 11,000 341,687 1.0
COMPUTERS & PERIPHERALS
AnswerThink Consulting Group, Inc.-/- ...................... US 15,800 339,700 1.0
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-158
<PAGE> 1079
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Platinum Technology, Inc.-/- ............................... US 9,800 $ 279,913 0.8
SOFTWARE
MAPICS, Inc.-/- ............................................ US 13,300 261,844 0.7
SOFTWARE
Platinum Software Corp.-/- ................................. US 10,100 246,188 0.7
SOFTWARE
Excel Switching Corp.-/- ................................... US 9,400 233,825 0.7
TELECOM TECHNOLOGY
Cotelligent Group, Inc.-/- ................................. US 9,700 226,737 0.6
COMPUTERS & PERIPHERALS
Concord Communications, Inc.-/- ............................ US 8,200 209,612 0.6
SOFTWARE
Analysts International Corp. ............................... US 6,850 194,369 0.6
COMPUTERS & PERIPHERALS
SPR, Inc.-/- ............................................... US 6,000 186,750 0.5
COMPUTERS & PERIPHERALS
Fundtech Ltd.-/- {\/} ...................................... ISRL 8,525 160,909 0.5
SOFTWARE
JDA Software Group, Inc.-/- ................................ US 3,300 144,375 0.4
SOFTWARE
Documentum, Inc.-/- ........................................ US 2,900 139,200 0.4
SOFTWARE
BrightStar Information Technology Group, Inc.-/- ........... US 9,500 131,812 0.4
COMPUTERS & PERIPHERALS
Aspen Technology, Inc.-/- .................................. US 2,300 116,150 0.3
SOFTWARE
Pericom Semiconductor Corp.-/- ............................. US 15,400 105,875 0.3
SEMICONDUCTORS
Amkor Technology, Inc.-/- .................................. US 10,800 100,912 0.3
SEMICONDUCTORS
Walker Interactive Systems, Inc.-/- ........................ US 3,700 54,575 0.2
SOFTWARE
-----------
5,788,071
-----------
Health Care (15.7%)
ESC Medical Systems Ltd.-/- {\/} ........................... ISRL 15,000 506,250 1.4
MEDICAL TECHNOLOGY & SUPPLIES
ADAC Laboratories-/- ....................................... US 19,200 432,000 1.2
HEALTH CARE SERVICES
SEQUUS Pharmaceuticals, Inc.-/- ............................ US 36,300 412,913 1.2
PHARMACEUTICALS
PhyCor, Inc.-/- ............................................ US 24,800 410,750 1.2
HEALTH CARE SERVICES
Vertex Pharmaceuticals, Inc.-/- ............................ US 16,300 366,750 1.0
PHARMACEUTICALS
AmeriPath, Inc.-/- ......................................... US 30,900 365,006 1.0
HEALTH CARE SERVICES
Assisted Living Concepts, Inc.-/- .......................... US 19,600 338,100 1.0
HEALTH CARE SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-159
<PAGE> 1080
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
CryoLife, Inc.-/- .......................................... US 21,400 $ 337,050 1.0
BIOTECHNOLOGY
Gilead Sciences, Inc.-/- ................................... US 10,200 327,037 0.9
BIOTECHNOLOGY
AXYS Pharmaceuticals, Inc.-/- .............................. US 44,100 314,212 0.9
PHARMACEUTICALS
Scios, Inc.-/- ............................................. US 35,200 312,400 0.9
HEALTH CARE SERVICES
COR Therapeutics, Inc.-/- .................................. US 22,500 312,188 0.9
BIOTECHNOLOGY
Total Renal Care Holdings, Inc.-/- ......................... US 8,300 286,350 0.8
HEALTH CARE SERVICES
American Dental Partners, Inc.-/- .......................... US 16,800 235,200 0.7
HEALTH CARE SERVICES
Barr Laboratories, Inc.-/- ................................. US 5,900 234,525 0.7
PHARMACEUTICALS
Symphonix Devices, Inc.-/- ................................. US 15,200 174,800 0.5
HEALTH CARE SERVICES
Physician Reliance Network, Inc.-/- ........................ US 6,200 70,913 0.2
MEDICAL TECHNOLOGY & SUPPLIES
Depotech Corp.-/- .......................................... US 42,200 65,937 0.2
PHARMACEUTICALS
-----------
5,502,381
-----------
Finance (7.4%)
Metris Cos., Inc.-/- ....................................... US 6,700 427,125 1.2
CONSUMER FINANCE
Affiliated Managers Group, Inc.-/- ......................... US 10,600 393,525 1.1
INVESTMENT MANAGEMENT
Reinsurance Group of America, Inc. Non-voting-/- ........... US 7,300 374,581 1.1
INSURANCE-LIFE
LaSalle Partners, Inc.-/- .................................. US 7,300 324,850 0.9
REAL ESTATE
Correctional Properties Trust-/- ........................... US 15,800 319,950 0.9
REAL ESTATE INVESTMENT TRUST
Annuity and Life Re (Holdings) Ltd.-/- ..................... US 11,000 243,375 0.7
INSURANCE-LIFE
Stirling Cooke Brown Holdings Ltd. ......................... US 8,000 225,000 0.6
INSURANCE - PROPERTY-CASUALTY
AmeriCredit Corp.-/- ....................................... US 5,200 185,575 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. ........................... US 6,600 150,975 0.4
CONSUMER FINANCE
-----------
2,644,956
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-160
<PAGE> 1081
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (5.5%)
Newfield Exploration Co.-/- ................................ US 29,600 $ 736,300 2.1
OIL
Petsec Energy Ltd. - ADR-/- {\/} ........................... AUSL 14,600 236,337 0.7
OIL
Cross Timbers Oil Co. ...................................... US 10,800 205,875 0.6
OIL
Dril-Quip, Inc.-/- ......................................... US 7,800 204,750 0.6
ENERGY EQUIPMENT & SERVICES
Mallon Resources Corp.-/- .................................. US 16,800 201,600 0.6
OIL
Varco International, Inc.-/- ............................... US 9,600 190,200 0.5
ENERGY EQUIPMENT & SERVICES
Hanover Compressor Co.-/- .................................. US 5,000 135,313 0.4
ENERGY EQUIPMENT & SERVICES
-----------
1,910,375
-----------
Materials/Basic Industry (4.9%)
OM Group, Inc. ............................................. US 12,600 519,750 1.5
METALS - NON-FERROUS
Hawk Corp. "A"-/- .......................................... US 21,100 371,888 1.1
METALS - NON-FERROUS
Gibraltar Steel Corp.-/- ................................... US 16,100 330,050 0.9
METALS - STEEL
Cambrex Corp. .............................................. US 10,400 273,000 0.8
CHEMICALS
CombiChem, Inc.-/- ......................................... US 33,000 228,937 0.6
CHEMICALS
-----------
1,723,625
-----------
Capital Goods (4.8%)
General Cable Corp. ........................................ US 28,700 828,712 2.4
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................. US 14,800 436,600 1.2
OFFICE EQUIPMENT
LMI Aerospace, Inc.-/- ..................................... US 14,500 150,438 0.4
AEROSPACE/DEFENSE
Gradall Industries, Inc.-/- ................................ US 10,200 149,175 0.4
MACHINERY & ENGINEERING
Global Industries Ltd.-/- .................................. US 8,100 136,687 0.4
CONSTRUCTION
-----------
1,701,612
-----------
Consumer Durables (1.4%)
Tower Automotive, Inc.-/- .................................. US 7,800 334,425 0.9
AUTO PARTS
U.S. Home Corp.-/- ......................................... US 4,100 169,125 0.5
HOUSING
-----------
503,550
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-161
<PAGE> 1082
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (0.7%)
Mail-Well, Inc.-/- ......................................... US 11,600 $ 251,575 0.7
OTHER CONSUMER GOODS
Racing Champions Corp.-/- .................................. US 700 8,181 --
TOYS
-----------
259,756
----------- -----
TOTAL EQUITY INVESTMENTS (cost $31,159,540) .................. 34,092,384 96.7
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co., due
July 1, 1998, for an effective yield of 5.70%,
collateralized by $2,560,000 U.S. Treasury Bills, 5.875%
due 1/31/99 (market value of collateral is $2,627,200,
including accrued interest). (cost $2,573,000) ........... 2,573,000 7.3
----------- -----
TOTAL INVESTMENTS (cost $33,732,540) * ...................... 36,665,384 104.0
Other Assets and Liabilities ................................. (1,410,524) (4.0)
----------- -----
NET ASSETS ................................................... $35,254,860 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $33,817,496 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,542,875
Unrealized depreciation: (1,694,987)
-------------
Net unrealized appreciation: $ 2,847,888
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-162
<PAGE> 1083
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (49.2%)
Outdoor Systems, Inc.-/- .................................. US 1,203,780 $ 33,705,837 7.0
BUSINESS & PUBLIC SERVICES
Clear Channel Communications, Inc.-/- ..................... US 268,443 29,293,842 6.1
BROADCASTING & PUBLISHING
Snyder Communications, Inc.-/- ............................ US 614,600 27,042,400 5.6
BUSINESS & PUBLIC SERVICES
Hilton Hotels Corp. ....................................... US 709,800 20,229,300 4.2
LEISURE & TOURISM
Chancellor Media Corp.-/- ................................. US 340,500 16,907,953 3.5
BROADCASTING & PUBLISHING
Premier Parks, Inc.-/- .................................... US 221,800 14,777,425 3.1
LEISURE & TOURISM
ServiceMaster Co. ......................................... US 320,200 12,187,613 2.5
CONSUMER SERVICES
Cablevision Systems Corp. "A"-/- .......................... US 125,000 10,437,500 2.2
CABLE TELEVISION
Keane, Inc.-/- ............................................ US 182,100 10,197,600 2.1
BUSINESS & PUBLIC SERVICES
Central Parking Corp. ..................................... US 221,800 10,091,900 2.1
CONSUMER SERVICES
Young & Rubicam, Inc.-/- .................................. US 308,200 9,862,400 2.0
BUSINESS & PUBLIC SERVICES
Cambridge Technology Partners, Inc.-/- .................... US 164,500 8,985,813 1.9
BUSINESS & PUBLIC SERVICES
Univision Communications, Inc.-/- ......................... US 239,600 8,925,100 1.9
BROADCASTING & PUBLISHING
Lamar Advertising Co.-/- .................................. US 217,100 7,788,463 1.6
BUSINESS & PUBLIC SERVICES
Personnel Group of America, Inc.-/- ....................... US 366,700 7,334,000 1.5
BUSINESS & PUBLIC SERVICES
Jacor Communications, Inc.-/- ............................. US 96,300 5,681,700 1.2
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 86,400 3,515,400 0.7
BUSINESS & PUBLIC SERVICES
------------
236,964,246
------------
Technology (14.6%)
Sterling Commerce, Inc.-/- ................................ US 327,700 15,893,450 3.3
SOFTWARE
Software AG Systems, Inc.-/- .............................. US 400,000 11,700,000 2.4
SOFTWARE
Aspen Technology, Inc.-/- ................................. US 190,500 9,620,250 2.0
SOFTWARE
Platinum Technology, Inc.-/- .............................. US 314,000 8,968,625 1.9
SOFTWARE
SunGard Data Systems, Inc.-/- ............................. US 229,000 8,787,875 1.8
SOFTWARE
Peoplesoft, Inc.-/- ....................................... US 177,500 8,342,500 1.7
SOFTWARE
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-163
<PAGE> 1084
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Ciena Corp.-/- ............................................ US 104,000 $ 7,241,000 1.5
TELECOM TECHNOLOGY
------------
70,553,700
------------
Finance (13.0%)
Golden State Bancorp, Inc.-/- ............................. US 381,300 11,343,675 2.4
SAVINGS & LOANS
C.I.T. Group, Inc. "A"-/- ................................. US 266,800 10,005,000 2.1
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 9,376,406 1.9
INSURANCE - PROPERTY-CASUALTY
GreenPoint Financial Corp. ................................ US 249,200 9,376,150 1.9
SAVINGS & LOANS
Capital One Financial Corp. ............................... US 68,200 8,469,588 1.8
CONSUMER FINANCE
Ace Ltd. .................................................. US 183,100 7,140,900 1.5
INSURANCE - PROPERTY-CASUALTY
Heller Financial, Inc.-/- ................................. US 226,600 6,798,000 1.4
OTHER FINANCIAL
------------
62,509,719
------------
Health Care (8.0%)
Forest Laboratories, Inc. "A"-/- .......................... US 268,000 9,581,000 2.0
PHARMACEUTICALS
Wellpoint Health Networks-/- .............................. US 118,000 8,732,000 1.8
HEALTH CARE SERVICES
ALZA Corp.-/- ............................................. US 176,300 7,624,975 1.6
PHARMACEUTICALS
HBO & Co. ................................................. US 206,200 7,268,550 1.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 68,100 5,533,125 1.1
HEALTH CARE SERVICES
------------
38,739,650
------------
Consumer Non-Durables (6.7%)
U.S. Foodservice-/- ....................................... US 553,400 19,403,588 4.0
FOOD
Suiza Foods Corp.-/- ...................................... US 170,500 10,176,719 2.1
FOOD
International Home Foods, Inc.-/- ......................... US 135,400 3,080,350 0.6
FOOD
------------
32,660,657
------------
Materials/Basic Industry (5.4%)
International Specialty Products, Inc.-/- ................. US 668,200 12,445,225 2.6
CHEMICALS
Millenium Chemicals, Inc. ................................. US 215,600 7,303,450 1.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-164
<PAGE> 1085
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Crompton & Knowles Corp. .................................. US 250,700 $ 6,314,506 1.3
CHEMICALS
------------
26,063,181
------------
Energy (3.1%)
J. Ray McDermott S.A.-/- .................................. US 239,900 9,955,850 2.1
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 75,300 5,059,219 1.0
ENERGY SOURCES
------------
15,015,069
------------
Capital Goods (2.5%)
U.S. Filter Corp.-/- ...................................... US 422,250 11,849,391 2.5
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $397,646,938) ................ 494,355,613 102.5
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Golden State Bancorp. Litigation Warrants-/- (cost
$2,296,744) .............................................. US 381,300 2,025,656 0.4
SAVINGS & LOANS
------------ -----
TOTAL INVESTMENTS (cost $399,943,682) * .................... 496,381,269 102.9
Other Assets and Liabilities ................................ (14,212,467) (2.9)
------------ -----
NET ASSETS .................................................. $482,168,802 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
* For Federal income tax purposes, cost is $401,270,613 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 99,557,388
Unrealized depreciation: (4,446,732)
-------------
Net unrealized appreciation: $ 95,110,656
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-165
<PAGE> 1086
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (33.1%)
Exel Ltd. ................................................. US 10,900 $ 848,156 2.9
INSURANCE - PROPERTY-CASUALTY
Chase Manhattan Corp. ..................................... US 10,150 766,325 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 12,150 736,594 2.5
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 7,875 721,055 2.4
INSURANCE - MULTI-LINE
Fleet Financial Group, Inc. ............................... US 8,600 718,100 2.4
BANKS-SUPER REGIONAL
SLM Holding Corp. ......................................... US 14,612 715,988 2.4
OTHER FINANCIAL
First Chicago NBD Corp. ................................... US 8,000 709,000 2.4
BANKS-REGIONAL
Mellon Bank Corp. ......................................... US 9,700 675,363 2.3
BANKS-REGIONAL
Household International, Inc. ............................. US 13,500 671,625 2.3
CONSUMER FINANCE
BankAmerica Corp. ......................................... US 7,550 652,603 2.2
BANKS-MONEY CENTER
GreenPoint Financial Corp. ................................ US 16,000 602,000 2.0
SAVINGS & LOANS
NationsBank Corp. ......................................... US 7,700 589,050 2.0
BANKS-REGIONAL
Starwood Hotels & Resorts ................................. US 8,583 414,666 1.4
REAL ESTATE INVESTMENT TRUST
Citicorp .................................................. US 2,400 358,200 1.2
BANKS-MONEY CENTER
Crescent Real Estate Equities Co. ......................... US 10,000 336,250 1.1
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 9,025 283,159 1.0
REAL ESTATE INVESTMENT TRUST
------------
9,798,134
------------
Energy (17.1%)
Texas Utilities Co. ....................................... US 17,900 745,088 2.5
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................... US 9,200 704,950 2.4
OIL
Unocal Corp. .............................................. US 19,300 689,975 2.3
OIL
Atlantic Richfield Co. (ARCO) ............................. US 8,100 632,813 2.1
OIL
Anadarko Petroleum Corp. .................................. US 9,200 618,125 2.1
ENERGY SOURCES
McDermott International, Inc. ............................. US 16,600 571,663 1.9
ENERGY EQUIPMENT & SERVICES
Pinnacle West Capital Corp. ............................... US 9,625 433,125 1.5
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-166
<PAGE> 1087
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Carolina Power & Light Co. ................................ US 9,000 $ 390,375 1.3
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 7,825 295,883 1.0
ELECTRICAL & GAS UTILITIES
------------
5,081,997
------------
Services (12.9%)
Bell Atlantic Corp. ....................................... US 18,400 839,500 2.8
TELEPHONE - REGIONAL/LOCAL
Comcast Corp. 'A' ......................................... US 17,500 710,391 2.4
CABLE TELEVISION
Time Warner, Inc. ......................................... US 8,000 683,500 2.3
BROADCASTING & PUBLISHING
Federated Department Stores, Inc.-/- ...................... US 11,500 618,844 2.1
RETAILERS-APPAREL
The Limited, Inc. ......................................... US 14,825 491,078 1.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 10,000 470,000 1.6
TELEPHONE - REGIONAL/LOCAL
------------
3,813,313
------------
Materials/Basic Industry (12.4%)
E.I. du Pont de Nemours & Company ......................... US 9,200 686,550 2.3
CHEMICALS
Owens Corning ............................................. US 16,200 661,163 2.2
BUILDING MATERIALS & COMPONENTS
Millenium Chemicals, Inc. ................................. US 18,500 626,688 2.1
CHEMICALS
Stone Container Corp. ..................................... US 38,600 603,125 2.0
PAPER/PACKAGING
Imperial Chemical Industries PLC - ADR{\/} ................ US 7,700 496,650 1.7
CHEMICALS
Crompton & Knowles Corp. .................................. US 13,500 340,031 1.2
CHEMICALS
International Paper Co. ................................... US 6,000 258,000 0.9
PAPER/PACKAGING
------------
3,672,207
------------
Consumer Durables (7.1%)
Ford Motor Co. ............................................ US 12,500 737,500 2.5
AUTOMOBILES
Lennar Corp. .............................................. US 18,500 545,750 1.9
HOUSING
General Motors Corp. ...................................... US 6,600 440,963 1.5
AUTOMOBILES
Meritor Automotive, Inc. .................................. US 15,000 360,000 1.2
AUTO PARTS
------------
2,084,213
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-167
<PAGE> 1088
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (5.2%)
International Business Machines Corp. ..................... US 7,500 $ 861,094 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp. ..................................... US 24,200 686,675 2.3
COMPUTERS & PERIPHERALS
------------
1,547,769
------------
Consumer Non-Durables (4.0%)
Philip Morris Cos., Inc. .................................. US 17,050 671,344 2.3
TOBACCO
RJR Nabisco Holdings Corp. ................................ US 21,275 505,281 1.7
TOBACCO
------------
1,176,625
------------
Capital Goods (3.7%)
U.S. Filter Corp.-/- ...................................... US 20,625 578,789 2.0
ENVIRONMENTAL
U.S.A.Waste Services, Inc. ................................ US 14,300 500,500 1.7
ENVIRONMENTAL
------------
1,079,289
------------
Health Care (1.6%)
Pharmacia & Upjohn, Inc. .................................. US 10,500 484,309 1.6
PHARMACEUTICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $26,403,641) ................. 28,737,856 97.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%
collateralized by $460,000 U.S. Treasury Bills, 5.875% due
1/31/99 (market value of collateral is $472,075, including
accrued interest). (cost $459,000) ....................... 459,000 1.5
------------ -----
TOTAL INVESTMENTS (cost $26,862,641) * ..................... 29,196,856 98.6
Other Assets and Liabilities ................................ 400,530 1.4
------------ -----
NET ASSETS .................................................. $ 29,597,386 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $26,900,718 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,898,607
Unrealized depreciation: (602,469)
-------------
Net unrealized appreciation: $ 2,296,138
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-168
<PAGE> 1089
STATEMENTS OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------
SMALL CAP
EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
-------------- ----------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $33,732,540; $399,943,682;
and $26,862,641, respectively) (Note 1).............................. $36,665,384 4$96,381,269 $29,196,856
U.S. currency......................................................... 86 644 240
Dividends receivable.................................................. 588 80,604 42,424
Interest receivable................................................... 407 -- 73
Receivable for Fund shares sold....................................... 522,566 442,351 70,096
Receivable for securities sold........................................ 447,737 1,391,606 857,174
Receivable from A I M Advisors, Inc. (Note 2)......................... 75,985 -- 68,265
Unamortized organizational costs (Note 1)............................. 40,679 -- 40,679
-------------- ----------- --------------
Total assets........................................................ 37,753,432 498,296,474 30,275,807
-------------- ----------- --------------
Liabilities:
Payable for custodian fees............................................ 778 84,299 5,455
Payable for Directors' and Trustees' fees and expenses (Note 2)....... 6,703 4,385 6,602
Payable for fund accounting fees (Note 2)............................. 1,532 10,018 658
Payable for Fund shares repurchased (Note 2).......................... 938,102 6,431,497 83,620
Payable for investment management and administration fees (Note 2).... 80,799 273,092 75,127
Payable for loan outstanding (Note 1)................................. -- 6,652,000 --
Payable for printing and postage expenses............................. 37,978 13,626 37,498
Payable for professional fees......................................... 19,013 13,728 17,735
Payable for registration and filing fees.............................. 22,587 13,414 17,486
Payable for securities purchased...................................... 1,355,332 2,006,275 399,574
Payable for service and distribution expenses (Note 2)................ 18,805 254,651 18,640
Payable for transfer agent fees (Note 2).............................. 13,369 339,800 11,132
Other accrued expenses................................................ 3,474 30,887 4,794
-------------- ----------- --------------
Total liabilities................................................... 2,498,472 16,127,672 678,321
Minority interest (Notes 1 & 2)....................................... 100 -- 100
-------------- ----------- --------------
Net assets.............................................................. $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
Class A:
Net asset value and redemption price per share ($12,620,070 DIVIDED BY
746,689; $238,023,863 DIVIDED BY 10,119,708; and $8,669,479 DIVIDED BY
471,856 shares outstanding, respectively).............................. $ 16.90 $ 23.52 $ 18.37
-------------- ----------- --------------
-------------- ----------- --------------
Maximum offering price per share (100/94.5 of $16.90; 100/94.5 of
$23.52; and 100/94.5 of $18.37, respectively) *........................ $ 17.88 $ 24.89 $ 19.44
-------------- ----------- --------------
-------------- ----------- --------------
Class B:+
Net asset value and offering price per share $20,177,075 DIVIDED BY
1,216,622; $243,093,084 DIVIDED BY 10,727,676; and $20,174,796 DIVIDED
BY 1,114,911 shares outstanding, respectively)......................... $ 16.58 $ 22.66 $ 18.10
-------------- ----------- --------------
-------------- ----------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share $2,457,715 DIVIDED BY 144,152; $1,051,855 DIVIDED BY 44,488; and
$753,111 DIVIDED BY 40,640 shares outstanding, respectively)........... $ 17.05 $ 23.64 $ 18.53
-------------- ----------- --------------
-------------- ----------- --------------
Net assets consist of:
Paid in capital (Note 4).............................................. $27,650,613 3$45,007,969 $25,439,934
Accumulated net investment loss....................................... (310,132) (3,756,379) (21,933)
Accumulated net realized gain on investments.......................... 4,981,535 44,479,625 1,845,170
Net unrealized appreciation of investments............................ 2,932,844 96,437,587 2,334,215
-------------- ----------- --------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
<FN>
- ----------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-169
<PAGE> 1090
STATEMENTS OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
--------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
----------------- ----------- -----------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income............................................................... $ 23,964 $ 687,891 $ 266,753
Interest income............................................................... 16,300 113,913 22,266
Securities lending income..................................................... 8,274 154,690 484
----------------- ----------- -----------------
Total investment income..................................................... 48,538 956,494 289,503
----------------- ----------- -----------------
Expenses:
Investment management and administration fees (Note 2)........................ 122,481 1,788,752 104,395
Amortization of organization costs (Note 1)................................... 8,779 -- 8,779
Custodian Fees................................................................ 13,190 59,368 5,430
Directors' and Trustees' fees and expenses (Note 2)........................... 9,576 7,964 9,050
Fund accounting fees (Note 2)................................................. 4,564 66,756 3,698
Printing and postage expenses................................................. 27,925 100,124 25,340
Professional fees............................................................. 34,443 65,372 28,236
Registration and filing fees (Note 1)......................................... 26,130 61,087 27,150
Service and distribution expenses: (Note 2)
Class A..................................................................... 20,616 432,588 15,364
Class B..................................................................... 99,273 1,226,897 96,391
Transfer agent fees (Note 2).................................................. 62,450 728,344 55,400
Other expenses................................................................ 6,244 204,822 2,014
----------------- ----------- -----------------
Total expenses before reductions and reimbursements......................... 435,671 4,742,074 381,247
----------------- ----------- -----------------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)...................... (75,985) -- (68,265)
Expense reductions (Note 5)............................................... (1,016) (29,201) (1,546)
----------------- ----------- -----------------
Total net expenses.......................................................... 358,670 4,712,873 311,436
----------------- ----------- -----------------
Net investment loss............................................................. (310,132) (3,756,379) (21,933)
----------------- ----------- -----------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments.............................................. 3,724,962 28,358,903 1,443,280
Net change in unrealized appreciation of investments.......................... 2,036,645 30,955,839 333,471
----------------- ----------- -----------------
Net realized and unrealized gain on investments................................. 5,761,607 59,314,742 1,776,751
----------------- ----------- -----------------
Net increase in net assets resulting from operations............................ $5,451,475 $55,558,363 $1,754,818
----------------- ----------- -----------------
----------------- ----------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-170
<PAGE> 1091
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
--------------------------- ---------------------------- --------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED
1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
Operations:
Net investment income
(loss)................ $ (310,132 ) $ (449,560 ) $ (3,756,379 ) $ (6,767,300 ) $ (21,933 ) $ 22,242
Net realized gain on
investments and
foreign currency
transactions.......... 3,724,962 2,524,251 28,358,903 91,288,360 1,443,280 1,352,859
Net change in
unrealized
appreciation
(depreciation) of
investments........... 2,036,645 1,674,235 30,955,839 (23,043,968 ) 333,471 2,016,032
------------ ------------- ------------- ------------- ------------ ------------
Net increase in net
assets resulting
from operations..... 5,451,475 3,748,926 55,558,363 61,477,092 1,754,818 3,391,133
------------ ------------- ------------- ------------- ------------ ------------
Class A:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (12,256 )
From net realized gain
on investments........ -- (213,287 ) -- (27,861,047 ) -- (482,262 )
Class B:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- --
From net realized gain
on investments........ -- (410,555 ) -- (29,550,073 ) -- (1,128,861 )
Advisor Class:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (1,610 )
From net realized gain
on investments........ -- (32,021 ) -- (120,835 ) -- (30,657 )
------------ ------------- ------------- ------------- ------------ ------------
Total
distributions....... -- (655,863 ) -- (57,531,955 ) -- (1,655,646 )
------------ ------------- ------------- ------------- ------------ ------------
Capital share
transactions: (Note 4)
Increase from capital
shares sold and
reinvested............ 23,061,481 60,411,522 380,523,601 783,255,935 11,647,193 33,884,259
Decrease from capital
shares repurchased.... (26,968,839 ) (49,371,158 ) (466,195,324 ) (954,921,988 ) (8,629,240 ) (19,018,130 )
------------ ------------- ------------- ------------- ------------ ------------
Net increase
(decrease) from
capital share
transactions........ (3,907,358 ) 11,040,364 (85,671,723 ) (171,666,053 ) 3,017,953 14,866,129
------------ ------------- ------------- ------------- ------------ ------------
Total increase (decrease)
in net assets........... 1,544,117 14,133,427 (30,113,360 ) (167,720,916 ) 4,772,771 16,601,616
Net assets:
Beginning of period.... 33,710,743 19,577,316 512,282,162 680,003,078 24,824,615 8,222,999
------------ ------------- ------------- ------------- ------------ ------------
End of period *....... $35,254,860 $ 33,710,743 $482,168,802 $512,282,162 $29,597,386 $24,824,615
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
* Includes
undistributed/accumulated
net investment
income (loss) of........ $ (310,132 ) $ -- $ (3,756,379 ) $ -- $ (21,933 ) $ --
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-171
<PAGE> 1092
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
CLASS A
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.27 $ 12.52 $11.80 $11.43
----------- -------- ------- --------
Income from investment operations:
Net investment income (loss).......... (0.11) * * * * (0.18) * * * (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.74 2.20 1.69 0.33
----------- -------- ------- --------
Net increase from investment
operations......................... 2.63 2.02 1.64 0.37
----------- -------- ------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- ------- --------
Total distributions................. -- (0.27) (0.92) --
----------- -------- ------- --------
Net asset value, end of period.......... $ 16.90 $ 14.27 $12.52 $11.80
----------- -------- ------- --------
----------- -------- ------- --------
Total investment return (c)............. 18.43% (b) 16.23% 13.81% 3.24% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $12,620 $10,896 $8,448 $1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.47)% (a) (1.40)% (0.38)% 1.68% (a)
Without expense reductions and/or
reimbursement........................ (1.93)% (a) (2.00)% (1.47)% (20.52)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.74% (a) 1.92% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.20% (a) 2.52% 3.09% 24.20% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-172
<PAGE> 1093
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
-----------------------------------------------------------
CLASS B
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 12.42 $ 11.78 $ 11.43
----------- -------- -------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.17) * * * * (0.26) * * * (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.69 2.17 1.70 0.33
----------- -------- -------- -----------------
Net increase from investment
operations......................... 2.52 1.91 1.56 0.35
----------- -------- -------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- -------- -----------------
Total distributions................. -- (0.27) (0.92) --
----------- -------- -------- -----------------
Net asset value, end of period.......... $ 16.58 $ 14.06 $ 12.42 $ 11.78
----------- -------- -------- -----------------
----------- -------- -------- -----------------
Total investment return (c)............. 17.99% (b) 15.47% 13.14% 3.06% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,177 $21,222 $10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (2.12)% (a) (2.05)% (1.03)% 1.03% (a)
Without expense reductions and/or
reimbursement........................ (2.58)% (a) (2.65)% (2.12)% (21.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.39% (a) 2.57% 2.65% 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.85% (a) 3.17% 3.74% 24.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-173
<PAGE> 1094
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
ADVISOR CLASS
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
---------- ------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.39 $12.58 $ 11.81 $ 11.43
---------- ------- -------- --------
Income from investment operations:
Net investment income (loss).......... (0.08) * * * * (0.14) * * * --* * 0.05*
Net realized and unrealized gain on
investments.......................... 2.74 2.22 1.69 0.33
---------- ------- -------- --------
Net increase from investment
operations......................... 2.66 2.08 1.69 0.38
---------- ------- -------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
---------- ------- -------- --------
Total distributions................. -- (0.27) (0.92) --
---------- ------- -------- --------
Net asset value, end of period.......... $17.05 $14.39 $ 12.58 $ 11.81
---------- ------- -------- --------
---------- ------- -------- --------
Total investment return (c)............. 18.49% (b) 16.63% 14.22% 3.32% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $2,458 $1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.12)% (a) (1.05)% (0.03)% 2.03% (a)
Without expense reductions and/or
reimbursement........................ (1.58)% (a) (1.65)% (1.12)% (20.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.39% (a) 1.57% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.85% (a) 2.17% 2.74% 23.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-174
<PAGE> 1095
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------------------------------------------
CLASS A+
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ---------------------------------------------------------------------
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
----------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss).......... (0.14) (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 2.65 3.00 2.96 3.93 2.55 1.56
----------- --------- --------- --------- --------- ---------
Net increase from investment
operations......................... 2.51 2.80 2.99 4.17 2.59 1.35
----------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income............ -- -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- --------- ---------
Total distributions................. -- (2.56) (1.29) (2.79) (2.07) (1.30)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 23.52 $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total investment return (c)............. 11.95%(b) 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $238,024 $255,674 $343,427 $396,291 $196,937 $116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.20)%(a) (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.21)%(a) (1.01)% 0.07% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.59%(a) 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.60%(a) 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-175
<PAGE> 1096
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
------------------------------------------------------------------------------
CLASS B++
------------------------------------------------------------------------------
SIX MONTHS APRIL 1,
ENDED 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ----------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $15.90
----------- --------- --------- --------- -------- ------------
Income from investment operations:
Net investment income (loss).......... (0.21) (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.56 2.93 2.91 3.87 2.55 2.78
----------- --------- --------- --------- -------- ------------
Net increase from investment
operations......................... 2.35 2.59 2.80 3.97 2.46 2.49
----------- --------- --------- --------- -------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.12) -- --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Total distributions................. -- (2.56) (1.29) (2.70) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Net asset value, end of period.......... $ 22.66 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $17.09
----------- --------- --------- --------- -------- ------------
----------- --------- --------- --------- -------- ------------
Total investment return (c)............. 11.57%(b) 13.35% 14.82% 22.42% 15.06% 16.1% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $243,093 $255,468 $334,590 $348,435 $80,060 $1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.85)%(a) (1.55)% (0.53)% 0.59% (0.48)% (1.3)% (a)
Without expense reductions............ (1.86)%(a) (1.66)% (0.58)% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.24%(a) 2.02% 2.01% 2.11% 2.23% 2.2% (a)
Without expense reductions............ 2.25%(a) 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-176
<PAGE> 1097
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------
ADVISOR CLASS+++
--------------------------------------------------
JUNE 1,
SIX MONTHS 1995
ENDED YEAR ENDED DECEMBER TO
JUNE 30, 31, DECEMBER
1998 -------------------- 31,
(UNAUDITED) (D) 1997 1996 1995
----------- ------- ------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.10 $20.76 $19.05 $20.61
----------- ------- ------- -------
Income from investment operations:
Net investment income (loss).......... (0.10) (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 2.64 3.05 2.91 1.09
----------- ------- ------- -------
Net increase from investment
operations......................... 2.54 2.90 3.00 1.30
----------- ------- ------- -------
Distributions to shareholders:
From net investment income............ -- -- -- (0.28)
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58)
----------- ------- ------- -------
Total distributions................. -- (2.56) (1.29) (2.86)
----------- ------- ------- -------
Net asset value, end of period.......... $ 23.64 $21.10 $20.76 $19.05
----------- ------- ------- -------
----------- ------- ------- -------
Total investment return (c)............. 12.04% (b) 14.54% 15.72% 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,052 $1,140 $1,986 $1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.85)% (a) 0.55% 0.47% 1.59%(a)
Without expense reductions............ (0.86)% (a) (0.66)% 0.42% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.24% (a) 1.02% 1.01% 1.11%(a)
Without expense reductions............ 1.25% (a) 1.13% 1.06% N/A
Portfolio turnover rate++++............. 171% (a) 190% 253% 71%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-177
<PAGE> 1098
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
CLASS A
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.25 $14.65 $12.76 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.03* * * * 0.09* * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 1.09 3.87 1.94 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.12 3.96 1.93 1.33
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- --
From net realized gain on
investments.......................... -- (1.33) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.36) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.37 $17.25 $14.65 $ 12.76
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.49% (b) 27.23% 15.12% 11.64% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $8,669 $7,668 $2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.28% (a) 0.56% (0.10)% 1.10% (a)
Without expense reductions and/or
reimbursement........................ (0.21)% (a) (0.42)% (3.61)% (47.44)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.73% (a) 1.99% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.22% (a) 2.97% 5.51% 50.54% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-178
<PAGE> 1099
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
------------------------------------------------------------
CLASS B
------------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.04 $ 14.54 $12.75 $ 11.43
----------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... (0.03) * * * * (0.01) * * * (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 1.09 3.83 1.93 1.31
----------- -------- ------- ----------------
Net increase from investment
operations......................... 1.06 3.82 1.83 1.32
----------- -------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- -- -- --
From net realized gain on
investments.......................... -- (1.32) (0.04) --
----------- -------- ------- ----------------
Total distributions................. -- (1.32) (0.04) --
----------- -------- ------- ----------------
Net asset value, end of period.......... $ 18.10 $ 17.04 $14.54 $ 12.75
----------- -------- ------- ----------------
----------- -------- ------- ----------------
Total investment return (c)............. 6.16% (b) 26.44% 14.35% 11.55% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,175 $16,717 $5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.37)% (a) (0.09)% (0.75)% 0.45% (a)
Without expense reductions and/or
reimbursement........................ (0.86)% (a) (1.07)% (4.26)% (48.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.38% (a) 2.64% 2.65%(a) 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.87% (a) 3.62% 6.16% 51.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-179
<PAGE> 1100
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
ADVISOR CLASS
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.37 $14.72 $12.77 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.05* * * * 0.15* * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 1.11 3.91 1.96 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.16 4.06 1.99 1.34
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.34) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.41) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.53 $17.37 $14.72 $ 12.77
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.68% (b) 27.78% 15.58% 11.72% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 753 $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.63% (a) 0.91% 0.25% 1.45% (a)
Without expense reductions and/or
reimbursement........................ 0.14% (a) (0.07)% (3.26)% (47.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.38% (a) 1.64% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.87% (a) 2.62% 5.16% 50.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-180
<PAGE> 1101
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund
(the "Funds" formerly, GT Global America Small Cap Growth Fund, GT Global
America Mid Cap Growth Fund, and GT Global America Value Fund, respectively),
are separate series of AIM Growth Series (the "Trust", formerly G.T. Global
Growth Series). The Trust is a Delaware business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Trust has eight diversified series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The AIM Small Cap Equity Fund and AIM America Value Fund invest substantially
all of their investable assets in Small Cap Portfolio and Value Portfolio
("Portfolios"), respectively. Each Portfolio is organized as a Delaware business
trust and is registered under the 1940 Act as a diversified, open-end management
investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the AIM Small Cap Equity Fund, the AIM America Value
Fund, and their respective Portfolios have been presented on a consolidated
basis, and represent all activities of both the respective Funds and Portfolios.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its respective fund or INVESCO (NY), Inc. (the
"Sub-adviser"), which has a nominal ($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Sub-adviser to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Sub-adviser deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued at amortized cost, adjusted for market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the AIM Mid Cap Growth Fund and
each of the two Portfolios), it is the Fund's or Portfolio's policy to always
receive, as collateral, United States government securities or other high
quality debt securities of which the value, including accrued interest, is at
least equal to the amount to be repaid to the Fund or Portfolio under each
agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-181
<PAGE> 1102
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
JUNE 30, 1998 PERIOD ENDED JUNE
-------------------------------- 30, 1998
AGGREGATE VALUE CASH -----------------
AIM ON LOANS COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
Small Cap Equity Fund................... $ 1,441,406 $ 1,470,234 $ 8,274
Mid Cap Growth Fund..................... 42,313,661 42,984,542 154,690
America Value Fund...................... -- -- 484
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. The cash collateral is invested in a securities lending
trust which consists of a portfolio of high quality short duration securities
whose average effective duration is restricted to 120 days or less.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the AIM Small Cap Equity Fund, the AIM America Value Fund,
and their respective Portfolios in connection with their organization, their
initial registration with the Securities and Exchange Commission and with
various states and the initial public offering of their shares aggregated
$63,500 for each Fund and $25,000 for each Portfolio. These expenses are being
amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-182
<PAGE> 1103
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds advised and/or administered by
the Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Funds and certain other Funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. Each of these three funds is limited to borrowing up to 33 1/3% of
the value of each Fund's total assets. On June 30, 1998, AIM Mid Cap Growth Fund
had $6,652,000 in loans outstanding.
For the period ended June 30, 1998, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for AIM
Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund was
$513,375, $11,735,546 and $87,889 with a weighted average interest rate of
6.36%, 6.28%, and 6.24%, respectively. Interest expense for AIM Small Cap Equity
Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund for the period ended
June 30, 1998 was $3,627, $198,306, and $137, respectively, and is included in
"Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Funds' and Portfolios'
investment manager and administrator, and INVESCO (NY), Inc., (formerly,
Chancellor LGT Asset Management, Inc.) is the Funds' and Portfolios' investment
sub-adviser and/or sub-administrator. As of the close of business on May 29,
1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of Chancellor LGT Asset Management, Inc. ("Chancellor LGT"),
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included Chancellor LGT and
certain other affiliates. As a result of this transaction, Chancellor LGT was
renamed INVESCO (NY), Inc., and is now an indirect wholly-owned subsidiary of
AMVESCAP PLC. In connection with this transaction, A I M Advisors, Inc., an
indirect wholly-owned subsidiary of AMVESCAP PLC, became the investment manager
and administrator of the Funds and Portfolios and INVESCO (NY), Inc. became the
sub-adviser and sub-administrator of the Funds and Portfolios. A I M
Distributors, Inc. ("AIM Distributors") became the Funds' distributor. Finally,
the Trust was reorganized from a Massachusetts business trust into a Delaware
business trust, and each Portfolio was reorganized from a New York Trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
AIM Small Cap Equity Fund and AIM America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. AIM Mid Cap
Growth Fund pays investment management and administration fees to the Manager at
the annualized rate of 0.725% on the first $500 million of average daily net
assets on the Fund; 0.70% on the next $500 million; 0.675% on the next $500
million and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
or Portfolio's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Funds' distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Funds' distributor. The Funds offer
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors collects the sales charges imposed on sales of
Class A shares, and reallows a portion of such charges to dealers through which
the sales are made. For the period ended June 30, 1998, AIM Distributors and GT
Global retained the following sales charges: $287 and $1,833, respectively, for
the AIM Small Cap Equity Fund, $1,705 and $12,353, respectively, for the AIM Mid
Cap Growth Fund, and $162 and $1,487, respectively, for the AIM America Value
Fund. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No
FS-183
<PAGE> 1104
CDSC's for Class A were collected for the period ended June 30, 1998. AIM
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. For the period ended June 30, 1998, AIM Distributors and GT
Global collected such CDSCs in the amount of: $5,915 and $65,285, respectively,
for the AIM Small Cap Equity Fund, $79,877 and $589,554, respectively, for the
AIM Mid Cap Growth Fund, and $6,047 and $32,112, respectively, for the AIM
America Value Fund. In addition, AIM Distributors makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Funds' Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Funds' reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund's were permitted to pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Funds' Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and were permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Funds'
Class A shares, less any amounts paid by the Funds as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global was reimbursed under the Class A Plan would
have been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Funds were
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for GT Global's
expenditures incurred in servicing and maintaining shareholder accounts, and
were permitted to pay GT Global a distribution fee at the annualized rate of up
to 0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continued in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Funds' Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Funds compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Funds. Under the Class A Plan, the funds
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of each of the Fund's Class A shares.
Pursuant to the Funds' Class B Plan, the Funds compensate AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Class A Plan and the Class B Plan (together, the "Plans") are designed to
compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A and Class B shares of a
Fund. Payments also can be directed by AIM Distributors to Financial
Institutions who have entered into service agreements with respect to Class A
and Class B shares of a Fund and who provide continuing personal services to
their customers who own Class A and Class B shares of a Fund. The service fees
payable to selected Financial Institutions are calculated at the annual rate of
0.25% of the average daily net asset value of those Fund shares that are held in
such Institution's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans.
The Manager and AIM Distributors have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class Shares, respectively.
This undertaking may be changed or eliminated in the future. If necessary, this
limitation will be effected by waivers by the Manager of investment management
and administration fees, waivers by AIM Distributors of payments under the Class
A Plan and/or Class B Plan and/or reimbursements by the Manager or AIM
Distributors of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Funds. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Funds for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its
FS-184
<PAGE> 1105
Trustees who is not an employee, officer or director of the Manager, AIM
Distributors or GT Services $500 per year plus $150 for each meeting of the
board or any committee thereof attended by the Trustee.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases of investment securities by the
AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund, and AIM America Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $34,489,676, $425,421,321 and $21,307,726, respectively. Sales of
investment securities by the AIM Small Cap Equity Portfolio, AIM Mid Cap Growth
Fund, and AIM America Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $38,854,404, $503,976,639 and
$18,275,286, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
CAPITAL SHARES-AIM SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 766,677 $ 12,379,784 2,067,494 $ 28,341,345
Shares issued in connection with
reinvestment of distributions......... -- -- 14,194 195,720
------------ -------------- ------------ ---------------
766,677 12,379,784 2,081,688 28,537,065
Shares repurchased...................... (783,355) (12,602,269) (1,992,960) (27,546,271)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (16,678) $ (222,485) 88,728 $ 990,794
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 649,669 $ 10,068,580 2,192,656 $ 29,216,057
Shares issued in connection with
reinvestment of distributions......... -- -- 26,438 359,234
------------ -------------- ------------ ---------------
649,669 10,068,580 2,219,094 29,575,291
Shares repurchased...................... (942,259) (14,277,803) (1,570,899) (20,624,826)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (292,590) $ (4,209,223) 648,195 $ 8,950,465
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 39,133 $ 613,117 156,123 $ 2,292,127
Shares issued in connection with
reinvestment of distributions......... -- -- 507 7,039
------------ -------------- ------------ ---------------
39,133 613,117 156,630 2,299,166
Shares repurchased...................... (5,668) (88,767) (80,540) (1,200,061)
------------ -------------- ------------ ---------------
Net increase............................ 33,465 $ 524,350 76,090 $ 1,099,105
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-185
<PAGE> 1106
CAPITAL SHARES-AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,237,471 $ 293,037,123 24,801,099 $ 522,081,212
Shares issued in connection with
reinvestment of distributions......... -- -- 1,170,749 23,490,213
------------ -------------- ------------ ---------------
13,237,471 293,037,123 25,971,848 545,571,425
Shares repurchased...................... (15,286,842) (338,921,081) (30,338,852) (637,412,658)
------------ -------------- ------------ ---------------
Net decrease............................ (2,049,371) $ (45,883,958) (4,367,004) $ (91,841,233)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,361,394 $ 70,538,881 9,218,434 $ 190,231,954
Shares issued in connection with
reinvestment of distributions......... -- -- 1,240,395 24,063,873
------------ -------------- ------------ ---------------
3,361,394 70,538,881 10,458,829 214,295,827
Shares repurchased...................... (5,214,434) (110,304,526) (14,376,532) (293,260,545)
------------ -------------- ------------ ---------------
Net decrease............................ (1,853,040) $ (39,765,645) (3,917,703) $ (78,964,718)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 796,165 $ 16,947,597 1,056,271 $ 23,267,932
Shares issued in connection with
reinvestment of distributions......... -- -- 5,993 120,751
------------ -------------- ------------ ---------------
796,165 16,947,597 1,062,264 23,388,683
Shares repurchased...................... (805,702) (16,969,717) (1,103,923) (24,248,785)
------------ -------------- ------------ ---------------
Net decrease............................ (9,537) $ (22,120) (41,659) $ (860,102)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
CAPITAL SHARES-AIM AMERICA VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 233,708 $ 4,201,126 781,797 $ 13,117,280
Shares issued in connection with
reinvestment of distributions......... -- -- 26,859 454,725
------------ -------------- ------------ ---------------
233,708 4,201,126 808,656 13,572,005
Shares repurchased...................... (206,495) (3,733,422) (536,657) (9,148,725)
------------ -------------- ------------ ---------------
Net increase............................ 27,213 $ 467,704 271,999 $ 4,423,280
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 402,934 $ 7,126,394 1,148,582 $ 19,043,834
Shares issued in connection with
reinvestment of distributions......... -- -- 60,093 1,004,744
------------ -------------- ------------ ---------------
402,934 7,126,394 1,208,675 20,048,578
Shares repurchased...................... (269,058) (4,850,260) (606,167) (9,803,021)
------------ -------------- ------------ ---------------
Net increase............................ 133,876 $ 2,276,134 602,508 $ 10,245,557
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 17,744 $ 319,673 14,203 $ 230,962
Shares issued in connection with
reinvestment of distributions......... -- -- 1,920 32,714
------------ -------------- ------------ ---------------
17,744 319,673 16,123 263,676
Shares repurchased...................... (2,387) (45,558) (3,834) (66,384)
------------ -------------- ------------ ---------------
Net increase............................ 15,357 $ 274,115 12,289 $ 197,292
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of a Fund's or Portfolio's expenses. For the period ended June 30, 1998,
the expenses of AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund and AIM
America Value Portfolio were reduced by $1,016, $29,201 and $1,546 respectively,
under these arrangements.
6. SUBSEQUENT EVENT
Effective September 8, 1998, INVESCO (NY), Inc. (the "Sub-adviser") will resign
as (i) sub-advisor and sub-administrator to the Value Portfolio, the Small Cap
Portfolio (together the "Portfolios") and AIM Mid Cap Growth Fund; and (ii)
sub-administrator to AIM America Value Fund and AIM Small Cap Equity Fund. A I M
Advisors, Inc. will continue to serve as the manager and administrator for the
above-named funds and portfolios.
FS-186
<PAGE> 1107
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Small Cap Growth Fund - Consolidated, GT Global America Mid Cap
Growth Fund, and GT Global America Value Fund - Consolidated, three of the funds
organized as a series of GT Global Growth Series, including the portfolios of
investments, as of December 31, 1997, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated herein. These financial statements and the financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and the 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, 1997, 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of the
GT Global America Small Cap Growth Fund - Consolidated, GT Global America Mid
Cap Growth Fund, and GT Global America Value Fund - Consolidated, as of December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-187
<PAGE> 1108
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accommodations, Inc.-/- ...................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-188
<PAGE> 1109
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.3%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.1
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.3
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-189
<PAGE> 1110
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (13.2%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.4
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.3
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.1
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 1.0
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-190
<PAGE> 1111
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.4%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.8
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.2
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.4%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.7
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-191
<PAGE> 1112
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
AUTOMOBILES
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 97.0
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-192
<PAGE> 1113
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 99.6
Other Assets and Liabilities ................................ 131,240 0.4
------------ -----
NET ASSETS .................................................. $ 33,710,743 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-193
<PAGE> 1114
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.5%)
Cendant Corp.-/- .......................................... US 924,232 $ 31,770,471 6.2
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................ US 571,700 20,867,050 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 477,325 18,317,347 3.6
BUSINESS & PUBLIC SERVICES
Signature Resorts, Inc.-/- ................................ US 789,900 17,279,063 3.4
LEISURE & TOURISM
Hilton Hotels Corp. ....................................... US 502,100 14,937,475 2.9
LEISURE & TOURISM
U.S. Office Products Co.-/- ............................... US 734,650 14,417,506 2.8
CONSUMER SERVICES
Caribiner International, Inc.-/- .......................... US 320,500 14,262,250 2.8
CONSUMER SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 264,900 13,774,800 2.7
BUSINESS & PUBLIC SERVICES
Mirage Resorts, Inc.-/- ................................... US 381,900 8,688,225 1.7
LEISURE & TOURISM
Nextel Communications, Inc. "A"-/- ........................ US 303,300 7,885,800 1.5
WIRELESS COMMUNICATIONS
Valassis Communications, Inc.-/- .......................... US 209,400 7,747,800 1.5
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 140,200 7,097,625 1.4
CONSUMER SERVICES
Service Corporation International ......................... US 137,500 5,078,906 1.0
CONSUMER SERVICES
Wolverine World Wide, Inc. ................................ US 201,600 4,561,200 0.9
RETAILERS-APPAREL
------------
186,685,518
------------
Finance (14.6%)
Conseco, Inc. ............................................. US 348,200 15,821,338 3.1
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................ US 154,100 11,181,881 2.2
BANKS-REGIONAL
CMAC Investment Corp. ..................................... US 149,700 9,038,138 1.8
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................ US 252,800 8,911,200 1.7
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 7,636,688 1.5
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................ US 228,400 7,365,900 1.4
CONSUMER FINANCE
Consolidated Capital Corp.-/- ............................. US 323,500 6,571,094 1.3
INVESTMENT MANAGEMENT
Student Loan Marketing Association ........................ US 42,800 5,954,550 1.2
OTHER FINANCIAL
Ace Ltd. .................................................. US 20,100 1,939,650 0.4
INSURANCE - PROPERTY-CASUALTY
------------
74,420,439
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-194
<PAGE> 1115
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (11.1%)
AmeriSource Health Corp. "A"-/- ........................... US 214,600 $ 12,607,750 2.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 114,600 12,398,288 2.4
HEALTH CARE SERVICES
HBO & Co. ................................................. US 203,800 9,782,400 1.9
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- .......................... US 246,100 9,413,325 1.8
HEALTH CARE SERVICES
Covance, Inc.-/- .......................................... US 337,000 6,697,875 1.3
HEALTH CARE SERVICES
Guidant Corp. ............................................. US 97,400 6,063,150 1.2
MEDICAL TECHNOLOGY & SUPPLIES
------------
56,962,788
------------
Technology (11.1%)
PeopleSoft, Inc.-/- ....................................... US 380,600 14,843,400 2.9
SOFTWARE
Sterling Commerce, Inc.-/- ................................ US 365,200 14,037,375 2.7
SOFTWARE
Ciena Corp.-/- ............................................ US 186,700 11,412,038 2.2
TELECOM TECHNOLOGY
CBT Group PLC - ADR-/- {\/} ............................... IRE 110,800 9,099,450 1.8
COMPUTERS & PERIPHERALS
Pegasystems, Inc.-/- ...................................... US 371,300 7,495,619 1.5
SOFTWARE
------------
56,887,882
------------
Materials/Basic Industry (9.7%)
Crompton & Knowles Corp. .................................. US 529,200 14,023,800 2.7
CHEMICALS
International Specialty Products, Inc.-/- ................. US 834,000 12,457,875 2.4
CHEMICALS
Sealed Air Corp.-/- ....................................... US 201,000 12,411,750 2.4
PLASTICS & RUBBER
J. Ray McDermott S.A.-/- .................................. US 263,900 11,347,700 2.2
BUILDING MATERIALS & COMPONENTS
------------
50,241,125
------------
Energy (8.6%)
Cooper Cameron Corp.-/- ................................... US 170,500 10,400,500 2.0
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ........................................ US 120,600 8,675,663 1.7
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 138,900 8,429,494 1.7
OIL
Smith International, Inc.-/- .............................. US 135,600 8,322,450 1.6
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-195
<PAGE> 1116
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Santa Fe International Corp. .............................. US 198,200 $ 8,064,263 1.6
ENERGY EQUIPMENT & SERVICES
------------
43,892,370
------------
Consumer Durables (4.1%)
Avis Rent A Car, Inc.-/- .................................. US 326,900 10,440,369 2.0
AUTOMOBILES
Hertz Corp. "A" ........................................... US 152,500 6,138,125 1.2
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 235,000 4,817,500 0.9
AUTOMOBILES
------------
21,395,994
------------
Multi-Industry/Miscellaneous (2.4%)
Corrections Corporation of America-/- ..................... US 324,500 12,026,781 2.4
------------
MISCELLANEOUS
Consumer Non-Durables (1.3%)
International Home Foods, Inc.-/- ......................... US 240,400 6,731,200 1.3
------------
FOOD
Capital Goods (1.3%)
U.S. Filter Corp.-/- ...................................... US 213,100 6,379,681 1.3
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $450,142,030) ................ 515,623,778 100.7
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,985,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $21,004,684,
including accrued interest).
(cost $20,589,000) ...................................... 20,589,000 4.0
------------ -----
TOTAL INVESTMENTS (cost $470,731,030) * .................... 536,212,778 104.7
Other Assets and Liabilities ................................ (23,930,616) (4.7)
------------ -----
NET ASSETS .................................................. $512,282,162 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $472,057,961 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,285,341
Unrealized depreciation: (8,130,524)
-------------
Net unrealized appreciation: $ 64,154,817
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-196
<PAGE> 1117
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-197
<PAGE> 1118
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-198
<PAGE> 1119
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-199
<PAGE> 1120
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (208,051) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,824,615 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-200
<PAGE> 1121
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
-------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304; $470,731,030;
and $23,031,922, respectively) (Note 1)............................ $33,579,503 $536,212,778 $25,032,666
U.S. currency....................................................... 927 295 988
Dividends receivable................................................ 10,766 125,429 42,920
Interest receivable................................................. 142 3,317 177
Receivable for Fund shares sold..................................... 358,830 628,959 306,827
Receivable for securities sold...................................... 887,683 -- 90,237
Unamortized organizational costs (Note 1)........................... 49,458 -- 49,458
-------------- ------------- --------------
Total assets...................................................... 34,887,309 536,970,778 25,523,273
-------------- ------------- --------------
Liabilities:
Payable for custodian fees.......................................... 2,924 25,081 2,892
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,310 5,062 5,725
Payable for fund accounting fees (Note 2)........................... 1,488 9,945 652
Payable for Fund shares repurchased................................. 716,716 3,845,129 356,809
Payable for investment management and administration fees (Note
2)................................................................. 19,707 306,242 417
Payable for printing and postage expenses........................... 16,077 31,815 16,948
Payable for professional fees....................................... 15,217 27,546 19,018
Payable for registration and filing fees............................ 15,960 3,900 8,146
Payable for securities purchased.................................... 348,610 19,887,085 263,514
Payable for service and distribution expenses (Note 2).............. 21,124 285,634 15,365
Payable for transfer agent fees (Note 2)............................ 11,763 231,778 5,430
Other accrued expenses.............................................. 1,570 29,399 3,642
-------------- ------------- --------------
Total liabilities................................................. 1,176,466 24,688,616 698,558
Minority interest (Notes 1 & 2)..................................... 100 -- 100
-------------- ------------- --------------
Net assets............................................................ $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
Class A:
Net asset value and redemption price per share ($10,896,107 DIVIDED BY
763,367;
$255,674,204 DIVIDED BY 12,169,079; and $7,668,100 DIVIDED BY 444,643
shares outstanding, respectively) ................................... $ 14.27 $ 21.01 $ 17.25
-------------- ------------- --------------
-------------- ------------- --------------
Maximum offering price per share (100/95.25 of $14.27; 100/95.25 of
$21.01; and 100/95.25 of $17.25, respectively) *..................... $ 14.98 $ 22.06 $ 18.11
-------------- ------------- --------------
-------------- ------------- --------------
Class B:+
Net asset value and offering price per share $21,222,157 DIVIDED BY
1,509,212; $255,468,031 DIVIDED BY 12,580,716; and $16,717,458
DIVIDED BY 981,035 shares outstanding, respectively)................. $ 14.06 $ 20.31 $ 17.04
-------------- ------------- --------------
-------------- ------------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share ($1,592,479 DIVIDED BY 110,687; $1,139,927 DIVIDED BY 54,025;
and $439,057 DIVIDED BY 25,283 shares outstanding, respectively)..... $ 14.39 $ 21.10 $ 17.37
-------------- ------------- --------------
-------------- ------------- --------------
Net assets consist of:
Paid in capital (Note 4)............................................ $31,557,971 $430,679,692 $22,421,981
Accumulated net realized gain on investments........................ 1,256,573 16,120,722 401,890
Net unrealized appreciation of investments.......................... 896,199 65,481,748 2,000,744
-------------- ------------- --------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-201
<PAGE> 1122
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
------------- ------------ -------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income.............................................. $ 35,957 $2,095,256 $ 357,943
Interest income.............................................. 95,213 519,576 46,139
------------- ------------ -------------
Total investment income.................................... 131,170 2,614,832 404,082
------------- ------------ -------------
Expenses:
Investment management and administration fees (Note 2)....... 184,004 3,999,732 113,543
Amortization of organization costs (Note 1).................. 17,702 -- 17,702
Custodian Fees............................................... 21,876 137,385 9,431
Directors' and Trustees' fees and expenses (Note 2).......... 14,813 12,580 12,042
Fund accounting fees (Note 2)................................ 6,379 142,274 3,938
Printing and postage expenses................................ 61,435 102,242 51,829
Professional fees............................................ 63,468 72,533 71,745
Registration and filing fees................................. 72,360 73,688 65,399
Service and distribution expenses: (Note 2)
Class A.................................................... 33,776 958,593 17,701
Class B.................................................... 148,043 2,781,908 102,587
Transfer agent fees (Note 2)................................. 102,790 1,545,314 59,946
Other expenses (Note 1)...................................... 5,430 156,232 9,271
------------- ------------ -------------
Total expenses before reductions and reimbursement......... 732,076 9,982,481 535,134
------------- ------------ -------------
Expenses reimbursed by Chancellor LGT Asset Management,
Inc. (Note 2)........................................... (131,297) -- (151,962)
Expense reductions (Notes 1 & 5)......................... (20,049) (600,349) (1,332)
------------- ------------ -------------
Total net expenses......................................... 580,730 9,382,132 381,840
------------- ------------ -------------
Net investment income (loss)................................... (449,560) (6,767,300) 22,242
------------- ------------ -------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments............................. 2,524,251 91,288,360 1,352,859
Net change in unrealized appreciation (depreciation) of
investments................................................. 1,674,235 (23,043,968) 2,016,032
------------- ------------ -------------
Net realized and unrealized gain on investments................ 4,198,486 68,244,392 3,368,891
------------- ------------ -------------
Net increase in net assets resulting from operations........... $ 3,748,926 $61,477,092 $ 3,391,133
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-202
<PAGE> 1123
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
AMERICA SMALL CAP AMERICA MID CAP AMERICA VALUE
GROWTH FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
------------------------ ------------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER DECEMBER DECEMBER YEAR ENDED DECEMBER DECEMBER
31, 31, 31, DECEMBER 31, 31, 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $(449,560) $(110,516) $(6,767,300) $ (1,367,346) $ 22,242 $ (30,160)
Net realized gain on investments and
foreign currency transactions........ 2,524,251 1,264,689 91,288,360 24,339,369 1,352,859 733,904
Net change in unrealized appreciation
(depreciation) of investments........ 1,674,235 (782,829) (23,043,968) 76,318,599 2,016,032 (69,965)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting
from operations.................... 3,748,926 371,344 61,477,092 99,290,622 3,391,133 633,779
----------- ----------- ----------- ------------ ----------- -----------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (12,256) --
From net realized gain on
investments.......................... (213,287) (564,752) (27,861,047) (21,518,831) (482,262) (7,007)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (410,555) (727,944) (29,550,073) (20,232,121) (1,128,861) (14,950)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (1,610) --
From net realized gain on
investments.......................... (32,021) (28,106) (120,835) (167,680) (30,657) (443)
----------- ----------- ----------- ------------ ----------- -----------
Total distributions................. (655,863) (1,320,802) (57,531,955) (41,918,632) (1,655,646) (22,400)
----------- ----------- ----------- ------------ ----------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 60,411,522 43,976,336 783,255,935 2,122,781,710 33,884,259 11,770,124
Decrease from capital shares
repurchased.......................... (49,371,158) (27,455,528) (954,921,988) (2,246,270,951) (19,018,130) (6,364,460)
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) from capital
share transactions................. 11,040,364 16,520,808 (171,666,053) (123,489,241) 14,866,129 5,405,664
----------- ----------- ----------- ------------ ----------- -----------
Total increase (decrease) in net
assets................................. 14,133,427 15,571,350 (167,720,916) (66,117,251) 16,601,616 6,017,043
Net assets:
Beginning of year..................... 19,577,316 4,005,966 680,003,078 746,120,329 8,222,999 2,205,956
----------- ----------- ----------- ------------ ----------- -----------
End of year *........................ 3$3,710,743 1$9,577,316 $512,282,162 $680,003,078 2$4,824,615 $8,222,999
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
* Includes undistributed/accumulated
net investment income (loss) of...... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-203
<PAGE> 1124
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.52 $ 11.80 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.18) ** (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.20 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.02 1.64 0.37
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.27 $ 12.52 $ 11.80
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.23 % 13.81 % 3.24 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 10,896 $ 8,448 $ 1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.40)% (0.38)% 1.68 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.00)% (1.47)% (20.52)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.92 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.52 % 3.09 % 24.20 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-204
<PAGE> 1125
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.42 $ 11.78 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.26) ** (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.17 1.70 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 1.91 1.56 0.35
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.06 $ 12.42 $ 11.78
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 15.47 % 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,222 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (2.05)% (1.03)% 1.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.65)% (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.57 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.17 % 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-205
<PAGE> 1126
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.58 $ 11.81 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.14) ** --** 0.05*
Net realized and unrealized gain on
investments.......................... 2.22 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.08 1.69 0.38
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.39 $ 12.58 $ 11.81
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.63 % 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.05)% (0.03)% 2.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.57 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.17 % 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-206
<PAGE> 1127
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 3.00 2.96 3.93 2.55 1.56
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.80 2.99 4.17 2.59 1.35
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.56) (1.29) (2.79) (2.07) (1.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,674 $ 343,427 $ 396,291 $ 196,937 $ 116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.01)% 0.07% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-207
<PAGE> 1128
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-------------------------------------------------------------
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 15.90
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.93 2.91 3.87 2.55 2.78
---------- ---------- ---------- ---------- -------------
Net increase from investment
operations......................... 2.59 2.80 3.97 2.46 2.49
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.12) -- --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Total distributions................. (2.56) (1.29) (2.70) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 13.35% 14.82% 22.42% 15.06% 16.1%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,468 $ 334,590 $ 348,435 $ 80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.55)% (0.53)% 0.59% (0.48)% (1.3)%(a)
Without expense reductions............ (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.02% 2.01% 2.11% 2.23% 2.2%(a)
Without expense reductions............ 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-208
<PAGE> 1129
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-----------------------------------------
ADVISOR CLASS+++
-----------------------------------------
JUNE 1, 1995
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.76 $ 19.05 $ 20.61
------------ ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 3.05 2.91 1.09
------------ ------------ -------------
Net increase from investment
operations......................... 2.90 3.00 1.30
------------ ------------ -------------
Distributions to shareholders:
From net investment income............ -- -- (0.28)
From net realized gain on
investments.......................... (2.56) (1.29) (2.58)
------------ ------------ -------------
Total distributions................. (2.56) (1.29) (2.86)
------------ ------------ -------------
Net asset value, end of period.......... $ 21.10 $ 20.76 $ 19.05
------------ ------------ -------------
------------ ------------ -------------
Total investment return (c)............. 14.54 % 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,140 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.55)% 0.47 % 1.59%(a)
Without expense reductions............ (0.66)% 0.42 % N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.02 % 1.01 % 1.11%(a)
Without expense reductions............ 1.13 % 1.06 % N/A
Portfolio turnover rate++++............. 190 % 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-209
<PAGE> 1130
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.65 $ 12.76 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.09 * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 3.87 1.94 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 3.96 1.93 1.33
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... (1.33) (0.04) --
------------ ------------ --------------
Total distributions................. (1.36) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.25 $ 14.65 $ 12.76
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.23 % 15.12 % 11.64 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.56 % (0.10)% 1.10 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.42)% (3.61)% (47.44)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.99 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97 % 5.51 % 50.54 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-210
<PAGE> 1131
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.54 $ 12.75 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 3.83 1.93 1.31
------------ ------------ --------------
Net increase from investment
operations......................... 3.82 1.83 1.32
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ -- -- --
From net realized gain on
investments.......................... (1.32) (0.04) --
------------ ------------ --------------
Total distributions................. (1.32) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.04 $ 14.54 $ 12.75
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 26.44 % 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (0.09)% (0.75)% 0.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.07)% (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.64 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.62 % 6.16 % 51.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-211
<PAGE> 1132
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.72 $ 12.77 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.15 * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 3.91 1.96 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 4.06 1.99 1.34
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.34) (0.04) --
------------ ------------ --------------
Total distributions................. (1.41) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.37 $ 14.72 $ 12.77
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.78 % 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.91 % 0.25 % 1.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.07)% (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.64 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.62 % 5.16 % 50.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-212
<PAGE> 1133
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund,
and GT Global America Value Fund ("Funds"), are separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1997, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-213
<PAGE> 1134
GT GLOBAL AMERICA FUNDS
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 YEAR ENDED
-------------------------------- DECEMBER 31, 1997
AGGREGATE VALUE CASH -----------------
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Small Cap Growth Fund........... $ 1,812,494 $ 1,869,550 $ 17,489
America Mid Cap Growth Fund............. 45,019,438 45,567,400 516,083
America Value Fund...................... 794,531 810,000 896
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the
Portfolios' custodian fees.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-214
<PAGE> 1135
GT GLOBAL AMERICA FUNDS
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Funds and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Funds' total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for GT
Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, and
GT Global America Value Fund was $101,429, $6,068,763, and $284,000 with a
weighted average interest rate of 6.34%, 6.33%, and 6.31%, respectively.
Interest expense for GT Global America Small Cap Growth Fund, GT Global America
Mid Cap Growth Fund, and GT Global America Value Fund for the year ended
December 31, 1997 was $125, $125,935, and $50, respectively, included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. GT Global America Small Cap Growth Fund and GT Global
America Value Fund each pays the Manager administration fees at the annualized
rate of 0.25% of such Fund's average daily net assets. Each Portfolio pays
investment management and administration fees to the Manager at the annualized
rate of 0.475% on the first $500 million of average daily net assets of the
Portfolio; 0.45% on the next $500 million; 0.425% on the next $500 million; and
0.40% on amounts thereafter. GT Global America Mid Cap Growth Fund pays
investment management and administration fees to the Manager at the annualized
rate of 0.725% on the first $500 million of average daily net assets on the
Fund; 0.70% on the next $500 million; 0.675% on the next $500 million and 0.65%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's or Portfolio's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained the
following sales charges: $5,417 for the GT Global America Small Cap Growth Fund,
$38,700 for the GT Global America Mid Cap Growth Fund, and $5,770 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $23,780 for the year ended December 31, 1997 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected such CDSCs
in the amount of: $60,107 for the GT Global America Small Cap Growth Fund,
$2,316,997 for the GT Global America Mid Cap Growth Fund, and $55,700 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the
FS-215
<PAGE> 1136
GT GLOBAL AMERICA FUNDS
Class A Plan, a Fund may pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and may pay GT Global a distribution fee at the annualized rate of up
to 0.35% of the average daily net assets of the Fund's Class A shares, less any
amounts paid by the Fund as the aforementioned service fee, for GT Global's
expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the
average daily net assets of the Fund's Class A, Class B, Advisor Class Shares,
respectively. This undertaking may be changed or eliminated in the future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1997, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,037,388,895, $66,820,422 and $25,951,699, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,221,752,474, $55,910,483 and
$13,967,002, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
FS-216
<PAGE> 1137
GT GLOBAL AMERICA FUNDS
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,067,494 $ 28,341,345 1,491,083 $ 20,216,595
Shares issued in connection with
reinvestment of distributions......... 14,194 195,720 39,998 505,573
------------ -------------- ------------ ---------------
2,081,688 28,537,065 1,531,081 20,722,168
Shares repurchased...................... (1,992,960) (27,546,271) (1,019,989) (13,880,892)
------------ -------------- ------------ ---------------
Net increase............................ 88,728 $ 990,794 511,092 $ 6,841,276
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,192,656 $ 29,216,057 1,665,796 $ 22,115,741
Shares issued in connection with
reinvestment of distributions......... 26,438 359,234 52,848 663,246
------------ -------------- ------------ ---------------
2,219,094 29,575,291 1,718,644 22,778,987
Shares repurchased...................... (1,570,899) (20,624,826) (1,029,367) (13,501,795)
------------ -------------- ------------ ---------------
Net increase............................ 648,195 $ 8,950,465 689,277 $ 9,277,192
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 156,123 $ 2,292,127 33,521 $ 447,953
Shares issued in connection with
reinvestment of distributions......... 507 7,039 2,144 27,228
------------ -------------- ------------ ---------------
156,630 2,299,166 35,665 475,181
Shares repurchased...................... (80,540) (1,200,061) (5,440) (72,841)
------------ -------------- ------------ ---------------
Net increase............................ 76,090 $ 1,099,105 30,225 $ 402,340
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-217
<PAGE> 1138
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 24,801,099 $ 522,081,212 89,962,964 $ 1,853,673,285
Shares issued in connection with
reinvestment of distributions......... 1,170,749 23,490,213 853,598 17,867,701
------------ -------------- ------------ ---------------
25,971,848 545,571,425 90,816,562 1,871,540,986
Shares repurchased...................... (30,338,852) (637,412,658) (95,061,922) (1,956,032,031)
------------ -------------- ------------ ---------------
Net decrease............................ (4,367,004) $ (91,841,233) (4,245,360) $ (84,491,045)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,218,434 $ 190,231,954 11,161,651 $ 224,412,718
Shares issued in connection with
reinvestment of distributions......... 1,240,395 24,063,873 803,575 16,429,676
------------ -------------- ------------ ---------------
10,458,829 214,295,827 11,965,226 240,842,394
Shares repurchased...................... (14,376,532) (293,260,545) (14,026,348) (280,392,879)
------------ -------------- ------------ ---------------
Net decrease............................ (3,917,703) $ (78,964,718) (2,061,122) $ (39,550,485)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,056,271 $ 23,267,932 485,169 $ 10,230,701
Shares issued in connection with
reinvestment of distributions......... 5,993 120,751 8,013 167,629
------------ -------------- ------------ ---------------
1,062,264 23,388,683 493,182 10,398,330
Shares repurchased...................... (1,103,923) (24,248,785) (470,673) (9,846,041)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (41,659) $ (860,102) 22,509 $ 552,289
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-218
<PAGE> 1139
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 781,797 $ 13,117,280 392,444 $ 5,443,835
Shares issued in connection with
reinvestment of distributions......... 26,859 454,725 365 5,408
------------ -------------- ------------ ---------------
808,656 13,572,005 392,809 5,449,243
Shares repurchased...................... (536,657) (9,148,725) (288,378) (3,812,666)
------------ -------------- ------------ ---------------
Net increase............................ 271,999 $ 4,423,280 104,431 $ 1,636,577
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,148,582 $ 19,043,834 445,266 $ 6,167,388
Shares issued in connection with
reinvestment of distributions......... 60,093 1,004,744 918 13,509
------------ -------------- ------------ ---------------
1,208,675 20,048,578 446,184 6,180,897
Shares repurchased...................... (606,167) (9,803,021) (166,052) (2,502,350)
------------ -------------- ------------ ---------------
Net increase............................ 602,508 $ 10,245,557 280,132 $ 3,678,547
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,203 $ 230,962 10,181 $ 139,541
Shares issued in connection with
reinvestment of distributions......... 1,920 32,714 30 443
------------ -------------- ------------ ---------------
16,123 263,676 10,211 139,984
Shares repurchased...................... (3,834) (66,384) (3,594) (49,444)
------------ -------------- ------------ ---------------
Net increase............................ 12,289 $ 197,292 6,617 $ 90,540
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1997, the
expenses of Small Cap Growth Portfolio, GT Global America Mid Cap Growth Fund
and Value Portfolio were reduced by $2,560, $84,266 and $436 respectively, under
these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America Mid
Cap Growth Fund designates $9,085,505, and the GT Global America Value Fund
designates $23,905 as capital gains dividends for the fiscal year ended December
31, 1997.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1997:
<TABLE>
<CAPTION>
FUND
- ----------------------------------------------------------------------
<S> <C>
GT Global America Small Cap Growth Fund............................... 3.06%
GT Global America Mid Cap Growth Fund................................. 3.13%
GT Global America Value Fund.......................................... 16.05%
</TABLE>
FS-219
<PAGE> 1140
STATEMENT OF
ADDITIONAL INFORMATION
ADVISOR CLASS SHARES OF
AIM BASIC VALUE FUND
AIM SMALL CAP GROWTH FUND
(SERIES PORTFOLIOS OF
AIM GROWTH SERIES)
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 OF THE
ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE
OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 8, 1998
RELATING TO THE AIM BASIC VALUE FUND PROSPECTUS
AND THE AIM SMALL CAP GROWTH FUND PROSPECTUS,
EACH DATED SEPTEMBER 8, 1998
<PAGE> 1141
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
INTRODUCTION................................................ 4
GENERAL INFORMATION ABOUT THE FUNDS......................... 4
The Trust and Its Shares.................................. 4
INVESTMENT OBJECTIVES AND POLICIES.......................... 5
Investment Objectives..................................... 5
Investments in Other Investment Companies................. 5
Depositary Receipts....................................... 5
Warrants or Rights........................................ 5
Lending of Portfolio Securities........................... 6
Commercial Bank Obligations............................... 6
Repurchase Agreements..................................... 6
Borrowing, Reverse Repurchase Agreements and "Roll"
Transactions........................................... 6
Temporary Defensive Strategies............................ 7
OPTIONS AND FUTURES......................................... 7
Special Risks of Options and Futures...................... 7
Writing Call Options...................................... 7
Writing Put Options....................................... 8
Purchasing Put Options.................................... 9
Purchasing Call Options................................... 9
Index Options............................................. 10
Interest Rate and Stock Index Futures Contracts........... 10
Options on Futures Contracts.............................. 12
Limitations on Use of Futures and Options on Futures...... 12
Cover..................................................... 12
RISK FACTORS................................................ 13
Illiquid Securities....................................... 13
Debt Securities........................................... 13
INVESTMENT LIMITATIONS...................................... 14
EXECUTION OF PORTFOLIO TRANSACTIONS......................... 15
Portfolio Trading and Turnover............................ 16
MANAGEMENT.................................................. 17
Trustees and Executive Officers........................... 17
Investment Management and Administration Services Relating
to the Funds and the Portfolios........................ 18
Distribution Services..................................... 19
Expenses of the Funds and the Portfolios.................. 19
NET ASSET VALUE DETERMINATION............................... 20
HOW TO PURCHASE AND REDEEM SHARES........................... 20
PROGRAMS AND SERVICES FOR SHAREHOLDERS...................... 21
DIVIDEND ORDER.............................................. 21
TAXES....................................................... 21
Taxation of the Funds..................................... 21
Taxation of the Portfolios................................ 21
Taxation of the Funds' Shareholders....................... 22
</TABLE>
2
<PAGE> 1142
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
MISCELLANEOUS INFORMATION................................... 22
Custodian................................................. 22
Transfer Agency and Accounting Agency Services............ 22
Independent Accountants................................... 23
Shareholder Liability..................................... 23
Names..................................................... 23
Control Persons and Principal Holders of Securities....... 24
INVESTMENT RESULTS.......................................... 24
Standardized Returns...................................... 24
Non-Standardized Returns.................................. 25
Performance Information................................... 25
APPENDIX.................................................... 27
Description of Bond Ratings............................... 27
Description of Commercial Paper Ratings................... 28
Absence of Rating......................................... 28
FINANCIAL STATEMENTS........................................ FS
</TABLE>
3
<PAGE> 1143
INTRODUCTION
This Statement of Additional Information relates to the Advisor Class shares
of AIM Small Cap Growth Fund, formerly AIM Small Cap Equity Fund ("Small Cap
Fund") and AIM Basic Value Fund, formerly AIM America Value Fund ("Basic Value
Fund") (individually, a "Fund," and collectively, the "Funds"). Each Fund is a
diversified series of AIM Growth Series (the "Trust"), a registered open-end
management investment company. The Small Cap Fund and Basic Value Fund invest
all of their investable assets in the Small Cap Portfolio and Value Portfolio
(individually, a "Portfolio," and collectively, the "Portfolios"), respectively.
A I M Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for the Portfolios and the funds.
The Trust is a series mutual fund. The rules and regulations of the Securities
and Exchange Commission (the "SEC") require all mutual funds to furnish
prospective investors certain information concerning the activities of the fund
being considered for investment. This information for Small Cap Fund is included
in a Prospectus dated September 8, 1998, and for Basic Value Fund is included in
a separate Prospectus dated September 8, 1998. Additional copies of the
Prospectuses and 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, TX 77210-4739
or by calling (800) 347-4246. Investors must receive a Prospectus before they
invest.
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 Prospectus, and, in order to avoid repetition, reference will be
made to section of the Prospectus. Additionally, the Prospectus and this
Statement of Additional Information omit certain information contained in the
Registration Statement filed with the SEC. Copies of the Registration Statement,
including items omitted from the Prospectus and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name G.T. Global Growth Series, which
was organized as a Massachusetts business trust on February 19, 1985. The Trust
was reorganized on May 29, 1998 as a Delaware business trust, and is registered
with the SEC as a diversified open-end series management investment company. The
Trust currently consists of the following portfolios: AIM New Pacific Growth
Fund, AIM Europe Growth Fund, AIM Japan Growth Fund, AIM International Growth
Fund, AIM Worldwide Growth Fund, AIM Mid Cap Equity Fund formerly known as AIM
Mid Cap Growth Fund, AIM Small Cap Growth Fund and AIM Basic Value Fund. Each of
these funds has three separate classes: Class A, Class B and Advisor Class
shares. All historical financial and other information contained in this
Statement of Additional Information for periods prior to May 7, 1998, is that of
the series of G.T. Global Growth Series (renamed AIM Growth Series).
This Statement of Additional Information relates solely to the Advisor Class
shares of the Funds.
The term "majority of the outstanding shares" of the Trust, a particular Fund,
a particular class of a Fund, or a particular Portfolio means, respectively, the
vote of the lesser of (a) 67% or more of the shares of the Trust, such Fund or
such class present at a meeting the Trust's shareholders, if the holders of more
than 50% of the outstanding shares of the Trust, such Fund or such class are
present or represented by proxy, or (b) more than 50% of the outstanding shares
of the Trust, such Fund or such class.
Class A, Class B and Advisor Class shares of each Fund have equal rights and
privileges. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Trust's Board
of Trustees with respect to the class of such Fund and, upon liquidation of the
Fund, to participate proportionately in the net assets of the Fund allocable to
such class remaining after satisfaction of outstanding liabilities of the Fund
allocable to such class. Fund shares are fully paid, non-assessable and fully
transferable when issued and have no preemptive rights and have such conversion
and exchange rights as set forth in the Prospectus and this Statement of
Additional Information. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
Shareholders of the Funds do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Funds voting
together for election of trustees may elect all of the members of the Board of
Trustees of the Trust, in such event, the remaining holders cannot elect any
trustees of the Trust.
4
<PAGE> 1144
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES
The investment objective of each Fund is long-term capital appreciation. The
Small Cap Fund and Basic Value Fund each seeks to achieve its investment
objective by investing all of its investable assets in the Small Cap Portfolio
and Value Portfolio, respectively, each of which is a subtrust (a "series") of
Growth Portfolio, a New York Common Law Trust registered as an open-end
management investment company with an investment objective that is identical to
that of its corresponding Fund. Whenever the phrase "all of the Fund's
investable assets" is used herein and in the Prospectus, it means that the only
investment securities that will be held by a Fund will be its interest in its
corresponding Portfolio. A Fund may withdraw its investment in its corresponding
Portfolio at any time, if the Board of Trustees of the Trust determines that it
is in the best interests of the Fund and its shareholders to do so. Upon any
such withdrawal, a Fund's assets would be invested in accordance with the
investment policies described below and in the Prospectus with respect to its
corresponding Portfolio.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Portfolios may invest in the securities of closed-end investment companies
(including investment vehicles or companies advised by AIM or its affiliates
("Affiliated Funds")) within the limits of the Investment Company Act of 1940,
as amended (the "1940 Act"). These limitations currently provide that, in
general, each Portfolio may purchase shares of a closed-end investment company
unless (a) such a purchase would cause a Portfolio to own more than 3% of the
total outstanding voting stock of the investment company or (b) such a purchase
would cause a Portfolio to have more than 5% of its assets invested in the
investment company or more than 10% of its assets invested in an aggregate of
all such investment companies. Investment in investment companies may involve
the payment of substantial premiums above the value of such companies' portfolio
securities. The Portfolios do not intend to invest in such vehicles or funds
unless AIM determines that the potential benefits of such investments justify
the payment of any applicable premiums. The return on such securities will be
reduced by operating expenses of such companies including payments to the
investment managers of those investment companies. With respect to investments
in Affiliated Funds, AIM waives its advisory fee to the extent that such fees
are based on assets of a Fund invested in Affiliated Funds.
DEPOSITARY RECEIPTS
Each Portfolio may invest up to 10% of its total assets in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs"), American
Depositary Shares ("ADSs"), Global Depositary Receipts ("GDRs") and European
Depositary Receipts ("EDRs") or other securities convertible into securities of
eligible European or Far Eastern issuers. These securities may not necessarily
be denominated in the same currency as the securities for which they may be
exchanged. ADRs and ADSs typically are issued by an American bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental Depositary
Receipts ("CDRs"), are issued in Europe typically by foreign banks and trust
companies and evidence ownership of either foreign or domestic securities. GDRs
are similar to EDRs and are designed for use in several international financial
markets. Generally, ADRs and ADSs in registered form are designed for use in
United States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of a Portfolio's investment policies,
its investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in
the equity securities representing securities of foreign issuers into which they
may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored."
While ADRs issued under these two types of facilities are in some respects
similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants. A
depository may establish an unsponsored facility without participation by (or
even necessarily the acquiescence of) the issuer of the deposited securities,
although typically the depository requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facilities. The depository usually charges
fees upon the deposit and withdrawal of the deposited securities, the conversion
of dividends into U.S. dollars, the disposition of non-cash distributions, and
the performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Portfolios may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Portfolio in connection with other
securities or separately and provide the Portfolio with the right to purchase at
a later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to
5
<PAGE> 1145
subscribe for other securities or commodities. Warrants do not carry with them
the right to dividends or voting rights with respect to the securities that they
entitle their holder to purchase, and they do not represent any rights in the
assets of the issuer. As a result, warrants may be considered more speculative
than certain other types of investments. In addition, the value of a warrant
does not necessarily change with the value of the underlying securities and a
warrant ceases to have value if it is not exercised prior to its expiration
date.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Portfolio may make
secured loans of its portfolio securities amounting to not more than 30% of its
total assets. Securities loans are made to broker/dealers or institutional
investors pursuant to agreements requiring that the loans continuously be
secured by collateral at least equal at all times to the value of the securities
lent, plus any accrued interest, "marked to market" on a daily basis. The
Portfolios may pay reasonable administrative and custodial fees in connection
with the loans of their securities. While the securities loans are outstanding,
the Portfolios will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. Each Portfolio will
have a right to call each loan at any time and obtain the securities within the
stated settlement period. The Portfolios will not have the right to vote equity
securities while they are being lent, but may call in a loan in anticipation of
any important vote. Loans will only be made to firms deemed by AIM to be of good
standing and will not be made unless, in the judgment of AIM, the consideration
to be earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Portfolio's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks are obligations of
the issuing bank and may be general obligations of the parent bank. Such
obligations, however, may be limited by the terms of a specific obligation and
by government regulation. Although a Portfolio typically will acquire
obligations issued and supported by the credit of U.S. banks having total assets
at the time of purchase of $1 billion or more, this $1 billion figure is not an
investment policy or restriction of any Portfolio. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which a Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investment in securities, including possible decline in
market value of the underlying securities and delays and costs to the Portfolio
if the other party to the repurchase agreement becomes bankrupt, the Portfolios
intend to enter into repurchase agreements only with banks and dealers believed
by AIM to present minimal credit risks in accordance with guidelines approved by
Growth Portfolio's Board of Trustees. AIM will review and monitor the
creditworthiness of such institutions under the general supervision of Growth
Portfolio's Board.
Each Portfolio will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings, there may be restrictions on the
Portfolio's ability to sell the collateral and the Portfolio could suffer a
loss. However, with respect to financial institutions whose bankruptcy or
liquidation proceedings are subject to the U.S. Bankruptcy Code, the Portfolios
intend to comply with provisions under the U.S. Bankruptcy Code that would allow
them to immediately to resell the collateral. A Portfolio will not enter into a
repurchase agreement with a maturity of more than seven days if, as a result,
more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Portfolio's borrowings will not exceed 33 1/3% of its total assets, i.e.,
each Portfolio's total assets at all times will equal at least 300% of the
amount of outstanding borrowings. If market fluctuations in the value of a
Portfolio's portfolio holdings or other factors cause the ratio of the
Portfolio's total assets to outstanding borrowings to fall below 300%, within
three days (excluding Sundays and holidays) of such event the Portfolio may be
required to sell portfolio securities to restore the 300% asset coverage, even
though from an investment standpoint such sales might be disadvantageous. Each
Portfolio also may borrow up to 5% of its total assets for temporary or
emergency purposes other than to meet redemptions. Any borrowing by a Portfolio
may cause greater fluctuation in the value of its corresponding Fund's shares
than would be the case if the Portfolio did not borrow.
Each Portfolio's fundamental investment limitations permit the Portfolio to
borrow money for leveraging purposes. Each Portfolio, however, currently is
prohibited, pursuant to a non-fundamental investment policy, from borrowing
money in order to purchase securities. Nevertheless, this policy may be changed
in the future by Growth Portfolio's Board of Trustees. If a Portfolio employs
leverage in the future, it would be subject to certain additional risks. Use of
leverage creates an opportunity for greater growth of capital but
6
<PAGE> 1146
would exaggerate any increases or decreases in a Portfolio's net asset value.
When the income and gains on securities purchased with the proceeds of
borrowings exceed the costs of such borrowings, a Portfolio's earnings or net
asset value will increase faster than otherwise would be the case; conversely,
if such income and gains fail to exceed such costs, a Portfolio's earnings or
net asset value would decline faster than would otherwise be the case.
Each Portfolio may enter into reverse repurchase agreements. A reverse
repurchase agreement is a borrowing transaction in which the Portfolio transfers
possession of a security to another party, such as a bank or broker/dealer in
return for cash, and agrees to repurchase the security in the future at an
agreed upon price, which includes an interest component. Each Portfolio also may
engage in "roll" borrowing transactions which involve its sale of Government
National Mortgage Association certificates or other securities together with a
commitment (for which the Portfolio may receive a fee) to purchase similar, but
not identical, securities at a future date. Each Portfolio will segregate with a
custodian, liquid assets in an amount sufficient to cover its obligations under
"roll" transactions and reverse repurchase agreements with broker/dealers. No
segregation is required for reverse repurchase agreements with banks.
TEMPORARY DEFENSIVE STRATEGIES
Money market instruments in which the Portfolios may invest include the
following: government securities; high grade commercial paper; bank certificates
of deposit; bankers' acceptances; and repurchase agreements related to any of
the foregoing. High grade commercial paper refers to commercial paper rated P-1
by Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard and Poor's, a
division of The McGraw-Hill Companies, Inc. ("S&P"), at the time of investment
or, if unrated, deemed by AIM to be of comparable quality.
OPTIONS AND FUTURES
SPECIAL RISKS OF OPTIONS AND FUTURES
The use of options and futures contracts involves special considerations and
risks, as described below. Risks pertaining to particular instruments are
described in the sections that follow.
(1) Successful use of most of these instruments depends upon AIM's
ability to predict movements of the overall securities markets, which
requires different skills than predicting changes in the prices of
individual securities. While AIM is experienced in the use of these
instruments, there can be no assurance that any particular strategy adopted
will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used
in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.
(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. For example, if a
Portfolio entered into a short hedge because AIM projected a decline in the
price of a security in the Portfolio's securities portfolio, and the price
of that security increased instead, the gain from that increase might be
wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by
more than the increase in the price of the security, the Portfolio could
suffer a loss. In either such case, the Portfolio would have been in a
better position had it not hedged at all.
(4) As described below, a Portfolio 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 (i.e., instruments other than purchased options). If the Portfolio
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 Portfolio'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 Portfolio sell a portfolio security at a disadvantageous
time. The Portfolio's ability to close out a position in an instrument
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to a Portfolio.
WRITING CALL OPTIONS
A Portfolio may write (sell) call options on securities and indices. Call
options generally will be written on securities that, in the opinion of AIM, are
not expected to make any major price moves in the near future but that, over the
long term, are deemed to be attractive investments for the Portfolio.
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A call option gives the holder (buyer) the right to purchase a security 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 the writer of a call option continues, he or she may be assigned an exercise
notice, requiring him or her to deliver the underlying security against payment
of the exercise price. This obligation terminates upon the expiration of the
call option, or such earlier time at which the writer effects a closing purchase
transaction by purchasing an option identical to that previously sold.
Portfolio securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with each
Portfolio's investment objective. When writing a call option, a Portfolio, in
return for the premium, gives up the opportunity for profit from a price
increase in the underlying security above the exercise price, and retains the
risk of loss should the price of the security decline. Unlike one who owns
securities not subject to an option, a Portfolio has no control over when it may
be required to sell the underlying securities, since most options may be
exercised at any time prior to the option's expiration. If a call option that a
Portfolio has written expires, the Portfolio 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 during the option period. If the call option is
exercised, the Portfolio will realize a gain or loss from the sale of the
underlying security, which will be increased or offset by the premium received.
Neither Portfolio considers a security covered by a call option to be "pledged"
as that term is used in the Portfolio's policy that limits the pledging or
mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security appreciates to a price
higher than the exercise price of the call option, it can be expected that the
option will be exercised and a Portfolio will be obligated to sell the security
at less than its market value.
The premium that a Portfolio receives for writing a call option is deemed to
constitute the market value of an option. The premium a Portfolio will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment
and the length of the option period. In determining whether a particular call
option should be written, AIM will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security from being called, or
to permit the sale of the underlying security. Furthermore, effecting a closing
transaction will permit a Portfolio to write another call option on the
underlying security with either a different exercise price or expiration date or
both.
Each Portfolio will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or indices at the time the options
are written. From time to time, a Portfolio may purchase an underlying security
for delivery in accordance with the exercise of an option, rather than
delivering such security from its portfolio. In such cases, additional costs
will be incurred.
A Portfolio will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Portfolio.
WRITING PUT OPTIONS
The Portfolios may write put options on securities and indices. A put option
gives the purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security at the exercise price at any time
until (American style) or on (European style) the expiration date. The operation
of put options in other respects, including their related risks and rewards, is
substantially identical to that of call options.
A Portfolio generally would write put options in circumstances where AIM
wishes to purchase the underlying security for the Portfolio's portfolio at a
price lower than the current market price of the security. In such event, the
Portfolio 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.
Since the Portfolio also would receive interest on debt securities maintained to
cover the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price, less the premium received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security depreciates to a price
lower than the exercise price of the put option, it can be expected that the put
option will be exercised and a Portfolio will be obligated to purchase the
security at greater than its market value.
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PURCHASING PUT OPTIONS
Each Portfolio may purchase put options on securities and indices. As the
holder of a put option, a Portfolio would have the right to sell the underlying
security at the exercise price at any time until (American style) or on
(European style) the expiration date. A Portfolio may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
A Portfolio may purchase a put option on an underlying security ("protective
put") owned by the Portfolio in order to protect against an anticipated decline
in the value of the security. Such hedge protection is provided only during the
life of the put option when the Portfolio, as the holder of the put option, is
able to sell the underlying security at the put exercise price regardless of any
decline in the underlying security's market price. The premium paid for the put
option and any transaction costs would reduce any profit otherwise available for
distribution when the security eventually is sold.
A Portfolio also may purchase put options at a time when the Portfolio does
not own the underlying security. By purchasing put options on a security it does
not own, a Portfolio seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Portfolio will
lose its entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Portfolio may purchase call options on securities and indices. As the
holder of a call option, a Portfolio would have the right to purchase the
underlying security at the exercise price at any time until (American style) or
on (European style) the expiration date. A Portfolio 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 Portfolio for the purpose of acquiring the
underlying security for its portfolio. Utilized in this fashion, the purchase of
call options would enable a Portfolio to acquire the security at the exercise
price of the call option plus the premium paid. At times, the net cost of
acquiring the security in this manner may be less than the cost of acquiring the
security directly. This technique also may be useful to the Portfolios in
purchasing a large block of securities that would be more difficult to acquire
by direct market purchases. As long as it holds such a call option, rather than
the underlying security itself, a Portfolio is partially protected from any
unexpected decline in the market price of the underlying security 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 Portfolio also may purchase call options on underlying securities it owns
to avoid realizing losses that would result in a reduction of its current
return. For example, where a Portfolio has written a call option on an
underlying security having a current market value below the price at which it
purchased the security, an increase in the market price could result in the
exercise of the call option written by the Portfolio and the realization of a
loss on the underlying security. Accordingly, the Portfolio could purchase a
call option on the same underlying security, which could be exercised to fulfill
the Portfolio's delivery obligations under its written call (if it is
exercised). This strategy could allow the Portfolio to avoid selling the
portfolio security at a time when it has an unrealized loss; however, the
Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of such
Portfolio's total assets at the time of purchase.
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 Portfolio will not purchase an OTC option unless AIM 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.
The staff of the SEC considers purchased OTC options to be illiquid
securities. A Portfolio may also sell OTC options and, in connection therewith,
set aside assets or cover its obligations with respect to OTC options written by
the Portfolio. The assets used as cover for OTC options written by a Portfolio
will be considered illiquid unless the OTC options are sold to qualified dealers
who agree that the Portfolio 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.
A Portfolio's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. A Portfolio intends to
purchase or write only those exchange-listed options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although a
Portfolio will enter into OTC options only with contra parties that are expected
to be capable of entering into closing transac-
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tions with the Portfolio, there is no assurance that the Portfolio 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 contra party, the Portfolio might
be unable to close out an OTC option position at any time prior to its
expiration.
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. When a Portfolio writes
a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the Portfolio an amount of cash if the closing level of the index
upon which the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of such
difference. When a Portfolio buys a call on an index, it pays a premium and has
the same rights as to such call as are indicated above. When a Portfolio buys a
put on an index, it pays a premium and has the right, prior to the expiration
date, to require the seller of the put, upon the Portfolio's exercise of the
put, to deliver to the Portfolio an amount of cash if the closing level of the
index upon which the put is based is less than the exercise price of the put,
which amount of cash is determined by the multiplier, as described above for
calls. When a Portfolio writes a put on an index, it receives a premium and the
purchaser has the right, prior to the expiration date, to require the Portfolio
to deliver to it an amount of cash equal to the difference between the closing
level of the index and the exercise price times the multiplier, if the closing
level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Portfolio writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Portfolio 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, a Portfolio 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 vary
from the value of the index.
Even if a Portfolio could assemble a securities portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the Portfolio, as the call writer,
will not know that it has been assigned until the next business day at the
earliest. The time lag between exercise and notice of assignment poses no risk
for the writer of a covered call on a specific underlying security, such as
common stock, because there the writer's obligation is to deliver the underlying
security, not to pay its value as of a fixed time in the past. So long as the
writer already owns the underlying security, it can satisfy its settlement
obligations by simply delivering it, and the risk that its value may have
declined since the exercise date is borne by the exercising holder. In contrast,
even if the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount based on
the closing index value on the exercise date; and by the time it learns that it
has been assigned, the index may have declined, with a corresponding decline in
the value of its securities portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding securities positions.
If a Portfolio purchases an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Portfolio will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
INTEREST RATE AND STOCK INDEX FUTURES CONTRACTS
A Portfolio may enter into interest rate or stock index futures contracts
("Futures" or "Futures Contracts") as a hedge against changes in prevailing
levels of interest rates or stock price levels in order to establish more
definitely the effective return on securities held or intended to be acquired by
the Portfolio. A Portfolio's hedging may include sales of Futures as an offset
against the effect of expected increases in interest rates or decreases in stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates or increases in stock prices.
The Portfolios only will enter into Futures Contracts that are traded 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 by the Commodity Futures Trading
Commission ("CFTC").
Although techniques other than sales and purchases of Futures Contracts could
be used to reduce a Portfolio's exposure to interest rate and stock market
fluctuations, the Portfolio may be able to hedge its exposure more effectively
and at a lower cost through using Futures Contracts.
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A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument for a
specified price at a designated date, time and place. A stock index Futures
Contract 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 at
which the Futures Contract is originally struck; 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 Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment
for financial instruments, Futures Contracts usually are closed out before the
delivery date. Closing out an open Futures Contract sale or purchase is effected
by entering into an offsetting Futures Contract purchase or sale, respectively,
for the same aggregate amount of the identical financial instrument and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Portfolio realizes a gain; if it is more, the Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Portfolio realizes a gain; if it is less, the Portfolio
realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that a Portfolio will be able
to enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Portfolio is not able to enter into an
offsetting transaction, the Portfolio will continue to be required to maintain
the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one September stock index Futures Contract on an
exchange may be fulfilled at any time before delivery under the Futures Contract
is required (i.e., on a specified date in September, the "delivery month") by
the purchase of the same September stock index Futures Contract on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Portfolio.
Each Portfolio's Futures transactions will be entered into for hedging
purposes only; that is, Futures Contracts will be sold to protect against a
decline in the price of securities that a Portfolio owns, or Futures Contracts
will be purchased to protect a Portfolio against an increase in the price of
securities it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Portfolio in order to initiate Futures trading and to maintain
the Portfolio's open positions in Futures Contracts. A margin deposit made when
the Futures Contract is entered into ("initial margin") is intended to ensure
the Portfolio's performance under the Futures Contract. The margin required for
a particular Futures Contract is set by the exchange on which the Futures
Contract 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 the Portfolio entered into the Futures
Contract will be made on a daily basis as the price of the underlying security
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest rates and in stock market movements, which in turn are affected by
fiscal and monetary policies and national and international political and
economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities in the Portfolio's portfolio being
hedged. The degree of imperfection of correlation depends upon circumstances
such as variations in speculative market demand for Futures and for securities,
including technical influences in Futures trading; and differences between the
financial instruments being hedged and the instruments underlying the standard
Futures Contracts available for trading. A decision of whether, when and how to
hedge involves skill and judgment, and even a well-conceived hedge may be
unsuccessful to some degree because of unexpected market behavior or interest
rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted in
Futures Contract and options on Futures Contract prices during a single trading
day. The daily limit establishes the maximum amount that the price of a Futures
Contract or option may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of Futures Contract or option, no trades may be made on that
day at a price beyond that limit. The daily limit governs only price movement
during a particular trading day and therefore does not limit potential losses,
because the limit may prevent the liquidation of unfavorable positions. Futures
Contract and option prices occasionally have moved to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
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If a Portfolio were unable to liquidate a Futures or option on Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Portfolio would continue to
be subject to market risk with respect to the position. In addition, except in
the case of purchased options, the Portfolio 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.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities, 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, 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 is exercised on the last trading day 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
level of the securities or index upon which the Futures Contract is based on the
expiration date. Purchasers of options who fail to exercise their options prior
to the exercise date suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities or indices.
If a Portfolio writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Portfolio may seek to close out an option position by selling an option
covering the same Futures Contract and having the same exercise price and
expiration date. The ability to establish and close out positions on such
options is subject to the maintenance of a liquid secondary market.
LIMITATIONS ON USE OF FUTURES AND OPTIONS ON FUTURES
To the extent that a Portfolio enters into Futures Contracts and options on
Futures Contracts, in each case other than for bona fide hedging purposes (as
defined by the CFTC), the aggregate initial margin and premiums required to
establish these positions (excluding the amount by which options are
"in-the-money") will not exceed 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized losses on
any contracts the Portfolio has entered into. In general, a call option on a
Futures Contract is "in-the-money" if the value of the underlying Futures
Contract exceeds the strike, i.e., exercise, price of the call; a put option on
a Futures Contract is "in-the-money" if the value of the underlying Futures
Contract is exceeded by the strike price of the put. This guideline may be
modified by Growth Portfolio's Board of Trustees without a shareholder vote.
This limitation does not limit the percentage of a Portfolio's assets at risk to
5%.
COVER
Transactions using Futures Contracts and options (other than options purchased
by a Portfolio) expose the Portfolio to an obligation to another party. A
Portfolio will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities or other options or Futures
Contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. Each Portfolio will comply with SEC guidelines regarding
cover for these instruments and, if the guidelines so require, set aside cash or
liquid securities.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Futures Contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of a Portfolio's
assets are used for cover or otherwise set aside, it could affect portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
12
<PAGE> 1152
RISK FACTORS
ILLIQUID SECURITIES
A Portfolio may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if a Portfolio cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Portfolio values such securities. See "Investment Limitations." The sale of
illiquid securities, if they can be sold at all, generally will require more
time and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities eligible
for trading on U.S. securities exchanges or in the OTC markets. Moreover,
restricted securities, which may be illiquid for purposes of this limitation,
often sell, if at all, at a price lower than similar securities that are not
subject to restrictions on resale.
Illiquid securities include those that are subject to restrictions contained
in the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, a Portfolio may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended (the "1933 Act"),
including private placements, repurchase agreements, commercial paper, foreign
securities and corporate bonds and notes. These instruments are often restricted
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
a Portfolio, however, could affect adversely the marketability of such portfolio
securities and the Portfolio might be unable to dispose of such securities
promptly or at favorable prices.
With respect to liquidity determinations generally, Growth Portfolio's Board
of Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, are liquid or
illiquid. That Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to AIM in accordance with procedures approved by
that Board of Trustees. AIM takes into account a number of factors in reaching
liquidity decisions, including: (i) the frequency of trading in the security;
(ii) the number of dealers who make quotes for the security; (iii) the number of
dealers who have undertaken to make a market in the security; (iv) the number of
other potential purchasers; and (v) the nature of the security and how trading
is effected (e.g., the time needed to sell the security, how offers are
solicited, and the mechanics of transfer). AIM monitors the liquidity of
securities in each Portfolio's securities portfolio and periodically reports
such determinations to the Growth Portfolio's Board of Trustees. If the
liquidity percentage restriction of a Portfolio is satisfied at the time of
investment, a later increase in the percentage of illiquid securities held by a
Portfolio resulting from a change in market value or assets will not constitute
a violation of that restriction. If as a result of a change in market value or
assets, the percentage of illiquid securities held by the Portfolio increases
above the applicable limit, AIM will take appropriate steps to bring the
aggregate amount of illiquid assets back within the prescribed limitations as
soon as reasonably practicable, taking into account the effect of any
disposition on that Portfolio.
DEBT SECURITIES
Each Portfolio is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, AIM reviews and monitors the
creditworthiness of each issuer and issue and analyzes interest rate trends and
specific developments that may affect individual issuers, in addition to relying
on ratings assigned by S&P, Moody's or another nationally recognized statistical
rating organization ("NRSRO") as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's considers
securities rated Baa to have speculative characteristics. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
for such securities to make principal and interest payments than is the case for
higher grade debt securities. Each Portfolio is also permitted to purchase debt
securities that are not rated by S&P, Moody's or another NRSRO but that AIM
determines to be of comparable quality to that of rated securities in which the
Portfolio may invest. Such securities are included in the computation of any
percentage limitations applicable to the comparable rated securities.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality, are not a guarantee of quality and may be reduced after a
Portfolio has acquired the security. AIM will consider such an event in
determining whether a Portfolio should con-
13
<PAGE> 1153
tinue to hold the security but is not required to dispose of it. Credit ratings
attempt to evaluate the safety of principal and interest payments and do not
reflect an assessment of the volatility of the security's market value or the
liquidity of an investment in the security. Also, NRSROs may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than the rating indicates.
For a description of Moody's and S&P ratings, see "Description of Debt Ratings"
herein.
INVESTMENT LIMITATIONS
The Small Cap Fund and Basic Value Fund each has the following fundamental
investment policy to enable it to invest in the Small Cap Portfolio and Value
Portfolio, respectively:
Notwithstanding any other investment policy of the Fund, the Fund may invest
all of its investable assets (cash, securities and receivables related to
securities) in an open-end management investment company having substantially
the same investment objective, policies and limitations as the Fund.
All other investment policies and limitations of each Fund and its
corresponding Portfolio are identical. Therefore, although the following
discusses certain investment policies and limitations of each Portfolio and
Growth Portfolio's Board of Trustees, it applies equally to each Fund and the
Trust's Board of Trustees.
Each Portfolio has adopted the following investment limitations as fundamental
policies that (unless otherwise noted) may not be changed without approval by
the affirmative vote of a majority of the outstanding shares of the Portfolio.
Whenever a Fund is requested to vote on a change in the investment limitations
of its corresponding Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by the shareholders. Neither Portfolio
may:
(1) Purchase or sell real estate, except that investments in
securities of issuers that invest in real estate and investments in
mortgage-backed securities, mortgage participations or other instruments
supported by interests in real estate are not subject to this limitation,
and except that a Portfolio may exercise rights under agreements relating
to such securities, including the right to enforce security interests and
to hold real estate acquired by reason of such enforcement until that real
estate can be liquidated in an orderly manner.
(2) Purchase or sell physical commodities, but a Portfolio may
purchase, sell or enter into financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments.
(3) Issue senior securities or borrow money, except as permitted under
the 1940 Act and then not in excess of 33 1/3% of a Portfolio's total
assets (including the amount borrowed but reduced by any liabilities not
constituting borrowings) at the time of the borrowing, except that a
Portfolio may borrow up to an additional 5% of its total assets (not
including the amount borrowed) for temporary or emergency purposes;
(4) Make loans, except through loans of portfolio securities or
through repurchase agreements, provided that for purposes of this
limitation, the acquisition of bonds, debentures, other debt securities or
instruments, or participations or other interests therein and investments
in government obligations, commercial paper, certificates of deposit,
banker's acceptances or similar instruments will not be considered the
making of a loan;
(5) Purchase securities of any one issuer if, as a result, more than
5% of a Portfolio's total assets would be invested in securities of that
issuer or the Portfolio would own or hold more than 10% of the outstanding
voting securities of that issuer, except that up to 25% of the Portfolio's
total assets may be invested without regard to this limitation, and except
that this limitation does not apply to securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or to securities
issued by other investment companies;
(6) Engage in the business of underwriting securities of other
issuers, except to the extent that a Portfolio might be considered an
underwriter under the federal securities laws in connection with its
disposition of portfolio securities; or
(7) Purchase any security if, as a result of that purchase, 25% or
more of a Portfolio's total assets would be invested in securities of
issuers having their principal business activities in the same industry,
except that this limitation does not apply to securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities.
The following investment limitations of each Portfolio are not fundamental
policies and may be changed by vote of Growth Portfolio's Board of Trustees
without shareholder approval. Neither Portfolio may:
(1) Invest more than 15% of its net assets in illiquid securities, a
term which means securities that cannot be disposed of within seven days in
the normal course of business at approximately the amount at which the
Portfolio has valued the securities and includes, among other things,
repurchase agreements maturing in more than seven days;
(2) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Portfolio's total
assets;
14
<PAGE> 1154
(3) Enter into a futures contract or an option on a futures contract,
in each case other than for bona fide hedging purposes (as defined by the
CFTC), if the aggregate initial margin and premiums required to establish
all of these positions (excluding the amount by which options are
"in-the-money") exceeds 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized
losses on any contracts the Portfolio has entered into;
(4) Purchase securities of other investment companies, except to the
extent permitted by the 1940 Act, in the open market at no more than
customary commission rates. This limitation does not apply to securities
received or acquired as dividends, through offers of exchange, or as a
result of reorganization, consolidation, or merger;
(5) Purchase securities on margin, provided that a Portfolio may
obtain short-term credits as may be necessary for the clearance of
purchases and sales of securities, and further provided that a Portfolio
may make margin deposits in connection with its use of financial options
and futures, forward and spot currency contracts, swap transactions and
other financial contracts or derivative instruments; or
(6) Mortgage, pledge, or hypothecate any of its assets, provided that
this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
If a percentage restriction on investment or utilization of assets in an
investment policy or limitation is adhered to at the time an investment is made,
a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of a Portfolio's investment policies or restrictions. A
Portfolio may exchange securities, exercise conversion or subscription rights,
warrants, or other rights to purchase common stock or other equity securities
and may hold, except to the extent limited by the 1940 Act, any such securities
so acquired without regard to the Portfolio's investment policies and
limitations. The original cost of the securities so acquired will be included in
any subsequent determination of a Portfolio's compliance with the investment
percentage limitations referred to above and in the Prospectus.
Investors should refer to each Fund's prospectus for further information with
respect to that particular Fund's investment objective, which may not be changed
without the approval of its shareholders, and other investment policies
techniques and limitations, which may be changed without shareholder approval.
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by Growth Portfolio's Board of Trustees, AIM
is responsible for the execution of the Portfolios' securities transactions and
the selection of brokers/dealers who execute such transactions on behalf of the
Portfolios. In executing transactions, AIM seeks the best net results for each
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although AIM
generally seeks reasonably competitive commission rates and spreads, payment of
the lowest commission or spread is not necessarily consistent with the best net
results. While the Portfolios may engage in soft dollar arrangements for
research services, as described below, the Portfolios have no obligation to deal
with any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.
Consistent with the interests of the Portfolios, AIM may select brokers to
execute the Portfolios' securities transactions on the basis of the research
services they provide to AIM for its use in managing the Portfolios and its
other advisory accounts. Such services may include furnishing analyses, reports
and information concerning issuers, industries, securities, geographic regions,
economic factors and trends, portfolio strategy, and performance of accounts,
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage services
received from such broker are in addition to, and not in lieu of, the services
required to be performed by AIM under the applicable investment management and
administration contract. A commission paid to such broker may be higher than
that which another qualified broker would have charged for effecting the same
transaction, provided that AIM determines in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of AIM to the Portfolios and its other clients and that the total
commissions paid by each Fund will be reasonable in relation to the benefits
received by the Portfolios over the long term. Research services may also be
received from dealers who execute Portfolio transactions in OTC markets.
AIM may allocate brokerage transactions to broker/dealers who have entered
into arrangements under which the broker/dealer allocates a portion of the
commissions paid by the Portfolio toward payment of its expenses, such as
custodian fees.
Investment decisions for each Portfolio and for other investment accounts
managed by AIM are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts, including one or more Portfolios. In such cases,
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Portfolio is concerned, in other cases AIM
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Portfolios.
Under a policy adopted by Growth Portfolio's Board of Trustees, and subject to
the policy of obtaining the best net results, AIM may consider a broker/dealer's
sale of the shares of the Funds and the other funds for which AIM serves as
investment manager and/or
15
<PAGE> 1155
administrator in selecting broker/dealers for the execution of portfolio
transactions. This policy does not imply a commitment to execute portfolio
transactions through all broker/dealers that sell shares of the Funds and such
other funds.
Each Portfolio contemplates that, consistent with the policy of obtaining the
best net results, brokerage transactions may be conducted through certain
companies that are affiliated with AIM. Growth Portfolio's Board of Trustees has
adopted procedures in conformity with Rule 17e-1 under the 1940 Act to ensure
that all brokerage commissions paid to such affiliates are reasonable and fair
in the context of the market in which they are operating. Any such transactions
will be effected and related compensation paid only in accordance with
applicable SEC regulations.
The Portfolios 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 Portfolio, provided the conditions of an exemptive order
received by the Funds from the SEC are met. In addition, a Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolios
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.
For the fiscal years ended December 31, 1997 and December 31, 1996, and for
the fiscal period October 18, 1995 (commencement of operations) to December 31,
1995, the Small Cap Portfolio paid aggregate brokerage commissions of $91,971,
$54,241 and $3,317, respectively. For the fiscal years ended December 31, 1997
and December 31, 1996, and for the fiscal period October 18, 1995 (commencement
of operations) to December 31, 1995, the Value Portfolio paid aggregate
brokerage commissions of $22,202, $37,380 and $1,032, respectively.
PORTFOLIO TRADING AND TURNOVER
Although the Portfolios generally do not intend to trade for short-term
profits, the securities held by a Portfolio will be sold whenever AIM believes
it is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by each Portfolio's
average month-end portfolio value, excluding short-term investments. The
portfolio turnover rate will not be a limiting factor when AIM deems portfolio
changes appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that a Portfolio will bear
directly and may result in the realization of net capital gains that are taxable
when distributed to each corresponding Fund's shareholders. For the fiscal years
ended December 31, 1997 and December 31, 1996, the Small Cap Portfolio's and
Value Portfolio's portfolio turnover rates were 233% and 150%, and 93% and 256%,
respectively.
16
<PAGE> 1156
MANAGEMENT
TRUSTEES AND EXECUTIVE OFFICERS
The Trust's Trustees and Executive Officers are listed below. Unless otherwise
indicated, the address of each Executive Officer is 11 Greenway Plaza, Suite
100, Houston, Texas 77046.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (51) Trustee, Chairman of the Director, President and Chief Executive Officer,
Board and 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, AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------------
C. DEREK ANDERSON (57) Trustee Mr. Anderson is President, Plantagenet Capital
220 Sansome Street Management, LLC (an investment partnership); Chief
Suite 400 Executive Officer, Plantagenet Holdings, Ltd. (an
San Francisco, CA 94104 investment banking firm); Director, Anderson Capital
Management, Inc. since 1988; Director, PremiumWear,
Inc. (formerly Munsingwear, Inc.) (a casual apparel
company) and Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a trustee of
each of the other investment companies registered
under the 1940 Act that is sub-advised or
sub-administered by the Sub-advisor.
- ---------------------------------------------------------------------------------------------------------------
FRANK S. BAYLEY (59) Trustee Mr. Bayley is a partner of the law firm of Baker &
Two Embarcadero Center McKenzie, and serves as a Director and Chairman of
Suite 2400 C.D. Stimson Company (a private investment company).
San Francisco, CA 94111 Mr. Bayley is also a trustee of each of the other
investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the
Sub-advisor.
- ---------------------------------------------------------------------------------------------------------------
ARTHUR C. PATTERSON (54) Trustee Mr. Patterson is Managing Partner of Accel Partners
428 University Avenue (a venture capital firm). He also serves as a
Palo Alto, CA 94301 director of Viasoft and PageMart, Inc. (both public
software companies), as well as several other
privately held software and communications companies.
Mr. Patterson is also a trustee of each of the other
investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the
Sub-advisor.
- ---------------------------------------------------------------------------------------------------------------
RUTH H. QUIGLEY (63) Trustee Miss Quigley is a private investor. From 1984 to
1055 California Street 1986, she was President of Quigley Friedlander & Co.,
San Francisco, CA 94108 Inc. (a financial advisory services firm). Miss
Quigley is also a trustee of each of the other
investment companies registered under the 1940 Act
that is sub-advised or sub-administered by the
Sub-advisor.
- ---------------------------------------------------------------------------------------------------------------
+ JOHN J. ARTHUR (53) Vice President Director, Senior Vice President and Treasurer, A I M
Advisors, Inc.; Vice President and Treasurer, A I M
Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and A I M Advisors, Inc.
as defined in the 1940 Act.
+ Mr. Arthur and Ms. Relihan are married to each other.
17
<PAGE> 1157
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
KENNETH W. CHANCEY (52) Vice President and Senior Vice President -- Mutual Fund Accounting, the
50 California Street Principal Accounting sub- advisor since 1997; Vice President -- Mutual
San Francisco, CA 94111 Officer Fund Accounting, the Sub-advisor from 1992 to 1997.
- ---------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and
Fund Management Company.
- ---------------------------------------------------------------------------------------------------------------
GARY T. CRUM (50) Vice President Director and President, A I M Capital Management,
Inc.; Director and Senior Vice President, A I M
Management Group Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------------
HELGE K. LEE (52) Vice President and Chief Legal and Compliance Officer -- North America,
50 California Street Secretary the Sub-advisor since October 1997; Executive Vice
San Francisco, CA 94111 President of the Asset Management Division of
Liechtenstein Global Trust since October 1996; Senior
Vice President, General Counsel and Secretary of LGT
Asset Management, Inc., Chancellor LGT Asset
Management, Inc., GT Global, GT Global Investor
Services, Inc. and G.T. Insurance from May 1994 to
October 1996; Senior Vice President, General Counsel
and Secretary of Strong/Corneliuson Management, Inc.
and Secretary of each of the Strong Funds from
October 1991 through May 1994.
- ---------------------------------------------------------------------------------------------------------------
+ CAROL F. RELIHAN (43) Vice President Director, Senior Vice President, General Counsel and
Secretary, A I M Advisors, Inc.; Vice President,
General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; Vice President and General
Counsel, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President and Vice President and Fund Controller, A I M Advisors,
Assistant Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
+ Mr. Arthur and Ms. Relihan are married to each other.
The Board of Trustees has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Trust and the
Funds and recommending firms to serve as independent auditors of the Trust. All
of the Trust's Trustees also serve as directors or trustees of some or all of
the other investment companies managed, administered or advised by AIM. All of
the Trust's Executive Officers hold similar offices with some or all of the
other investment companies managed, administered or advised by AIM. Each Trustee
who is not a director, officer or employee of AIM or any affiliated company is
paid aggregate fees of $5,000 a year, plus $300 per Fund for each meeting of the
Board attended, and reimbursed travel and other expenses incurred in connection
with attendance at such meetings. Other Trustees and Officers receive no
compensation or expense reimbursements from the Trust. For the fiscal year ended
December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who
are not directors, officers or employees of AIM or any affiliated company,
received total compensation of $6,425, $6,681, $5,450 and $6,068, respectively,
from the Trust for their services as Trustees. For the year ended December 31,
1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not
directors, officers or employees of AIM or any other affiliated company,
received total compensation of $103,654, $106,556, $89,700 and $98,038,
respectively, from the investment companies managed or administered by AIM for
which he or she served as a Trustee. Fees and expenses disbursed to the Trustees
contained no accrued or payable pension or retirement benefits. As of June 26,
1998, the Officers and Trustees and their families as a group owned in the
aggregate beneficially or of record less than 1% of the shares of the Basic
Value Fund and less than 1% of the shares of the Small Cap Fund.
18
<PAGE> 1158
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO THE FUNDS AND THE
PORTFOLIOS
AIM serves as each Portfolio's investment manager and administrator under an
investment management and administration contract between the Portfolios and
AIM ("Portfolio Management Contract"). AIM serves as administrator to each Fund
under an administration contract between the Trust and AIM ("Administration
Contract").
The Administration Contracts will not be deemed advisory contracts, as defined
under the 1940 Act. As investment managers and administrators, AIM makes all
investment decisions for each Portfolio and, as administrator, AIM administers
each Portfolio's and Fund's affairs. Among other things, AIM furnishes the
services and pays the compensation and travel expenses of persons who perform
the executive, administrative, clerical and bookkeeping functions of the
Portfolios and the Funds and provide suitable office space and necessary small
office equipment and utilities.
The Portfolio Management Contracts may be renewed with respect to a Portfolio
for one-year terms, provided that any such renewal has been specifically
approved at least annually by: (i) the Portfolio's Board of Trustees or the
vote of a majority of the Portfolio's outstanding voting securities (as defined
in the 1940 Act), and (ii) a majority of the Portfolio's Trustees who are not
parties to the Portfolio Management Contracts or "interested persons" of any
such party (as defined in the 1940 Act), cast in person at a meeting called for
the specific purpose of voting on such approval. The Portfolio Management
Contracts provide that with respect to each Portfolio, and the Administration
Contracts provide that with respect to each Fund, either the Trust, the
Portfolio or AIM may terminate the contracts without penalty upon sixty
days' written notice to the other party. The Portfolio Management Contracts
terminate automatically in the event of its assignment (as defined in the 1940
Act).
For the fiscal period October 18, 1995 (commencement of operations) to
December 31, 1995, the Small Cap Portfolio and the Value Portfolio paid fees of
$1,293 and $622, respectively, to INVESCO (NY), Inc. (former sub-advisor to the
Portfolios and the Funds). For the same period, the Small Cap Fund and Basic
Value Fund paid administration fees of $755 and $349, respectively, to INVESCO
(NY), Inc. For the fiscal period October 18, 1995 (commencement of operations)
to December 31, 1995, INVESCO (NY), Inc. reimbursed the Small Cap Portfolio and
Value Portfolio for their respective investment management and administration
fees in the amounts of $1,293 and $622, respectively; for the same period, the
Small Cap Fund and Basic Value Fund reimbursed administration fees in the
amounts of $755 and $349, respectively. Accordingly, INVESCO (NY), Inc.,
reimbursed each Fund and its respective Portfolio investment management and
administration fees in the aggregate amounts of $2,048 and $971, respectively.
For the fiscal years ended December 31, 1997 and December 31, 1996, the Small
Cap Portfolio and the Value Portfolio paid fees of $120,544 and $73,312; and
$74,372 and $27,487, respectively, to INVESCO (NY), Inc. For the same periods,
the Small Cap Fund and Basic Value Fund paid administration fees of $63,460 and
$39,004; and $39,171 and $14,722, respectively, to INVESCO (NY), Inc. For the
fiscal years ended December 31, 1997 and December 31, 1996, INVESCO (NY), Inc.
reimbursed the Small Cap Portfolio and Value Portfolio for their respective
investment management and administration fees in the amounts of $67,837 and
$73,312; and $74,372 and $27,487, respectively; for the same periods, INVESCO
(NY), Inc. reimbursed the Small Cap Fund and Basic Value Fund for their
respective administration fees in the amounts of $63,460 and $39,004; and
$39,171 and $14,722, respectively. Accordingly, INVESCO (NY), Inc. reimbursed
each Fund and its corresponding Portfolio investment management and
administration fees in the aggregate amounts of $131,297 and $112,316; and
$113,543 and $42,209, respectively.
For the fiscal period October 18, 1995 (commencement of operations) to
December 31, 1995, INVESCO (NY), Inc., pursuant to a voluntary expense
undertaking to limit expenses to the maximum annual level of 1.65% of average
daily net assets of Advisor Class shares of the Funds, reimbursed the Small Cap
Fund and Basic Value Fund for expenses in the additional amounts of $65,079 and
$66,907, respectively.
For the fiscal years ended December 31, 1997 and December 31, 1996, INVESCO
(NY), Inc., pursuant to its voluntary expense undertaking, reimbursed the Small
Cap Fund and Basic Value Fund for expenses in the additional amounts of $0 and
$58,269; and $38,419 and $164,683, respectively.
DISTRIBUTION SERVICES
Each Fund's Advisor Class shares are offered continuously through the Funds'
principal underwriter and distributor, AIM Distributors on a "best efforts"
basis pursuant to a distribution contract between the Trust and AIM Distributors
without a front-end sales charge or a contingent deferred sales charge.
EXPENSES OF THE FUNDS AND THE PORTFOLIOS
Each Fund and each Portfolio pays all expenses not assumed by the AIM, AIM
Distributors and other agents. These expenses include, in addition to the
advisory, distribution, transfer agency, pricing and accounting agency and
brokerage fees discussed above, legal and audit expenses, custodian fees,
trustees' fees, organizational fees, fidelity bond and other insurance premiums,
taxes, extraordinary expenses and expenses of reports and prospectuses sent to
existing investors. The allocation of general Trust expenses, and expenses
shared by the Funds with one another, are made on a basis deemed fair and
equitable, which may be based on the relative net assets of the Funds or the
nature of the services performed and relative applicability to each Fund.
Similarly, the allocation of general Growth Portfolio expenses, and expenses
shared by the Portfolios with each other, are made on a basis deemed fair and
equitable and may be based on the relative net assets of the Portfolios or the
nature of the services performed and relative applicability to each
19
<PAGE> 1159
Portfolio. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, that are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and not as expenses.
NET ASSET VALUE DETERMINATION
The net asset value per share of each Fund and Portfolio is normally
determined daily as of the close of trading on the New York Stock Exchange
("NYSE") (generally 4:00 p.m. Eastern time) on each business day of the Fund and
Portfolio. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern
time) on a particular day, the net asset value of a Fund or Portfolio is
determined as of the close of the NYSE on such day. Net asset value per share is
determined by dividing the value of a Fund's or a Portfolio'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 or a Portfolio's net asset
value per share is made in accordance with generally accepted accounting
principles.
Each equity security held is valued at its last sales price on the exchange
where the security is principally traded or, lacking any sales on a particular
day, the security is valued at the mean between the closing bid and the asked
prices on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued at
the mean between the last bid and asked prices based upon quotes furnished by
market makers for such securities. Each security reported on the NASDAQ National
Market System is valued at the last sales price on the valuation date or absent
a last sales price, at the mean between the closing bid and asked prices on that
day. Debt securities 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, 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 specially authorized
by the Growth Portfolio's Board of Trustees. Short-term obligations having 60
days or less to maturity are valued on the basis of amortized cost. For purposes
of determining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the NYSE.
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 NYSE. The values of such securities used
in computing the net asset value of each Fund's or Portfolio's shares are
determined at 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 such values are determined and the close of the NYSE which will not be
reflected in the computation of a Fund's or Portfolio'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 Growth Portfolio's Board of
Trustees.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
For purposes of a Letter of Intent entered into prior to June 1, 1998, any
registered investment advisor, trust company or bank trust department which
exercises investment discretion and which intends within thirteen months to
invest $500,000 or more can be treated as a single purchaser, provided further
that such entity places all purchases and redemption orders. Such entities
should be prepared to establish their qualifications for such treatment.
Complete information concerning the method of exchanging shares of the Funds
for shares of the other AIM Funds is set forth in the Prospectuses under the
heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "How to Redeem Shares." 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 A I M
Fund Services, Inc. ("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.
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the 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,
20
<PAGE> 1160
(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.
PROGRAMS AND SERVICES FOR SHAREHOLDERS
The Funds provide certain services for shareholders and certain investment or
redemption programs. See "Exchange Privilege" and "How to Redeem Shares" in the
Prospectus. All inquiries concerning these programs should be made directly to
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, toll free
at (800) 959-4246.
DIVIDEND ORDER
Dividends may be paid to someone other than the registered owner, or sent to
an address other than the address of record. (Please note that signature
guarantees are required to effect this option.) An investor also may direct that
his or her dividends be invested in one of the other AIM Funds and there is no
sales charge for these investments; initial investment minimums apply. See
"Dividends, Distributions and Tax Matters-Dividends and Distributions" in the
Prospectus. To effect this option, please contact your authorized dealer. For
more information concerning AIM Funds other than the Funds, please obtain a
current prospectus by contacting your authorized dealer, by writing to A I M
Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, or by calling
toll free (800) 959-4246.
TAXES
TAXATION OF THE FUNDS
Each Fund is treated as a separate corporation for federal income tax
purposes. In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, each Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income and net short-term
capital gain and must meet several additional requirements. With respect to each
Fund, these requirements include the following: (1) the Fund must derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or other income (including gains from options or
Futures) derived with respect to its business of investing in securities
("Income Requirement"); and (2) the Diversification Requirements. Each Fund, as
an investor in its corresponding Portfolio, is deemed to own a proportionate
share of the Portfolios assets, and to earn a proportionate share of the
Portfolio's income, for purposes of determining whether the Fund satisfies all
of the requirements described above to qualify as a RIC.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
See the next section for a discussion of the tax consequences to each Fund of
hedging transactions engaged in by its corresponding Portfolio.
TAXATION OF THE PORTFOLIOS
The Portfolios and Their Relationship to the Fund. Each Portfolio is treated
as a separate partnership for federal income tax purposes and is not a "publicly
traded partnership." As a result, each Portfolio is not subject to federal
income tax; instead, each Fund, as an investor in its corresponding Portfolio,
is required to take into account in determining its federal income tax liability
its share of the Portfolio's income, gains, losses, deductions and credits,
without regard to whether it has received any cash distributions from the
Portfolio. Each Portfolio also is not subject to New York income or franchise
tax.
Because, as noted above, each Fund is deemed to own a proportionate share of
its corresponding Portfolio's assets, and to earn a proportionate share of its
corresponding Portfolio's income, for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, each Portfolio intends to
conduct its operations so that its corresponding Fund will be able to continue
to satisfy all those requirements.
Distributions to each Fund from its corresponding Portfolio (whether pursuant
to a partial or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that (1)
gain will be recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before the distribution, (2)
income or gain will be recognized if the distribution is in liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio, and (3) loss will be
recognized if a liquidation distribution consists solely of cash and/or
unrealized receivables. Each Fund's basis for its interest in its corresponding
Portfolio generally will equal the amount of cash and the basis of any property
the Fund invests in the Portfolio, increased by the Fund's share of the
Portfolio's net income and gains and decreased by (a) the amount of cash and the
basis of any property the Portfolio distributes to the Fund and (b) the Fund's
share of the Portfolio's losses.
21
<PAGE> 1161
Options and Futures Transactions. The Portfolios' use of hedging transactions,
such as selling (writing) and purchasing options and Futures, involves complex
rules that will determine, for federal income tax purposes, the character and
timing of recognition of the gains and losses a Portfolio realizes in connection
therewith. Gains from options and Futures derived by a Portfolio with respect to
its business of investing in securities will qualify as permissible income under
the Income Requirement for its corresponding Fund.
Futures that are subject to section 1256 of the Code (other than those that
are part of a "mixed straddle") ("Section 1256 Contracts") and that are held by
a Portfolio at the end of its taxable year generally will be deemed to have been
sold at that time at market value for federal income tax purposes. Sixty percent
of any net gain or loss recognized on these deemed sales, and 60% of any net
realized gain or loss from any actual sales of Section 1256 Contracts, will be
treated as long-term capital gain or loss, and the balance will be treated as
short-term capital gain or loss. That 60% portion will qualify for the reduced
maximum tax rates on noncorporate taxpayers' net capital gain (i.e., the excess
of net long-term capital gain over net short-term capital loss) enacted by the
Taxpayer Relief Act of 1997 -- 20% (10% for taxpayers in the 15% marginal tax
bracket) for gain recognized on capital assets held for more than 18
months -- instead of the 28% rate in effect before that legislation, which now
applies to gain on capital assets held for more than one year but not more than
18 months. However, technical corrections legislation passed by the House of
Representatives late in 1997 would clarify that the lower rates apply.
If a Portfolio has an "appreciated financial position" -- generally, an
interest (including an interest through an option, Futures Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted
basis -- and enters into a "constructive sale" of the same or substantially
similar property, the Portfolio will be treated as having made an actual sale
thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract or Futures Contract entered into by a Portfolio or a related
person with respect to the same or substantially similar property. In addition,
if the appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
TAXATION OF THE FUNDS' SHAREHOLDERS
Dividends and distributions declared by a Fund in, and payable to shareholders
of record as of a date in, October, November or December of any year will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year if the distributions are paid by the Fund during the
following January. Accordingly, those distributions will be taxed to
shareholders for the year in which that December 31 falls.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.
Dividends paid by a Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply, however, to a dividend paid by a Fund to a foreign
shareholder that is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by a
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a resident
alien individual for federal income tax purposes.
The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Funds, their shareholders and the Portfolios.
Investors are urged to consult their own tax advisors for more detailed
information and for information regarding any foreign, state and local taxes
applicable to distributions received from a Fund.
MISCELLANEOUS INFORMATION
AIM was organized in 1976, and together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. 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, 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
independent investment management groups that have a significant presence in the
institutional and retail segment of the investment management industry in North
America and Europe, and a growing presence in Asia.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110,
acts as custodian of the Portfolios' assets.
22
<PAGE> 1162
TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agency and Service Agreement between the Trust and 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 Transfer Agency and Service Agreement became
effective on September 8, 1998. AIM serves as each Fund's pricing and accounting
agent. For the fiscal years ended December 31, 1997 and December 31, 1996 and
the period October 18, 1995 (commencement of operations) to December 31, 1995,
the Small Cap Fund and Basic Value Fund paid accounting services fees of $6,379,
$3,900 and $76; and $3,938, $1,472 and $36, respectively.
INDEPENDENT ACCOUNTANTS
The Trust's, the Funds' and the Portfolios' independent accountants are
PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP conducts annual audits of
the Funds and the Portfolios, assists in the preparation of the Funds' and the
Portfolios' federal and state income tax returns and consults with the Trust and
the Funds and Growth Portfolio and the Portfolios as to matters of accounting,
regulatory filings and federal and state income taxation.
The audited financial statements of the Trust and Growth Portfolio included in
this Statement of Additional Information have been examined by
PricewaterhouseCoopers LLP as stated in their opinion appearing herein and are
included in reliance upon such opinion given upon the authority of that firm as
experts in accounting and auditing.
SHAREHOLDER LIABILITY
Under Delaware law, the shareholders of the Trust enjoy the same limitations
of liability extended to shareholders of private, for-profit corporations. There
is a remote possibility, however, that under certain circumstances shareholders
of the Trust may be held personally liable for the Trust's obligations. However,
the Trust's Agreement and Declaration of Trust 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 a trustee. If a shareholder is held personally liable for the
obligations of the Trust, the Trust Agreement provides that the shareholder
shall be entitled out of the assets belonging to the applicable Fund (or
allocable to the applicable Class), to be held harmless from and indemnified
against all loss and expense arising from such liability in accordance with the
Trust's Bylaws and applicable law. Thus, the risk of a shareholder incurring
financial loss on account of such liability is limited to circumstances in which
the Trust itself would be unable to meet its obligations and where the other
party was held not to be bound by the disclaimer.
NAMES
Prior to May 29, 1998, AIM Small Cap Equity Fund operated under the name of GT
Global America Small Cap Growth Fund, and AIM Basic Value Fund operated under
the name of GT Global American Value Fund.
23
<PAGE> 1163
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of August 10, 1998, the Trustees and officers of the Trust, as a group,
owned less than 1% of the outstanding shares of any class of the Trust.
To the best knowledge of the Trust, the names and addresses of the holders of
5% or more of the outstanding shares of any class of each Fund's equity
securities as of August 10, 1998, and the percentage of the outstanding shares
held by such holders are set forth below.
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ---- ------------------------- -------- ------------
<S> <C> <C> <C>
Small Cap Fund -- Advisor Class Donaldson Lufkin Jenrette Securities 6.66% -0-
Corp. Inc.
P.O. Box 2052
Jersey City, New Jersey 07303-2052
Small Cap Fund -- Class A MLPF& S for the Sole Benefit of 9.34% -0-
Its Customers, Security #97HX3
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Fl.
Jacksonville, Florida 32246-6484
Small Cap Fund -- Class B MLPF& S for the Sole Benefit of 5.32% -0-
Its Customers, Security #97HX5
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Fl.
Jacksonville, Florida 32246-6484
Basic Value Fund -- Advisor Class INVESCO (NY) Asset Management Inc. 7.12% -0-
1166 Avenue of the Americas
New York, New York 10036-2708
Attn: Julio Garcia
Basic Value Fund -- Class B MLPF& S For the Sole Benefits of 5.96% -0-
Its Customers, Security #97HX6
Attn: Fund Administration
4800 Deer Lake Drive East, 2nd Fl.
Jacksonville, Florida 32246-6484
</TABLE>
- ---------------
* The Trust has no knowledge as to whether all or any portion of the shares
owned of record are also owned beneficially.
INVESTMENT RESULTS
STANDARDIZED RETURNS
Total Return Quotations. The standard formula for calculating total return, as
described in the Prospectus, is as follows:
P(1+T)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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).
</TABLE>
The standardized returns for the Advisor Class shares of the Small Cap Fund,
stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
SMALL CAP
FUND
PERIOD (ADVISOR CLASS)
- ------ ---------------
<S> <C>
Fiscal year ended Dec. 31, 1997............................. 16.63%
Oct. 18, 1995 (commencement of operations) through Dec. 31,
1997...................................................... 15.61%
</TABLE>
24
<PAGE> 1164
The Standardized Returns for the Advisor Class shares of the Basic Value Fund,
stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
BASIC
VALUE FUND
PERIOD (ADVISOR CLASS)
- ------ ---------------
<S> <C>
Fiscal year ended Oct. 31, 1997............................. 27.78%
Oct. 18, 1995 (commencement of operations) through Dec. 31,
1997...................................................... 22.50%
</TABLE>
NON-STANDARDIZED RETURNS
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:
P(1+U)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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 stated period.
</TABLE>
Cumulative total return across a stated period may be calculated as follows:
P(1+V)(n)=ERV
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Advisor Class shares of the Small Cap Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
SMALL CAP
FUND
PERIOD (ADVISOR CLASS)
- ------ ---------------
<S> <C>
Oct. 18, 1995 (commencement of operations) through Dec. 31,
1997...................................................... 37.64%
</TABLE>
The aggregate non-standardized returns (not taking sales charges into account)
for the Advisor Class shares of the Basic Value Fund, stated as aggregate total
returns for the periods shown, were:
<TABLE>
<CAPTION>
BASIC
VALUE FUND
PERIOD (ADVISOR CLASS)
- ------ ---------------
<S> <C>
Oct. 18, 1995 (commencement of operations) through Dec. 31,
1997...................................................... 65.00%
</TABLE>
Each Fund's investment results will vary from time to time depending upon
market conditions, the composition of each Fund's portfolio and operating
expenses of each Fund, so that current or past yield or total return should not
be considered representative of what an investment in each Fund may earn in any
future period. These factors and possible differences in the methods used in
calculating investment results should be considered when comparing each Fund's
investment results with those published for other investment companies and other
investment vehicles. Each Fund's results also should be considered relative to
the risks associated with such Fund's investment objective and policies.
PERFORMANCE INFORMATION
Total return and yield figures for the Funds are neither fixed nor guaranteed,
and no Fund's principal is insured. Performance quotations reflect historical
information and should not be considered representative of a Fund's performance
for any period in the future. Performance is a function of a number of factors
which can be expected to fluctuate. 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
25
<PAGE> 1165
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. Such publications or media entities may include the
following, among others:
Advertising Age
Barron's
Best's Review
Broker World
Business Week
Changing Times
Christian Science Monitor
Consumer Reports
Economist
EuroMoney
FACS of the Week
Financial Planning
Financial Product News
Financial World
Forbes
Fortune
Global Finance
Hartford Courant Inc.
Institutional Investor
Insurance Forum
Insurance Week
Investor's Daily
Journal of the American
Society of CLU & ChFC
Kiplinger Letter
Money
Mutual Fund Forecaster
Mutual Fund Magazine
Nation's Business
New York Times
Pension World
Pensions & Investments
Personal Investor
Financial Services Week
Philadelphia Inquirer
Smart Money
USA Today
U.S. News & World Report
Wall Street Journal
Washington Post
CNN
CNBC
PBS
The Funds and AIM Distributors may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
each Fund with the following, or compare each Fund's performance to performance
data of similar mutual funds as published in the following, among others:
Bank Rate National Monitor Index
Bear Stearns Foreign Bond Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Services
(data and mutual fund rankings and
comparisons)
CNBC/Financial News Composite Index
COFI
Consumer Price Index
Datastream
Donoghue's
Dow Jones Industrial Average
EAFE Index
First Boston High Yield Index
Fitch (publications)
Ibbotson Associates International Bond Index
International Bank for Reconstruction and
Development (publications)
International Finance Corporation Emerging
Markets Database
International Financial Statistics
Lehman Bond Indices
Lipper Analytical Data Services, Inc. (data and
mutual fund rankings and comparisons)
Micropal, Inc. (data and mutual fund rankings
and comparisons)
Moody's Investors Service (publications)
Morgan Stanley Capital International All
Country (AC) World Index
Morgan Stanley Capital International World
Indices
Morningstar, Inc. (data and mutual fund rankings
and comparisons)
NASDAQ
Organization for Economic Cooperation and
Development (publications)
Salomon Brothers Global Telecommunications
Index
Salomon Brothers World Government Bond
Index -- Non-U.S.
Salomon Brothers World Government Bond Index
Standard & Poor's (publications)
Standard & Poor's 500 Composite Stock Price
Index
Stangar
Wilshire Associates
World Bank (publications and reports)
The World Bank Publication of Trends in
Developing Countries
Worldscope
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
30-day Treasury Bills
Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or AIM
Distributors. Advertising for the Funds may from time to time include
discussions of general economic conditions and interest rates. Advertising for
the Funds may also include reference 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.
26
<PAGE> 1166
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.
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.
APPENDIX
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories: 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 edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than the Aaa securities.
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 some time 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.
Standard & Poor's, a division of the McGraw-Hill Companies, Inc. ("S&P") rates
the securities debt of various entities in categories ranging from "AAA" to "D"
according to quality. Investment grade ratings are the first four categories:
AAA -- An obligation rated "AAA" has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong. AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong. A -- An obligation rated "A" is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than obligations in higher rated categories. BBB -- An
obligation rated "BBB" exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation. BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and
"C" are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major exposures to adverse
conditions. BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to the obligor's inadequate capacity to meet its financial commitment on the
obligation. B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation. CCC -- An obligation rated "CCC" is
currently vulnerable to nonpayment, and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity to meet its
financial commitment on the obligation. CC -- An obligation rated "CC" is
currently highly vulnerable to nonpayment. C -- The "C" rating may be used to
cover a situation where a bankruptcy petition has been filed or similar action
has been taken, but payments on this obligation are being continued. D -- An
obligation rated "D" is in payment default. The "D" rating category is used when
payments on an obligation are not made on the date due even if the applicable
grace period has not expired, unless S&P believes that such payments will be
made during such grace period. The "D" rating also will be used upon the filing
of a bankruptcy petition or the taking of a similar action if payments on an
obligation are jeopardized.
27
<PAGE> 1167
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designation "Prime-1" to indicate commercial paper having
a superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure 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. Issues rated Prime-2 have a strong ability for repayment of
senior short-term debt obligations. This normally will be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into several categories ranging
from "A-1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. "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 will be denoted with a plus sign
(+) designation. "A-2" -- Capacity for timely payments on issues with this
designation is satisfactory; however, the relative degree of safety is not as
high as for issues designated "A-1."
ABSENCE OF RATING
Where no rating has been assigned or where a rating has been suspended or
withdrawn, it may be for reasons unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. 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.
28
<PAGE> 1168
FINANCIAL STATEMENTS
FS
<PAGE> 1169
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (39.7%)
Insight Enterprises, Inc.-/- ............................... US 19,800 $ 792,000 2.2
RETAILERS-OTHER
DM Management Co.-/- ....................................... US 20,500 735,437 2.1
RETAILERS-APPAREL
Service Experts, Inc.-/- ................................... US 20,100 693,450 2.0
CONSUMER SERVICES
Lason Holdings, Inc.-/- .................................... US 12,500 681,250 1.9
CONSUMER SERVICES
Iron Mountain, Inc.-/- ..................................... US 14,700 657,825 1.9
BUSINESS & PUBLIC SERVICES
American Disposal Services, Inc.-/- ........................ US 14,000 656,250 1.9
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- .................................. US 18,900 588,263 1.7
CONSUMER SERVICES
Personnel Group of America, Inc.-/- ........................ US 27,300 546,000 1.5
BUSINESS & PUBLIC SERVICES
Eastern Environmental Services, Inc.-/- .................... US 15,400 523,600 1.5
CONSUMER SERVICES
Central Parking Corp. ...................................... US 10,400 473,200 1.3
CONSUMER SERVICES
Comfort Systems USA, Inc.-/- ............................... US 20,200 472,175 1.3
BUSINESS & PUBLIC SERVICES
99 Cents Only Stores-/- .................................... US 11,100 460,650 1.3
RETAILERS-OTHER
ITT Educational Services, Inc.-/- .......................... US 12,400 399,900 1.1
CONSUMER SERVICES
United Rentals, Inc.-/- .................................... US 9,300 390,600 1.1
BUSINESS & PUBLIC SERVICES
Hagler Bailly, Inc.-/- ..................................... US 14,900 385,538 1.1
BUSINESS & PUBLIC SERVICES
Expeditors International of Washington, Inc. ............... US 8,400 369,600 1.0
TRANSPORTATION - SHIPPING
Superior Services, Inc.-/- ................................. US 12,100 363,756 1.0
CONSUMER SERVICES
Cornell Corrections, Inc.-/- ............................... US 16,300 342,300 1.0
BUSINESS & PUBLIC SERVICES
Fairfield Communities, Inc.-/- ............................. US 17,800 341,537 1.0
LEISURE & TOURISM
ResortQuest International, Inc.-/- ......................... US 20,400 332,775 0.9
LEISURE & TOURISM
United Road Services, Inc.-/- .............................. US 15,800 302,175 0.9
CONSUMER SERVICES
Execustay Corp.-/- ......................................... US 21,900 257,325 0.7
LEISURE & TOURISM
Championship Auto Racing Teams, Inc.-/- .................... US 13,900 253,675 0.7
LEISURE & TOURISM
Cox Radio, Inc.-/- ......................................... US 5,700 246,525 0.7
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-1
<PAGE> 1170
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Duane Reade, Inc.-/- ....................................... US 8,100 $ 243,000 0.7
RETAILERS-OTHER
Lamar Advertising Co.-/- ................................... US 6,500 233,188 0.7
BROADCASTING & PUBLISHING
Ambassadors International, Inc.-/- ......................... US 7,300 221,281 0.6
LEISURE & TOURISM
CompX International, Inc.-/- ............................... US 10,200 220,575 0.6
BUSINESS & PUBLIC SERVICES
Industrial Distribution Group, Inc.-/- ..................... US 13,200 204,600 0.6
WHOLESALE & INTERNATIONAL TRADE
e.spire Communications, Inc.-/- ............................ US 8,700 196,294 0.6
TELEPHONE NETWORKS
CORT Business Services Corp.-/- ............................ US 5,900 185,850 0.5
BUSINESS & PUBLIC SERVICES
Vistana, Inc.-/- ........................................... US 9,500 174,563 0.5
LEISURE & TOURISM
Jevic Transportation, Inc.-/- .............................. US 15,200 172,900 0.5
TRANSPORTATION - SHIPPING
Metzler Group, Inc.-/- ..................................... US 4,500 164,813 0.5
BUSINESS & PUBLIC SERVICES
Restoration Hardware, Inc.-/- .............................. US 6,100 153,263 0.4
RETAILERS-OTHER
Blue Rhino Corp.-/- ........................................ US 8,200 143,500 0.4
RETAILERS-OTHER
Sunglass Hut International, Inc.-/- ........................ US 12,700 140,494 0.4
RETAILERS-APPAREL
Cavanaughs Hospitality Corp.-/- ............................ US 9,700 126,706 0.4
LEISURE & TOURISM
Waste Connections, Inc.-/- ................................. US 6,200 123,225 0.3
CONSUMER SERVICES
ACSYS, Inc.-/- ............................................. US 6,400 88,000 0.2
BUSINESS & PUBLIC SERVICES
-----------
14,058,058
-----------
Technology (16.6%)
Software AG Systems, Inc.-/- ............................... US 21,200 620,100 1.8
SOFTWARE
Metro Information Services, Inc.-/- ........................ US 12,400 485,150 1.4
COMPUTERS & PERIPHERALS
Atlantic Data Services, Inc.-/- ............................ US 24,000 460,500 1.3
COMPUTERS & PERIPHERALS
Computer Management Sciences, Inc.-/- ...................... US 16,200 384,750 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. ..................................... US 13,900 363,138 1.0
INSTRUMENTATION & TEST
Data Processing Resources Corp.-/- ......................... US 11,000 341,687 1.0
COMPUTERS & PERIPHERALS
AnswerThink Consulting Group, Inc.-/- ...................... US 15,800 339,700 1.0
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-2
<PAGE> 1171
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Platinum Technology, Inc.-/- ............................... US 9,800 $ 279,913 0.8
SOFTWARE
MAPICS, Inc.-/- ............................................ US 13,300 261,844 0.7
SOFTWARE
Platinum Software Corp.-/- ................................. US 10,100 246,188 0.7
SOFTWARE
Excel Switching Corp.-/- ................................... US 9,400 233,825 0.7
TELECOM TECHNOLOGY
Cotelligent Group, Inc.-/- ................................. US 9,700 226,737 0.6
COMPUTERS & PERIPHERALS
Concord Communications, Inc.-/- ............................ US 8,200 209,612 0.6
SOFTWARE
Analysts International Corp. ............................... US 6,850 194,369 0.6
COMPUTERS & PERIPHERALS
SPR, Inc.-/- ............................................... US 6,000 186,750 0.5
COMPUTERS & PERIPHERALS
Fundtech Ltd.-/- {\/} ...................................... ISRL 8,525 160,909 0.5
SOFTWARE
JDA Software Group, Inc.-/- ................................ US 3,300 144,375 0.4
SOFTWARE
Documentum, Inc.-/- ........................................ US 2,900 139,200 0.4
SOFTWARE
BrightStar Information Technology Group, Inc.-/- ........... US 9,500 131,812 0.4
COMPUTERS & PERIPHERALS
Aspen Technology, Inc.-/- .................................. US 2,300 116,150 0.3
SOFTWARE
Pericom Semiconductor Corp.-/- ............................. US 15,400 105,875 0.3
SEMICONDUCTORS
Amkor Technology, Inc.-/- .................................. US 10,800 100,912 0.3
SEMICONDUCTORS
Walker Interactive Systems, Inc.-/- ........................ US 3,700 54,575 0.2
SOFTWARE
-----------
5,788,071
-----------
Health Care (15.7%)
ESC Medical Systems Ltd.-/- {\/} ........................... ISRL 15,000 506,250 1.4
MEDICAL TECHNOLOGY & SUPPLIES
ADAC Laboratories-/- ....................................... US 19,200 432,000 1.2
HEALTH CARE SERVICES
SEQUUS Pharmaceuticals, Inc.-/- ............................ US 36,300 412,913 1.2
PHARMACEUTICALS
PhyCor, Inc.-/- ............................................ US 24,800 410,750 1.2
HEALTH CARE SERVICES
Vertex Pharmaceuticals, Inc.-/- ............................ US 16,300 366,750 1.0
PHARMACEUTICALS
AmeriPath, Inc.-/- ......................................... US 30,900 365,006 1.0
HEALTH CARE SERVICES
Assisted Living Concepts, Inc.-/- .......................... US 19,600 338,100 1.0
HEALTH CARE SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-3
<PAGE> 1172
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
CryoLife, Inc.-/- .......................................... US 21,400 $ 337,050 1.0
BIOTECHNOLOGY
Gilead Sciences, Inc.-/- ................................... US 10,200 327,037 0.9
BIOTECHNOLOGY
AXYS Pharmaceuticals, Inc.-/- .............................. US 44,100 314,212 0.9
PHARMACEUTICALS
Scios, Inc.-/- ............................................. US 35,200 312,400 0.9
HEALTH CARE SERVICES
COR Therapeutics, Inc.-/- .................................. US 22,500 312,188 0.9
BIOTECHNOLOGY
Total Renal Care Holdings, Inc.-/- ......................... US 8,300 286,350 0.8
HEALTH CARE SERVICES
American Dental Partners, Inc.-/- .......................... US 16,800 235,200 0.7
HEALTH CARE SERVICES
Barr Laboratories, Inc.-/- ................................. US 5,900 234,525 0.7
PHARMACEUTICALS
Symphonix Devices, Inc.-/- ................................. US 15,200 174,800 0.5
HEALTH CARE SERVICES
Physician Reliance Network, Inc.-/- ........................ US 6,200 70,913 0.2
MEDICAL TECHNOLOGY & SUPPLIES
Depotech Corp.-/- .......................................... US 42,200 65,937 0.2
PHARMACEUTICALS
-----------
5,502,381
-----------
Finance (7.4%)
Metris Cos., Inc.-/- ....................................... US 6,700 427,125 1.2
CONSUMER FINANCE
Affiliated Managers Group, Inc.-/- ......................... US 10,600 393,525 1.1
INVESTMENT MANAGEMENT
Reinsurance Group of America, Inc. Non-voting-/- ........... US 7,300 374,581 1.1
INSURANCE-LIFE
LaSalle Partners, Inc.-/- .................................. US 7,300 324,850 0.9
REAL ESTATE
Correctional Properties Trust-/- ........................... US 15,800 319,950 0.9
REAL ESTATE INVESTMENT TRUST
Annuity and Life Re (Holdings) Ltd.-/- ..................... US 11,000 243,375 0.7
INSURANCE-LIFE
Stirling Cooke Brown Holdings Ltd. ......................... US 8,000 225,000 0.6
INSURANCE - PROPERTY-CASUALTY
AmeriCredit Corp.-/- ....................................... US 5,200 185,575 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. ........................... US 6,600 150,975 0.4
CONSUMER FINANCE
-----------
2,644,956
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-4
<PAGE> 1173
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (5.5%)
Newfield Exploration Co.-/- ................................ US 29,600 $ 736,300 2.1
OIL
Petsec Energy Ltd. - ADR-/- {\/} ........................... AUSL 14,600 236,337 0.7
OIL
Cross Timbers Oil Co. ...................................... US 10,800 205,875 0.6
OIL
Dril-Quip, Inc.-/- ......................................... US 7,800 204,750 0.6
ENERGY EQUIPMENT & SERVICES
Mallon Resources Corp.-/- .................................. US 16,800 201,600 0.6
OIL
Varco International, Inc.-/- ............................... US 9,600 190,200 0.5
ENERGY EQUIPMENT & SERVICES
Hanover Compressor Co.-/- .................................. US 5,000 135,313 0.4
ENERGY EQUIPMENT & SERVICES
-----------
1,910,375
-----------
Materials/Basic Industry (4.9%)
OM Group, Inc. ............................................. US 12,600 519,750 1.5
METALS - NON-FERROUS
Hawk Corp. "A"-/- .......................................... US 21,100 371,888 1.1
METALS - NON-FERROUS
Gibraltar Steel Corp.-/- ................................... US 16,100 330,050 0.9
METALS - STEEL
Cambrex Corp. .............................................. US 10,400 273,000 0.8
CHEMICALS
CombiChem, Inc.-/- ......................................... US 33,000 228,937 0.6
CHEMICALS
-----------
1,723,625
-----------
Capital Goods (4.8%)
General Cable Corp. ........................................ US 28,700 828,712 2.4
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................. US 14,800 436,600 1.2
OFFICE EQUIPMENT
LMI Aerospace, Inc.-/- ..................................... US 14,500 150,438 0.4
AEROSPACE/DEFENSE
Gradall Industries, Inc.-/- ................................ US 10,200 149,175 0.4
MACHINERY & ENGINEERING
Global Industries Ltd.-/- .................................. US 8,100 136,687 0.4
CONSTRUCTION
-----------
1,701,612
-----------
Consumer Durables (1.4%)
Tower Automotive, Inc.-/- .................................. US 7,800 334,425 0.9
AUTO PARTS
U.S. Home Corp.-/- ......................................... US 4,100 169,125 0.5
HOUSING
-----------
503,550
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-5
<PAGE> 1174
AIM SMALL CAP EQUITY - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA SMALL CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (0.7%)
Mail-Well, Inc.-/- ......................................... US 11,600 $ 251,575 0.7
OTHER CONSUMER GOODS
Racing Champions Corp.-/- .................................. US 700 8,181 --
TOYS
-----------
259,756
----------- -----
TOTAL EQUITY INVESTMENTS (cost $31,159,540) .................. 34,092,384 96.7
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co., due
July 1, 1998, for an effective yield of 5.70%,
collateralized by $2,560,000 U.S. Treasury Bills, 5.875%
due 1/31/99 (market value of collateral is $2,627,200,
including accrued interest). (cost $2,573,000) ........... 2,573,000 7.3
----------- -----
TOTAL INVESTMENTS (cost $33,732,540) * ...................... 36,665,384 104.0
Other Assets and Liabilities ................................. (1,410,524) (4.0)
----------- -----
NET ASSETS ................................................... $35,254,860 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $33,817,496 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,542,875
Unrealized depreciation: (1,694,987)
-------------
Net unrealized appreciation: $ 2,847,888
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-6
<PAGE> 1175
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (49.2%)
Outdoor Systems, Inc.-/- .................................. US 1,203,780 $ 33,705,837 7.0
BUSINESS & PUBLIC SERVICES
Clear Channel Communications, Inc.-/- ..................... US 268,443 29,293,842 6.1
BROADCASTING & PUBLISHING
Snyder Communications, Inc.-/- ............................ US 614,600 27,042,400 5.6
BUSINESS & PUBLIC SERVICES
Hilton Hotels Corp. ....................................... US 709,800 20,229,300 4.2
LEISURE & TOURISM
Chancellor Media Corp.-/- ................................. US 340,500 16,907,953 3.5
BROADCASTING & PUBLISHING
Premier Parks, Inc.-/- .................................... US 221,800 14,777,425 3.1
LEISURE & TOURISM
ServiceMaster Co. ......................................... US 320,200 12,187,613 2.5
CONSUMER SERVICES
Cablevision Systems Corp. "A"-/- .......................... US 125,000 10,437,500 2.2
CABLE TELEVISION
Keane, Inc.-/- ............................................ US 182,100 10,197,600 2.1
BUSINESS & PUBLIC SERVICES
Central Parking Corp. ..................................... US 221,800 10,091,900 2.1
CONSUMER SERVICES
Young & Rubicam, Inc.-/- .................................. US 308,200 9,862,400 2.0
BUSINESS & PUBLIC SERVICES
Cambridge Technology Partners, Inc.-/- .................... US 164,500 8,985,813 1.9
BUSINESS & PUBLIC SERVICES
Univision Communications, Inc.-/- ......................... US 239,600 8,925,100 1.9
BROADCASTING & PUBLISHING
Lamar Advertising Co.-/- .................................. US 217,100 7,788,463 1.6
BUSINESS & PUBLIC SERVICES
Personnel Group of America, Inc.-/- ....................... US 366,700 7,334,000 1.5
BUSINESS & PUBLIC SERVICES
Jacor Communications, Inc.-/- ............................. US 96,300 5,681,700 1.2
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 86,400 3,515,400 0.7
BUSINESS & PUBLIC SERVICES
------------
236,964,246
------------
Technology (14.6%)
Sterling Commerce, Inc.-/- ................................ US 327,700 15,893,450 3.3
SOFTWARE
Software AG Systems, Inc.-/- .............................. US 400,000 11,700,000 2.4
SOFTWARE
Aspen Technology, Inc.-/- ................................. US 190,500 9,620,250 2.0
SOFTWARE
Platinum Technology, Inc.-/- .............................. US 314,000 8,968,625 1.9
SOFTWARE
SunGard Data Systems, Inc.-/- ............................. US 229,000 8,787,875 1.8
SOFTWARE
Peoplesoft, Inc.-/- ....................................... US 177,500 8,342,500 1.7
SOFTWARE
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-7
<PAGE> 1176
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Ciena Corp.-/- ............................................ US 104,000 $ 7,241,000 1.5
TELECOM TECHNOLOGY
------------
70,553,700
------------
Finance (13.0%)
Golden State Bancorp, Inc.-/- ............................. US 381,300 11,343,675 2.4
SAVINGS & LOANS
C.I.T. Group, Inc. "A"-/- ................................. US 266,800 10,005,000 2.1
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 9,376,406 1.9
INSURANCE - PROPERTY-CASUALTY
GreenPoint Financial Corp. ................................ US 249,200 9,376,150 1.9
SAVINGS & LOANS
Capital One Financial Corp. ............................... US 68,200 8,469,588 1.8
CONSUMER FINANCE
Ace Ltd. .................................................. US 183,100 7,140,900 1.5
INSURANCE - PROPERTY-CASUALTY
Heller Financial, Inc.-/- ................................. US 226,600 6,798,000 1.4
OTHER FINANCIAL
------------
62,509,719
------------
Health Care (8.0%)
Forest Laboratories, Inc. "A"-/- .......................... US 268,000 9,581,000 2.0
PHARMACEUTICALS
Wellpoint Health Networks-/- .............................. US 118,000 8,732,000 1.8
HEALTH CARE SERVICES
ALZA Corp.-/- ............................................. US 176,300 7,624,975 1.6
PHARMACEUTICALS
HBO & Co. ................................................. US 206,200 7,268,550 1.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 68,100 5,533,125 1.1
HEALTH CARE SERVICES
------------
38,739,650
------------
Consumer Non-Durables (6.7%)
U.S. Foodservice-/- ....................................... US 553,400 19,403,588 4.0
FOOD
Suiza Foods Corp.-/- ...................................... US 170,500 10,176,719 2.1
FOOD
International Home Foods, Inc.-/- ......................... US 135,400 3,080,350 0.6
FOOD
------------
32,660,657
------------
Materials/Basic Industry (5.4%)
International Specialty Products, Inc.-/- ................. US 668,200 12,445,225 2.6
CHEMICALS
Millenium Chemicals, Inc. ................................. US 215,600 7,303,450 1.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-8
<PAGE> 1177
AIM MID CAP GROWTH FUND
(FORMERLY GT GLOBAL AMERICA MID CAP GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Crompton & Knowles Corp. .................................. US 250,700 $ 6,314,506 1.3
CHEMICALS
------------
26,063,181
------------
Energy (3.1%)
J. Ray McDermott S.A.-/- .................................. US 239,900 9,955,850 2.1
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 75,300 5,059,219 1.0
ENERGY SOURCES
------------
15,015,069
------------
Capital Goods (2.5%)
U.S. Filter Corp.-/- ...................................... US 422,250 11,849,391 2.5
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $397,646,938) ................ 494,355,613 102.5
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Golden State Bancorp. Litigation Warrants-/- (cost
$2,296,744) .............................................. US 381,300 2,025,656 0.4
SAVINGS & LOANS
------------ -----
TOTAL INVESTMENTS (cost $399,943,682) * .................... 496,381,269 102.9
Other Assets and Liabilities ................................ (14,212,467) (2.9)
------------ -----
NET ASSETS .................................................. $482,168,802 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
* For Federal income tax purposes, cost is $401,270,613 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 99,557,388
Unrealized depreciation: (4,446,732)
-------------
Net unrealized appreciation: $ 95,110,656
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-9
<PAGE> 1178
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (33.1%)
Exel Ltd. ................................................. US 10,900 $ 848,156 2.9
INSURANCE - PROPERTY-CASUALTY
Chase Manhattan Corp. ..................................... US 10,150 766,325 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 12,150 736,594 2.5
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 7,875 721,055 2.4
INSURANCE - MULTI-LINE
Fleet Financial Group, Inc. ............................... US 8,600 718,100 2.4
BANKS-SUPER REGIONAL
SLM Holding Corp. ......................................... US 14,612 715,988 2.4
OTHER FINANCIAL
First Chicago NBD Corp. ................................... US 8,000 709,000 2.4
BANKS-REGIONAL
Mellon Bank Corp. ......................................... US 9,700 675,363 2.3
BANKS-REGIONAL
Household International, Inc. ............................. US 13,500 671,625 2.3
CONSUMER FINANCE
BankAmerica Corp. ......................................... US 7,550 652,603 2.2
BANKS-MONEY CENTER
GreenPoint Financial Corp. ................................ US 16,000 602,000 2.0
SAVINGS & LOANS
NationsBank Corp. ......................................... US 7,700 589,050 2.0
BANKS-REGIONAL
Starwood Hotels & Resorts ................................. US 8,583 414,666 1.4
REAL ESTATE INVESTMENT TRUST
Citicorp .................................................. US 2,400 358,200 1.2
BANKS-MONEY CENTER
Crescent Real Estate Equities Co. ......................... US 10,000 336,250 1.1
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 9,025 283,159 1.0
REAL ESTATE INVESTMENT TRUST
------------
9,798,134
------------
Energy (17.1%)
Texas Utilities Co. ....................................... US 17,900 745,088 2.5
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................... US 9,200 704,950 2.4
OIL
Unocal Corp. .............................................. US 19,300 689,975 2.3
OIL
Atlantic Richfield Co. (ARCO) ............................. US 8,100 632,813 2.1
OIL
Anadarko Petroleum Corp. .................................. US 9,200 618,125 2.1
ENERGY SOURCES
McDermott International, Inc. ............................. US 16,600 571,663 1.9
ENERGY EQUIPMENT & SERVICES
Pinnacle West Capital Corp. ............................... US 9,625 433,125 1.5
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-10
<PAGE> 1179
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Carolina Power & Light Co. ................................ US 9,000 $ 390,375 1.3
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 7,825 295,883 1.0
ELECTRICAL & GAS UTILITIES
------------
5,081,997
------------
Services (12.9%)
Bell Atlantic Corp. ....................................... US 18,400 839,500 2.8
TELEPHONE - REGIONAL/LOCAL
Comcast Corp. 'A' ......................................... US 17,500 710,391 2.4
CABLE TELEVISION
Time Warner, Inc. ......................................... US 8,000 683,500 2.3
BROADCASTING & PUBLISHING
Federated Department Stores, Inc.-/- ...................... US 11,500 618,844 2.1
RETAILERS-APPAREL
The Limited, Inc. ......................................... US 14,825 491,078 1.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 10,000 470,000 1.6
TELEPHONE - REGIONAL/LOCAL
------------
3,813,313
------------
Materials/Basic Industry (12.4%)
E.I. du Pont de Nemours & Company ......................... US 9,200 686,550 2.3
CHEMICALS
Owens Corning ............................................. US 16,200 661,163 2.2
BUILDING MATERIALS & COMPONENTS
Millenium Chemicals, Inc. ................................. US 18,500 626,688 2.1
CHEMICALS
Stone Container Corp. ..................................... US 38,600 603,125 2.0
PAPER/PACKAGING
Imperial Chemical Industries PLC - ADR{\/} ................ US 7,700 496,650 1.7
CHEMICALS
Crompton & Knowles Corp. .................................. US 13,500 340,031 1.2
CHEMICALS
International Paper Co. ................................... US 6,000 258,000 0.9
PAPER/PACKAGING
------------
3,672,207
------------
Consumer Durables (7.1%)
Ford Motor Co. ............................................ US 12,500 737,500 2.5
AUTOMOBILES
Lennar Corp. .............................................. US 18,500 545,750 1.9
HOUSING
General Motors Corp. ...................................... US 6,600 440,963 1.5
AUTOMOBILES
Meritor Automotive, Inc. .................................. US 15,000 360,000 1.2
AUTO PARTS
------------
2,084,213
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-11
<PAGE> 1180
AIM AMERICA VALUE FUND - CONSOLIDATED
(FORMERLY GT GLOBAL AMERICA VALUE FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (5.2%)
International Business Machines Corp. ..................... US 7,500 $ 861,094 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp. ..................................... US 24,200 686,675 2.3
COMPUTERS & PERIPHERALS
------------
1,547,769
------------
Consumer Non-Durables (4.0%)
Philip Morris Cos., Inc. .................................. US 17,050 671,344 2.3
TOBACCO
RJR Nabisco Holdings Corp. ................................ US 21,275 505,281 1.7
TOBACCO
------------
1,176,625
------------
Capital Goods (3.7%)
U.S. Filter Corp.-/- ...................................... US 20,625 578,789 2.0
ENVIRONMENTAL
U.S.A.Waste Services, Inc. ................................ US 14,300 500,500 1.7
ENVIRONMENTAL
------------
1,079,289
------------
Health Care (1.6%)
Pharmacia & Upjohn, Inc. .................................. US 10,500 484,309 1.6
PHARMACEUTICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $26,403,641) ................. 28,737,856 97.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%
collateralized by $460,000 U.S. Treasury Bills, 5.875% due
1/31/99 (market value of collateral is $472,075, including
accrued interest). (cost $459,000) ....................... 459,000 1.5
------------ -----
TOTAL INVESTMENTS (cost $26,862,641) * ..................... 29,196,856 98.6
Other Assets and Liabilities ................................ 400,530 1.4
------------ -----
NET ASSETS .................................................. $ 29,597,386 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $26,900,718 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,898,607
Unrealized depreciation: (602,469)
-------------
Net unrealized appreciation: $ 2,296,138
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-12
<PAGE> 1181
STATEMENTS OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------
SMALL CAP
EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
-------------- ----------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $33,732,540; $399,943,682;
and $26,862,641, respectively) (Note 1).............................. $36,665,384 4$96,381,269 $29,196,856
U.S. currency......................................................... 86 644 240
Dividends receivable.................................................. 588 80,604 42,424
Interest receivable................................................... 407 -- 73
Receivable for Fund shares sold....................................... 522,566 442,351 70,096
Receivable for securities sold........................................ 447,737 1,391,606 857,174
Receivable from A I M Advisors, Inc. (Note 2)......................... 75,985 -- 68,265
Unamortized organizational costs (Note 1)............................. 40,679 -- 40,679
-------------- ----------- --------------
Total assets........................................................ 37,753,432 498,296,474 30,275,807
-------------- ----------- --------------
Liabilities:
Payable for custodian fees............................................ 778 84,299 5,455
Payable for Directors' and Trustees' fees and expenses (Note 2)....... 6,703 4,385 6,602
Payable for fund accounting fees (Note 2)............................. 1,532 10,018 658
Payable for Fund shares repurchased (Note 2).......................... 938,102 6,431,497 83,620
Payable for investment management and administration fees (Note 2).... 80,799 273,092 75,127
Payable for loan outstanding (Note 1)................................. -- 6,652,000 --
Payable for printing and postage expenses............................. 37,978 13,626 37,498
Payable for professional fees......................................... 19,013 13,728 17,735
Payable for registration and filing fees.............................. 22,587 13,414 17,486
Payable for securities purchased...................................... 1,355,332 2,006,275 399,574
Payable for service and distribution expenses (Note 2)................ 18,805 254,651 18,640
Payable for transfer agent fees (Note 2).............................. 13,369 339,800 11,132
Other accrued expenses................................................ 3,474 30,887 4,794
-------------- ----------- --------------
Total liabilities................................................... 2,498,472 16,127,672 678,321
Minority interest (Notes 1 & 2)....................................... 100 -- 100
-------------- ----------- --------------
Net assets.............................................................. $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
Class A:
Net asset value and redemption price per share ($12,620,070 DIVIDED BY
746,689; $238,023,863 DIVIDED BY 10,119,708; and $8,669,479 DIVIDED BY
471,856 shares outstanding, respectively).............................. $ 16.90 $ 23.52 $ 18.37
-------------- ----------- --------------
-------------- ----------- --------------
Maximum offering price per share (100/94.5 of $16.90; 100/94.5 of
$23.52; and 100/94.5 of $18.37, respectively) *........................ $ 17.88 $ 24.89 $ 19.44
-------------- ----------- --------------
-------------- ----------- --------------
Class B:+
Net asset value and offering price per share $20,177,075 DIVIDED BY
1,216,622; $243,093,084 DIVIDED BY 10,727,676; and $20,174,796 DIVIDED
BY 1,114,911 shares outstanding, respectively)......................... $ 16.58 $ 22.66 $ 18.10
-------------- ----------- --------------
-------------- ----------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share $2,457,715 DIVIDED BY 144,152; $1,051,855 DIVIDED BY 44,488; and
$753,111 DIVIDED BY 40,640 shares outstanding, respectively)........... $ 17.05 $ 23.64 $ 18.53
-------------- ----------- --------------
-------------- ----------- --------------
Net assets consist of:
Paid in capital (Note 4).............................................. $27,650,613 3$45,007,969 $25,439,934
Accumulated net investment loss....................................... (310,132) (3,756,379) (21,933)
Accumulated net realized gain on investments.......................... 4,981,535 44,479,625 1,845,170
Net unrealized appreciation of investments............................ 2,932,844 96,437,587 2,334,215
-------------- ----------- --------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $35,254,860 4$82,168,802 $29,597,386
-------------- ----------- --------------
-------------- ----------- --------------
<FN>
- ----------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-13
<PAGE> 1182
STATEMENTS OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
--------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
----------------- ----------- -----------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income............................................................... $ 23,964 $ 687,891 $ 266,753
Interest income............................................................... 16,300 113,913 22,266
Securities lending income..................................................... 8,274 154,690 484
----------------- ----------- -----------------
Total investment income..................................................... 48,538 956,494 289,503
----------------- ----------- -----------------
Expenses:
Investment management and administration fees (Note 2)........................ 122,481 1,788,752 104,395
Amortization of organization costs (Note 1)................................... 8,779 -- 8,779
Custodian Fees................................................................ 13,190 59,368 5,430
Directors' and Trustees' fees and expenses (Note 2)........................... 9,576 7,964 9,050
Fund accounting fees (Note 2)................................................. 4,564 66,756 3,698
Printing and postage expenses................................................. 27,925 100,124 25,340
Professional fees............................................................. 34,443 65,372 28,236
Registration and filing fees (Note 1)......................................... 26,130 61,087 27,150
Service and distribution expenses: (Note 2)
Class A..................................................................... 20,616 432,588 15,364
Class B..................................................................... 99,273 1,226,897 96,391
Transfer agent fees (Note 2).................................................. 62,450 728,344 55,400
Other expenses................................................................ 6,244 204,822 2,014
----------------- ----------- -----------------
Total expenses before reductions and reimbursements......................... 435,671 4,742,074 381,247
----------------- ----------- -----------------
Expenses reimbursed by A I M Advisors, Inc. (Note 2)...................... (75,985) -- (68,265)
Expense reductions (Note 5)............................................... (1,016) (29,201) (1,546)
----------------- ----------- -----------------
Total net expenses.......................................................... 358,670 4,712,873 311,436
----------------- ----------- -----------------
Net investment loss............................................................. (310,132) (3,756,379) (21,933)
----------------- ----------- -----------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments.............................................. 3,724,962 28,358,903 1,443,280
Net change in unrealized appreciation of investments.......................... 2,036,645 30,955,839 333,471
----------------- ----------- -----------------
Net realized and unrealized gain on investments................................. 5,761,607 59,314,742 1,776,751
----------------- ----------- -----------------
Net increase in net assets resulting from operations............................ $5,451,475 $55,558,363 $1,754,818
----------------- ----------- -----------------
----------------- ----------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-14
<PAGE> 1183
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AIM
-------------------------------------------------------------------------------------
SMALL CAP EQUITY MID CAP AMERICA VALUE
FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
--------------------------- ---------------------------- --------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED JUNE 30, YEAR ENDED
1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
net assets
Operations:
Net investment income
(loss)................ $ (310,132 ) $ (449,560 ) $ (3,756,379 ) $ (6,767,300 ) $ (21,933 ) $ 22,242
Net realized gain on
investments and
foreign currency
transactions.......... 3,724,962 2,524,251 28,358,903 91,288,360 1,443,280 1,352,859
Net change in
unrealized
appreciation
(depreciation) of
investments........... 2,036,645 1,674,235 30,955,839 (23,043,968 ) 333,471 2,016,032
------------ ------------- ------------- ------------- ------------ ------------
Net increase in net
assets resulting
from operations..... 5,451,475 3,748,926 55,558,363 61,477,092 1,754,818 3,391,133
------------ ------------- ------------- ------------- ------------ ------------
Class A:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (12,256 )
From net realized gain
on investments........ -- (213,287 ) -- (27,861,047 ) -- (482,262 )
Class B:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- --
From net realized gain
on investments........ -- (410,555 ) -- (29,550,073 ) -- (1,128,861 )
Advisor Class:
Distributions to
shareholders: (Note 1)
From net investment
income................ -- -- -- -- -- (1,610 )
From net realized gain
on investments........ -- (32,021 ) -- (120,835 ) -- (30,657 )
------------ ------------- ------------- ------------- ------------ ------------
Total
distributions....... -- (655,863 ) -- (57,531,955 ) -- (1,655,646 )
------------ ------------- ------------- ------------- ------------ ------------
Capital share
transactions: (Note 4)
Increase from capital
shares sold and
reinvested............ 23,061,481 60,411,522 380,523,601 783,255,935 11,647,193 33,884,259
Decrease from capital
shares repurchased.... (26,968,839 ) (49,371,158 ) (466,195,324 ) (954,921,988 ) (8,629,240 ) (19,018,130 )
------------ ------------- ------------- ------------- ------------ ------------
Net increase
(decrease) from
capital share
transactions........ (3,907,358 ) 11,040,364 (85,671,723 ) (171,666,053 ) 3,017,953 14,866,129
------------ ------------- ------------- ------------- ------------ ------------
Total increase (decrease)
in net assets........... 1,544,117 14,133,427 (30,113,360 ) (167,720,916 ) 4,772,771 16,601,616
Net assets:
Beginning of period.... 33,710,743 19,577,316 512,282,162 680,003,078 24,824,615 8,222,999
------------ ------------- ------------- ------------- ------------ ------------
End of period *....... $35,254,860 $ 33,710,743 $482,168,802 $512,282,162 $29,597,386 $24,824,615
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
* Includes
undistributed/accumulated
net investment
income (loss) of........ $ (310,132 ) $ -- $ (3,756,379 ) $ -- $ (21,933 ) $ --
------------ ------------- ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-15
<PAGE> 1184
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
CLASS A
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.27 $ 12.52 $11.80 $11.43
----------- -------- ------- --------
Income from investment operations:
Net investment income (loss).......... (0.11) * * * * (0.18) * * * (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.74 2.20 1.69 0.33
----------- -------- ------- --------
Net increase from investment
operations......................... 2.63 2.02 1.64 0.37
----------- -------- ------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- ------- --------
Total distributions................. -- (0.27) (0.92) --
----------- -------- ------- --------
Net asset value, end of period.......... $ 16.90 $ 14.27 $12.52 $11.80
----------- -------- ------- --------
----------- -------- ------- --------
Total investment return (c)............. 18.43% (b) 16.23% 13.81% 3.24% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $12,620 $10,896 $8,448 $1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.47)% (a) (1.40)% (0.38)% 1.68% (a)
Without expense reductions and/or
reimbursement........................ (1.93)% (a) (2.00)% (1.47)% (20.52)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.74% (a) 1.92% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.20% (a) 2.52% 3.09% 24.20% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-16
<PAGE> 1185
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
-----------------------------------------------------------
CLASS B
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 12.42 $ 11.78 $ 11.43
----------- -------- -------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.17) * * * * (0.26) * * * (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.69 2.17 1.70 0.33
----------- -------- -------- -----------------
Net increase from investment
operations......................... 2.52 1.91 1.56 0.35
----------- -------- -------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
----------- -------- -------- -----------------
Total distributions................. -- (0.27) (0.92) --
----------- -------- -------- -----------------
Net asset value, end of period.......... $ 16.58 $ 14.06 $ 12.42 $ 11.78
----------- -------- -------- -----------------
----------- -------- -------- -----------------
Total investment return (c)............. 17.99% (b) 15.47% 13.14% 3.06% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,177 $21,222 $10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (2.12)% (a) (2.05)% (1.03)% 1.03% (a)
Without expense reductions and/or
reimbursement........................ (2.58)% (a) (2.65)% (2.12)% (21.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.39% (a) 2.57% 2.65% 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.85% (a) 3.17% 3.74% 24.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-17
<PAGE> 1186
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM SMALL CAP EQUITY FUND
---------------------------------------------------------
ADVISOR CLASS
---------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED (COMMENCEMENT
JUNE 30, DECEMBER 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
---------- ------- -------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.39 $12.58 $ 11.81 $ 11.43
---------- ------- -------- --------
Income from investment operations:
Net investment income (loss).......... (0.08) * * * * (0.14) * * * --* * 0.05*
Net realized and unrealized gain on
investments.......................... 2.74 2.22 1.69 0.33
---------- ------- -------- --------
Net increase from investment
operations......................... 2.66 2.08 1.69 0.38
---------- ------- -------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... -- (0.27) (0.92) --
---------- ------- -------- --------
Total distributions................. -- (0.27) (0.92) --
---------- ------- -------- --------
Net asset value, end of period.......... $17.05 $14.39 $ 12.58 $ 11.81
---------- ------- -------- --------
---------- ------- -------- --------
Total investment return (c)............. 18.49% (b) 16.63% 14.22% 3.32% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $2,458 $1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (1.12)% (a) (1.05)% (0.03)% 2.03% (a)
Without expense reductions and/or
reimbursement........................ (1.58)% (a) (1.65)% (1.12)% (20.17)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.39% (a) 1.57% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.85% (a) 2.17% 2.74% 23.85% (a)
Ratio of interest expense to average net
assets+................................ 0.02% (a) N/A N/A N/A
Portfolio turnover rate+................ 208% (a) 233% 150% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(0.47), $(0.49), and $(0.46) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
** Before reimbursement the net investment loss per share would have been
$(0.19), $(0.28), and $(0.14) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(0.25), $(0.33), and $(0.21) for Class A, Class B, and Advisor Class,
respectively, for the year ended December 31, 1997.
* * * * Before reimbursement the net investment loss per share would have been
$(0.15), $(0.21), and $(0.12) for Class A, Class B, and Advisor Class,
respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
FS-18
<PAGE> 1187
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------------------------------------------
CLASS A+
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ---------------------------------------------------------------------
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
----------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income (loss).......... (0.14) (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 2.65 3.00 2.96 3.93 2.55 1.56
----------- --------- --------- --------- --------- ---------
Net increase from investment
operations......................... 2.51 2.80 2.99 4.17 2.59 1.35
----------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income............ -- -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- --------- ---------
Total distributions................. -- (2.56) (1.29) (2.79) (2.07) (1.30)
----------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 23.52 $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total investment return (c)............. 11.95%(b) 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $238,024 $255,674 $343,427 $396,291 $196,937 $116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.20)%(a) (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.21)%(a) (1.01)% 0.07% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.59%(a) 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.60%(a) 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-19
<PAGE> 1188
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
------------------------------------------------------------------------------
CLASS B++
------------------------------------------------------------------------------
SIX MONTHS APRIL 1,
ENDED 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ----------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 1996 1995 1994 (D) 1993
----------- --------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09 $15.90
----------- --------- --------- --------- -------- ------------
Income from investment operations:
Net investment income (loss).......... (0.21) (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.56 2.93 2.91 3.87 2.55 2.78
----------- --------- --------- --------- -------- ------------
Net increase from investment
operations......................... 2.35 2.59 2.80 3.97 2.46 2.49
----------- --------- --------- --------- -------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.12) -- --
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Total distributions................. -- (2.56) (1.29) (2.70) (2.05) (1.30)
----------- --------- --------- --------- -------- ------------
Net asset value, end of period.......... $ 22.66 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $17.09
----------- --------- --------- --------- -------- ------------
----------- --------- --------- --------- -------- ------------
Total investment return (c)............. 11.57%(b) 13.35% 14.82% 22.42% 15.06% 16.1% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $243,093 $255,468 $334,590 $348,435 $80,060 $1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (1.85)%(a) (1.55)% (0.53)% 0.59% (0.48)% (1.3)% (a)
Without expense reductions............ (1.86)%(a) (1.66)% (0.58)% N/A N/A N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.24%(a) 2.02% 2.01% 2.11% 2.23% 2.2% (a)
Without expense reductions............ 2.25%(a) 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 171%(a) 190% 253% 71% 102% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-20
<PAGE> 1189
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM MID CAP GROWTH FUND
--------------------------------------------------
ADVISOR CLASS+++
--------------------------------------------------
JUNE 1,
SIX MONTHS 1995
ENDED YEAR ENDED DECEMBER TO
JUNE 30, 31, DECEMBER
1998 -------------------- 31,
(UNAUDITED) (D) 1997 1996 1995
----------- ------- ------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.10 $20.76 $19.05 $20.61
----------- ------- ------- -------
Income from investment operations:
Net investment income (loss).......... (0.10) (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 2.64 3.05 2.91 1.09
----------- ------- ------- -------
Net increase from investment
operations......................... 2.54 2.90 3.00 1.30
----------- ------- ------- -------
Distributions to shareholders:
From net investment income............ -- -- -- (0.28)
From net realized gain on
investments.......................... -- (2.56) (1.29) (2.58)
----------- ------- ------- -------
Total distributions................. -- (2.56) (1.29) (2.86)
----------- ------- ------- -------
Net asset value, end of period.......... $ 23.64 $21.10 $20.76 $19.05
----------- ------- ------- -------
----------- ------- ------- -------
Total investment return (c)............. 12.04% (b) 14.54% 15.72% 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,052 $1,140 $1,986 $1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.85)% (a) 0.55% 0.47% 1.59%(a)
Without expense reductions............ (0.86)% (a) (0.66)% 0.42% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.24% (a) 1.02% 1.01% 1.11%(a)
Without expense reductions............ 1.25% (a) 1.13% 1.06% N/A
Portfolio turnover rate++++............. 171% (a) 190% 253% 71%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-21
<PAGE> 1190
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
CLASS A
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.25 $14.65 $12.76 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.03* * * * 0.09* * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 1.09 3.87 1.94 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.12 3.96 1.93 1.33
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- --
From net realized gain on
investments.......................... -- (1.33) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.36) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.37 $17.25 $14.65 $ 12.76
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.49% (b) 27.23% 15.12% 11.64% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $8,669 $7,668 $2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.28% (a) 0.56% (0.10)% 1.10% (a)
Without expense reductions and/or
reimbursement........................ (0.21)% (a) (0.42)% (3.61)% (47.44)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.73% (a) 1.99% 2.00% 2.00% (a)
Without expense reductions and/or
reimbursement........................ 2.22% (a) 2.97% 5.51% 50.54% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-22
<PAGE> 1191
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
------------------------------------------------------------
CLASS B
------------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 --------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- -------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.04 $ 14.54 $12.75 $ 11.43
----------- -------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... (0.03) * * * * (0.01) * * * (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 1.09 3.83 1.93 1.31
----------- -------- ------- ----------------
Net increase from investment
operations......................... 1.06 3.82 1.83 1.32
----------- -------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- -- -- --
From net realized gain on
investments.......................... -- (1.32) (0.04) --
----------- -------- ------- ----------------
Total distributions................. -- (1.32) (0.04) --
----------- -------- ------- ----------------
Net asset value, end of period.......... $ 18.10 $ 17.04 $14.54 $ 12.75
----------- -------- ------- ----------------
----------- -------- ------- ----------------
Total investment return (c)............. 6.16% (b) 26.44% 14.35% 11.55% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $20,175 $16,717 $5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... (0.37)% (a) (0.09)% (0.75)% 0.45% (a)
Without expense reductions and/or
reimbursement........................ (0.86)% (a) (1.07)% (4.26)% (48.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 2.38% (a) 2.64% 2.65%(a) 2.65% (a)
Without expense reductions and/or
reimbursement........................ 2.87% (a) 3.62% 6.16% 51.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-23
<PAGE> 1192
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
AIM AMERICA VALUE FUND
-----------------------------------------------------------
ADVISOR CLASS
-----------------------------------------------------------
SIX MONTHS OCTOBER 18, 1995
ENDED YEAR ENDED DECEMBER (COMMENCEMENT
JUNE 30, 31, OF OPERATIONS)
1998 -------------------- TO DECEMBER 31,
(UNAUDITED) 1997 (D) 1996 (D) 1995 (D)
----------- ------- ------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $17.37 $14.72 $12.77 $ 11.43
----------- ------- ------- ----------------
Income from investment operations:
Net investment income (loss).......... 0.05* * * * 0.15* * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 1.11 3.91 1.96 1.30
----------- ------- ------- ----------------
Net increase from investment
operations......................... 1.16 4.06 1.99 1.34
----------- ------- ------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.34) (0.04) --
----------- ------- ------- ----------------
Total distributions................. -- (1.41) (0.04) --
----------- ------- ------- ----------------
Net asset value, end of period.......... $18.53 $17.37 $14.72 $ 12.77
----------- ------- ------- ----------------
----------- ------- ------- ----------------
Total investment return (c)............. 6.68% (b) 27.78% 15.58% 11.72% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 753 $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 0.63% (a) 0.91% 0.25% 1.45% (a)
Without expense reductions and/or
reimbursement........................ 0.14% (a) (0.07)% (3.26)% (47.09)% (a)
Ratio of operating expenses to average
net assets:
With expense reductions and/or
reimbursement (Notes 2 & 5).......... 1.38% (a) 1.64% 1.65% 1.65% (a)
Without expense reductions and/or
reimbursement........................ 1.87% (a) 2.62% 5.16% 50.19% (a)
Ratio of interest expense to average net
assets+................................ N/A 0.03% N/A N/A
Portfolio turnover rate+................ 132% (a) 93% 256% N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement the net investment loss per share would have been
$(1.11), $(1.13), and $(1.10) for Class A, Class B, and Advisor Class,
respectively, from October 18, 1995 to December 31, 1995.
* * Before reimbursement the net investment loss per share would have been
$(.50), $(.59), and $(.46) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1996.
* * * Before reimbursement the net investment loss per share would have been
$(.07), $(.17), and $(.01) for Class A, Class B, and Advisor Class,
respectively, for the period ended December 31, 1997.
* * * * Before reimbursement the net investment income (loss) per share would
have been $(.01), $(.07) and $.01 for Class A, Class B, and Advisor
Class, respectively, for the six months ended June 30, 1998.
+ Portfolio turnover rates and ratio of interest expense to average net
assets are calculated on the basis of the Portfolio as a whole without
distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-24
<PAGE> 1193
NOTES TO
FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund
(the "Funds" formerly, GT Global America Small Cap Growth Fund, GT Global
America Mid Cap Growth Fund, and GT Global America Value Fund, respectively),
are separate series of AIM Growth Series (the "Trust", formerly G.T. Global
Growth Series). The Trust is a Delaware business trust and is registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
management investment company. The Trust has eight diversified series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The AIM Small Cap Equity Fund and AIM America Value Fund invest substantially
all of their investable assets in Small Cap Portfolio and Value Portfolio
("Portfolios"), respectively. Each Portfolio is organized as a Delaware business
trust and is registered under the 1940 Act as a diversified, open-end management
investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the AIM Small Cap Equity Fund, the AIM America Value
Fund, and their respective Portfolios have been presented on a consolidated
basis, and represent all activities of both the respective Funds and Portfolios.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its respective fund or INVESCO (NY), Inc. (the
"Sub-adviser"), which has a nominal ($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Sub-adviser to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Sub-adviser deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued at amortized cost, adjusted for market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the AIM Mid Cap Growth Fund and
each of the two Portfolios), it is the Fund's or Portfolio's policy to always
receive, as collateral, United States government securities or other high
quality debt securities of which the value, including accrued interest, is at
least equal to the amount to be repaid to the Fund or Portfolio under each
agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-25
<PAGE> 1194
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
JUNE 30, 1998 PERIOD ENDED JUNE
-------------------------------- 30, 1998
AGGREGATE VALUE CASH -----------------
AIM ON LOANS COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
Small Cap Equity Fund................... $ 1,441,406 $ 1,470,234 $ 8,274
Mid Cap Growth Fund..................... 42,313,661 42,984,542 154,690
America Value Fund...................... -- -- 484
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. The cash collateral is invested in a securities lending
trust which consists of a portfolio of high quality short duration securities
whose average effective duration is restricted to 120 days or less.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the AIM Small Cap Equity Fund, the AIM America Value Fund,
and their respective Portfolios in connection with their organization, their
initial registration with the Securities and Exchange Commission and with
various states and the initial public offering of their shares aggregated
$63,500 for each Fund and $25,000 for each Portfolio. These expenses are being
amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-26
<PAGE> 1195
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds advised and/or administered by
the Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Funds and certain other Funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. Each of these three funds is limited to borrowing up to 33 1/3% of
the value of each Fund's total assets. On June 30, 1998, AIM Mid Cap Growth Fund
had $6,652,000 in loans outstanding.
For the period ended June 30, 1998, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for AIM
Small Cap Equity Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund was
$513,375, $11,735,546 and $87,889 with a weighted average interest rate of
6.36%, 6.28%, and 6.24%, respectively. Interest expense for AIM Small Cap Equity
Fund, AIM Mid Cap Growth Fund, and AIM America Value Fund for the period ended
June 30, 1998 was $3,627, $198,306, and $137, respectively, and is included in
"Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Funds' and Portfolios'
investment manager and administrator, and INVESCO (NY), Inc., (formerly,
Chancellor LGT Asset Management, Inc.) is the Funds' and Portfolios' investment
sub-adviser and/or sub-administrator. As of the close of business on May 29,
1998, Liechtenstein Global Trust AG ("LGT"), the former indirect parent
organization of Chancellor LGT Asset Management, Inc. ("Chancellor LGT"),
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included Chancellor LGT and
certain other affiliates. As a result of this transaction, Chancellor LGT was
renamed INVESCO (NY), Inc., and is now an indirect wholly-owned subsidiary of
AMVESCAP PLC. In connection with this transaction, A I M Advisors, Inc., an
indirect wholly-owned subsidiary of AMVESCAP PLC, became the investment manager
and administrator of the Funds and Portfolios and INVESCO (NY), Inc. became the
sub-adviser and sub-administrator of the Funds and Portfolios. A I M
Distributors, Inc. ("AIM Distributors") became the Funds' distributor. Finally,
the Trust was reorganized from a Massachusetts business trust into a Delaware
business trust, and each Portfolio was reorganized from a New York Trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
AIM Small Cap Equity Fund and AIM America Value Fund each pays the Manager
administration fees at the annualized rate of 0.25% of such Fund's average daily
net assets. Each Portfolio pays investment management and administration fees to
the Manager at the annualized rate of 0.475% on the first $500 million of
average daily net assets of the Portfolio; 0.45% on the next $500 million;
0.425% on the next $500 million; and 0.40% on amounts thereafter. AIM Mid Cap
Growth Fund pays investment management and administration fees to the Manager at
the annualized rate of 0.725% on the first $500 million of average daily net
assets on the Fund; 0.70% on the next $500 million; 0.675% on the next $500
million and 0.65% on amounts thereafter. These fees are computed daily and paid
monthly, and are subject to reduction in any year to the extent that the Fund's
or Portfolio's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Funds' distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Funds' distributor. The Funds offer
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors collects the sales charges imposed on sales of
Class A shares, and reallows a portion of such charges to dealers through which
the sales are made. For the period ended June 30, 1998, AIM Distributors and GT
Global retained the following sales charges: $287 and $1,833, respectively, for
the AIM Small Cap Equity Fund, $1,705 and $12,353, respectively, for the AIM Mid
Cap Growth Fund, and $162 and $1,487, respectively, for the AIM America Value
Fund. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No
FS-27
<PAGE> 1196
CDSC's for Class A were collected for the period ended June 30, 1998. AIM
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. For the period ended June 30, 1998, AIM Distributors and GT
Global collected such CDSCs in the amount of: $5,915 and $65,285, respectively,
for the AIM Small Cap Equity Fund, $79,877 and $589,554, respectively, for the
AIM Mid Cap Growth Fund, and $6,047 and $32,112, respectively, for the AIM
America Value Fund. In addition, AIM Distributors makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Funds' Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Funds' reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund's were permitted to pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Funds' Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and were permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Funds'
Class A shares, less any amounts paid by the Funds as the aforementioned service
fee, for GT Global's expenditures incurred in providing services as distributor.
All expenses for which GT Global was reimbursed under the Class A Plan would
have been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Funds were
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for GT Global's
expenditures incurred in servicing and maintaining shareholder accounts, and
were permitted to pay GT Global a distribution fee at the annualized rate of up
to 0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continued in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Funds' Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Funds compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Funds. Under the Class A Plan, the funds
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of each of the Fund's Class A shares.
Pursuant to the Funds' Class B Plan, the Funds compensate AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Class A Plan and the Class B Plan (together, the "Plans") are designed to
compensate AIM Distributors for certain promotional and other sales-related
costs, and to implement a dealer incentive program that provides for periodic
payments to selected dealers who furnish continuing personal shareholder
services to their customers who purchase and own Class A and Class B shares of a
Fund. Payments also can be directed by AIM Distributors to Financial
Institutions who have entered into service agreements with respect to Class A
and Class B shares of a Fund and who provide continuing personal services to
their customers who own Class A and Class B shares of a Fund. The service fees
payable to selected Financial Institutions are calculated at the annual rate of
0.25% of the average daily net asset value of those Fund shares that are held in
such Institution's customers' accounts that were purchased on or after a
prescribed date set forth in the Plans.
The Manager and AIM Distributors have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class Shares, respectively.
This undertaking may be changed or eliminated in the future. If necessary, this
limitation will be effected by waivers by the Manager of investment management
and administration fees, waivers by AIM Distributors of payments under the Class
A Plan and/or Class B Plan and/or reimbursements by the Manager or AIM
Distributors of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Funds. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Funds for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its
FS-28
<PAGE> 1197
Trustees who is not an employee, officer or director of the Manager, AIM
Distributors or GT Services $500 per year plus $150 for each meeting of the
board or any committee thereof attended by the Trustee.
At June 30, 1998, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases of investment securities by the
AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund, and AIM America Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $34,489,676, $425,421,321 and $21,307,726, respectively. Sales of
investment securities by the AIM Small Cap Equity Portfolio, AIM Mid Cap Growth
Fund, and AIM America Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $38,854,404, $503,976,639 and
$18,275,286, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
CAPITAL SHARES-AIM SMALL CAP EQUITY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 766,677 $ 12,379,784 2,067,494 $ 28,341,345
Shares issued in connection with
reinvestment of distributions......... -- -- 14,194 195,720
------------ -------------- ------------ ---------------
766,677 12,379,784 2,081,688 28,537,065
Shares repurchased...................... (783,355) (12,602,269) (1,992,960) (27,546,271)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (16,678) $ (222,485) 88,728 $ 990,794
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 649,669 $ 10,068,580 2,192,656 $ 29,216,057
Shares issued in connection with
reinvestment of distributions......... -- -- 26,438 359,234
------------ -------------- ------------ ---------------
649,669 10,068,580 2,219,094 29,575,291
Shares repurchased...................... (942,259) (14,277,803) (1,570,899) (20,624,826)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (292,590) $ (4,209,223) 648,195 $ 8,950,465
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 39,133 $ 613,117 156,123 $ 2,292,127
Shares issued in connection with
reinvestment of distributions......... -- -- 507 7,039
------------ -------------- ------------ ---------------
39,133 613,117 156,630 2,299,166
Shares repurchased...................... (5,668) (88,767) (80,540) (1,200,061)
------------ -------------- ------------ ---------------
Net increase............................ 33,465 $ 524,350 76,090 $ 1,099,105
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-29
<PAGE> 1198
CAPITAL SHARES-AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 13,237,471 $ 293,037,123 24,801,099 $ 522,081,212
Shares issued in connection with
reinvestment of distributions......... -- -- 1,170,749 23,490,213
------------ -------------- ------------ ---------------
13,237,471 293,037,123 25,971,848 545,571,425
Shares repurchased...................... (15,286,842) (338,921,081) (30,338,852) (637,412,658)
------------ -------------- ------------ ---------------
Net decrease............................ (2,049,371) $ (45,883,958) (4,367,004) $ (91,841,233)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,361,394 $ 70,538,881 9,218,434 $ 190,231,954
Shares issued in connection with
reinvestment of distributions......... -- -- 1,240,395 24,063,873
------------ -------------- ------------ ---------------
3,361,394 70,538,881 10,458,829 214,295,827
Shares repurchased...................... (5,214,434) (110,304,526) (14,376,532) (293,260,545)
------------ -------------- ------------ ---------------
Net decrease............................ (1,853,040) $ (39,765,645) (3,917,703) $ (78,964,718)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 796,165 $ 16,947,597 1,056,271 $ 23,267,932
Shares issued in connection with
reinvestment of distributions......... -- -- 5,993 120,751
------------ -------------- ------------ ---------------
796,165 16,947,597 1,062,264 23,388,683
Shares repurchased...................... (805,702) (16,969,717) (1,103,923) (24,248,785)
------------ -------------- ------------ ---------------
Net decrease............................ (9,537) $ (22,120) (41,659) $ (860,102)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
CAPITAL SHARES-AIM AMERICA VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 233,708 $ 4,201,126 781,797 $ 13,117,280
Shares issued in connection with
reinvestment of distributions......... -- -- 26,859 454,725
------------ -------------- ------------ ---------------
233,708 4,201,126 808,656 13,572,005
Shares repurchased...................... (206,495) (3,733,422) (536,657) (9,148,725)
------------ -------------- ------------ ---------------
Net increase............................ 27,213 $ 467,704 271,999 $ 4,423,280
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 402,934 $ 7,126,394 1,148,582 $ 19,043,834
Shares issued in connection with
reinvestment of distributions......... -- -- 60,093 1,004,744
------------ -------------- ------------ ---------------
402,934 7,126,394 1,208,675 20,048,578
Shares repurchased...................... (269,058) (4,850,260) (606,167) (9,803,021)
------------ -------------- ------------ ---------------
Net increase............................ 133,876 $ 2,276,134 602,508 $ 10,245,557
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 17,744 $ 319,673 14,203 $ 230,962
Shares issued in connection with
reinvestment of distributions......... -- -- 1,920 32,714
------------ -------------- ------------ ---------------
17,744 319,673 16,123 263,676
Shares repurchased...................... (2,387) (45,558) (3,834) (66,384)
------------ -------------- ------------ ---------------
Net increase............................ 15,357 $ 274,115 12,289 $ 197,292
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of a Fund's or Portfolio's expenses. For the period ended June 30, 1998,
the expenses of AIM Small Cap Equity Portfolio, AIM Mid Cap Growth Fund and AIM
America Value Portfolio were reduced by $1,016, $29,201 and $1,546 respectively,
under these arrangements.
6. SUBSEQUENT EVENT
Effective September 8, 1998, INVESCO (NY), Inc. (the "Sub-adviser") will resign
as (i) sub-advisor and sub-administrator to the Value Portfolio, the Small Cap
Portfolio (together the "Portfolios") and AIM Mid Cap Growth Fund; and (ii)
sub-administrator to AIM America Value Fund and AIM Small Cap Equity Fund. A I M
Advisors, Inc. will continue to serve as the manager and administrator for the
above-named funds and portfolios.
FS-30
<PAGE> 1199
GT GLOBAL AMERICA FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statements of assets and liabilities of GT
Global America Small Cap Growth Fund - Consolidated, GT Global America Mid Cap
Growth Fund, and GT Global America Value Fund - Consolidated, three of the funds
organized as a series of GT Global Growth Series, including the portfolios of
investments, as of December 31, 1997, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated herein. These financial statements and the financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and the 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, 1997, 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of the
GT Global America Small Cap Growth Fund - Consolidated, GT Global America Mid
Cap Growth Fund, and GT Global America Value Fund - Consolidated, as of December
31, 1997, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
FS-31
<PAGE> 1200
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (33.0%)
Signature Resorts, Inc.-/- ................................ US 45,550 $ 996,400 3.0
LEISURE & TOURISM
Personnel Group of America, Inc.-/- ....................... US 25,700 848,100 2.5
BUSINESS & PUBLIC SERVICES
Insight Enterprises, Inc.-/- .............................. US 20,700 760,725 2.3
RETAILERS-OTHER
Vistana, Inc.-/- .......................................... US 26,900 618,700 1.8
LEISURE & TOURISM
American Disposal Services, Inc.-/- ....................... US 16,700 609,550 1.8
CONSUMER SERVICES
CDW Computer Centers, Inc.-/- ............................. US 11,000 573,375 1.7
RETAILERS-OTHER
Superior Services, Inc.-/- ................................ US 18,000 519,750 1.5
CONSUMER SERVICES
Lason Holdings, Inc.-/- ................................... US 19,000 505,875 1.5
CONSUMER SERVICES
BA Merchant Services, Inc. "A"-/- ......................... US 28,400 504,100 1.5
BUSINESS & PUBLIC SERVICES
Comfort Systems USA, Inc.-/- .............................. US 22,800 450,300 1.3
BUSINESS & PUBLIC SERVICES
HA-LO Industries, Inc.-/- ................................. US 17,200 447,200 1.3
CONSUMER SERVICES
Clear Channel Communications, Inc.-/- ..................... US 5,600 444,850 1.3
TELECOM - OTHER
Caribiner International, Inc.-/- .......................... US 9,300 413,850 1.2
CONSUMER SERVICES
Henry Schein, Inc.-/- ..................................... US 11,400 399,000 1.2
RETAILERS-OTHER
Lamar Advertising Co.-/- .................................. US 9,700 385,575 1.1
BUSINESS & PUBLIC SERVICES
C.H. Robinson Worldwide, Inc. ............................. US 16,600 371,425 1.1
TRANSPORTATION - SHIPPING
Jevic Transportation, Inc.-/- ............................. US 21,100 340,238 1.0
TRANSPORTATION - SHIPPING
Universal Outdoor Holdings, Inc.-/- ....................... US 5,900 306,800 0.9
BUSINESS & PUBLIC SERVICES
Bright Horizons, Inc.-/- .................................. US 16,000 300,000 0.9
CONSUMER SERVICES
Hagler Bailly, Inc.-/- .................................... US 10,900 245,250 0.7
BUSINESS & PUBLIC SERVICES
Service Experts, Inc.-/- .................................. US 8,400 240,450 0.7
CONSUMER SERVICES
Industrial Distribution Group, Inc.-/- .................... US 13,900 218,056 0.6
WHOLESALE & INTERNATIONAL TRADE
Execustay Corp.-/- ........................................ US 19,300 188,175 0.6
LEISURE & TOURISM
BridgeStreet Accommodations, Inc.-/- ...................... US 17,700 179,766 0.5
CONSUMER SERVICES
EduTrek International, Inc. "A"-/- ........................ US 4,900 127,400 0.4
BUSINESS & PUBLIC SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-32
<PAGE> 1201
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Linens 'N Things, Inc.-/- ................................. US 1,800 $ 78,525 0.2
RETAILERS-APPAREL
NEXTLINK Communications, Inc. "A"-/- ...................... US 3,600 76,725 0.2
TELEPHONE - REGIONAL/LOCAL
Coldwater Creek, Inc.-/- .................................. US 1,800 60,750 0.2
RETAILERS-OTHER
------------
11,210,910
------------
Health Care (14.3%)
Jones Medical Industries, Inc. ............................ US 16,700 638,775 1.9
MEDICAL TECHNOLOGY & SUPPLIES
SangStat Medical Corp.-/- ................................. US 9,400 380,700 1.1
MEDICAL TECHNOLOGY & SUPPLIES
Atria Communities, Inc.-/- ................................ US 21,300 364,763 1.1
HEALTH CARE SERVICES
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 9,400 364,250 1.1
MEDICAL TECHNOLOGY & SUPPLIES
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 47,900 356,256 1.1
PHARMACEUTICALS
AmeriSource Health Corp. "A"-/- ........................... US 5,600 329,000 1.0
HEALTH CARE SERVICES
Waters Corp.-/- ........................................... US 8,500 319,813 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Arris Pharmaceutical Corp.-/- ............................. US 36,800 308,200 0.9
PHARMACEUTICALS
Pharmacopeia, Inc.-/- ..................................... US 18,100 289,600 0.9
BIOTECHNOLOGY
Lunar Corp.-/- ............................................ US 13,800 282,900 0.8
MEDICAL TECHNOLOGY & SUPPLIES
VIVUS, Inc.-/- ............................................ US 24,600 261,375 0.8
MEDICAL TECHNOLOGY & SUPPLIES
COR Therapeutics, Inc.-/- ................................. US 9,700 218,250 0.6
BIOTECHNOLOGY
Focal, Inc.-/- ............................................ US 18,000 191,250 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nitinol Medical Technologies, Inc.-/- ..................... US 15,000 120,000 0.4
MEDICAL TECHNOLOGY & SUPPLIES
Gilead Sciences, Inc.-/- .................................. US 2,700 103,275 0.3
BIOTECHNOLOGY
AmeriPath, Inc.-/- ........................................ US 5,800 98,600 0.3
HEALTH CARE SERVICES
Depotech Corp.-/- ......................................... US 23,500 83,719 0.3
PHARMACEUTICALS
Sofamor Danek Group, Inc.-/- .............................. US 600 39,038 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
4,749,764
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-33
<PAGE> 1202
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (13.2%)
Software AG Systems, Inc.-/- .............................. US 31,600 $ 458,200 1.4
SOFTWARE
Documentum, Inc.-/- ....................................... US 10,000 421,250 1.3
SOFTWARE
Analysts International Corp. .............................. US 11,050 381,225 1.1
COMPUTERS & PERIPHERALS
Roper Industries, Inc. .................................... US 12,600 355,950 1.1
INSTRUMENTATION & TEST
Pegasystems, Inc.-/- ...................................... US 16,000 323,000 1.0
SOFTWARE
Integrated Circuit Systems, Inc.-/- ....................... US 10,900 310,650 0.9
SEMICONDUCTORS
MRV Communications, Inc.-/- ............................... US 12,900 307,988 0.9
TELECOM TECHNOLOGY
Ciber, Inc.-/- ............................................ US 4,800 278,400 0.8
COMPUTERS & PERIPHERALS
Inacom Corp.-/- ........................................... US 9,300 260,981 0.8
COMPUTERS & PERIPHERALS
Peerless Systems Corp.-/- ................................. US 18,500 238,188 0.7
SOFTWARE
Metro Information Services, Inc.-/- ....................... US 7,700 213,675 0.6
COMPUTERS & PERIPHERALS
Aspect Development, Inc.-/- ............................... US 3,400 176,800 0.5
SOFTWARE
Logility, Inc.-/- ......................................... US 18,100 176,475 0.5
SOFTWARE
Cirrus Logic, Inc.-/- ..................................... US 15,800 167,875 0.5
SEMICONDUCTORS
Pericom Semiconductor Corp.-/- ............................ US 15,400 112,613 0.3
SEMICONDUCTORS
FactSet Research Systems, Inc.-/- ......................... US 2,300 70,725 0.2
COMPUTERS & PERIPHERALS
Aehr Test Systems-/- ...................................... US 8,400 67,200 0.2
INSTRUMENTATION & TEST
PRI Automation, Inc.-/- ................................... US 2,000 57,750 0.2
COMPUTERS & PERIPHERALS
Excel Switching Corp.-/- .................................. US 2,800 50,050 0.2
TELECOM TECHNOLOGY
------------
4,428,995
------------
Finance (9.3%)
AmeriCredit Corp.-/- ...................................... US 15,100 418,081 1.2
CONSUMER FINANCE
Camden Property Trust ..................................... US 13,400 415,400 1.2
REAL ESTATE INVESTMENT TRUST
LaSalle Partners, Inc.-/- ................................. US 11,500 409,688 1.2
REAL ESTATE
Affiliated Managers Group, Inc.-/- ........................ US 13,000 377,000 1.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-34
<PAGE> 1203
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
ARM Financial Group, Inc. "A"-/- .......................... US 13,200 $ 348,150 1.0
INVESTMENT MANAGEMENT
HomeSide, Inc.-/- ......................................... US 12,000 330,750 1.0
SAVINGS & LOANS
Stirling Cooke Brown Holdings Ltd.-/- ..................... US 8,900 218,050 0.6
INSURANCE - PROPERTY-CASUALTY
Resource America, Inc. "A" ................................ US 3,900 178,425 0.5
CONSUMER FINANCE
American Capital Strategies Ltd. .......................... US 9,800 177,625 0.5
CONSUMER FINANCE
PAULA Financial-/- ........................................ US 5,800 133,400 0.4
REAL ESTATE
Tower Realty Trust, Inc. .................................. US 5,100 125,588 0.4
REAL ESTATE INVESTMENT TRUST
Citizens National Bank of Texas ........................... US 6,600 82,500 0.2
BANKS-REGIONAL
------------
3,214,657
------------
Capital Goods (7.4%)
General Cable Corp.-/- .................................... US 17,500 633,281 1.9
INDUSTRIAL COMPONENTS
Knoll, Inc.-/- ............................................ US 18,400 591,100 1.8
OFFICE EQUIPMENT
Chart Industries, Inc. .................................... US 17,100 390,094 1.2
MACHINERY & ENGINEERING
OSI Systems, Inc.-/- ...................................... US 22,300 273,175 0.8
ELECTRICAL PLANT/EQUIPMENT
Wyman-Gordon Co.-/- ....................................... US 13,700 268,863 0.8
ELECTRICAL PLANT/EQUIPMENT
The Middleby Corp.-/- ..................................... US 20,700 161,719 0.5
MACHINERY & ENGINEERING
Power-One, Inc.-/- ........................................ US 9,000 123,750 0.4
INDUSTRIAL COMPONENTS
------------
2,441,982
------------
Energy (5.4%)
Newfield Exploration Co.-/- ............................... US 27,900 650,419 1.9
OIL
Hanover Compressor Co.-/- ................................. US 27,800 556,000 1.7
ENERGY EQUIPMENT & SERVICES
Pride International, Inc.-/- .............................. US 10,400 262,600 0.8
OIL
ADAC Laboratories-/- ...................................... US 13,100 258,725 0.8
ENERGY EQUIPMENT & SERVICES
Dril-Quip, Inc.-/- ........................................ US 2,000 70,250 0.2
ENERGY EQUIPMENT & SERVICES
------------
1,797,994
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-35
<PAGE> 1204
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.2%)
JLK Direct Distribution, Inc. "A"-/- ...................... US 20,200 $ 565,600 1.7
OTHER CONSUMER GOODS
DM Management Co.-/- ...................................... US 20,900 326,563 1.0
OTHER CONSUMER GOODS
GameTech International, Inc.-/- ........................... US 30,100 323,575 1.0
RECREATION
Meadowcraft, Inc.-/- ...................................... US 13,600 159,800 0.5
HOUSEHOLD PRODUCTS
------------
1,375,538
------------
Materials/Basic Industry (3.9%)
Cambrex Corp. ............................................. US 10,100 464,600 1.4
CHEMICALS
Gibraltar Steel Corp.-/- .................................. US 22,600 446,350 1.3
METALS - STEEL
Crompton & Knowles Corp. .................................. US 12,700 336,550 1.0
CHEMICALS
Steel Dynamics, Inc.-/- ................................... US 4,200 67,200 0.2
METALS - STEEL
------------
1,314,700
------------
Consumer Durables (3.8%)
Avis Rent A Car, Inc.-/- .................................. US 17,000 542,938 1.6
AUTOMOBILES
Tower Automotive, Inc.-/- ................................. US 10,800 454,275 1.3
AUTO PARTS
Aftermarket Technology Corp.-/- ........................... US 17,400 315,375 0.9
AUTO PARTS
------------
1,312,588
------------
Multi-Industry/Miscellaneous (2.5%)
Cornell Corrections, Inc.-/- .............................. US 23,500 487,625 1.4
MISCELLANEOUS
Equity Corporation International-/- ....................... US 15,600 360,750 1.1
MISCELLANEOUS
------------
848,375
------------ -----
TOTAL EQUITY INVESTMENTS (cost $31,799,304) ................. 32,695,503 97.0
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-36
<PAGE> 1205
GT GLOBAL AMERICA SMALL CAP GROWTH FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%
collateralized by $905,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $905,993,
including accrued interest). (cost $884,000) ............ $ 884,000 2.6
------------ -----
TOTAL INVESTMENTS (cost $32,683,304) * ..................... 33,579,503 99.6
Other Assets and Liabilities ................................ 131,240 0.4
------------ -----
NET ASSETS .................................................. $ 33,710,743 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $32,768,260 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,952,339
Unrealized depreciation: (2,141,096)
-------------
Net unrealized appreciation: $ 811,243
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-37
<PAGE> 1206
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.5%)
Cendant Corp.-/- .......................................... US 924,232 $ 31,770,471 6.2
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................ US 571,700 20,867,050 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- .................................. US 477,325 18,317,347 3.6
BUSINESS & PUBLIC SERVICES
Signature Resorts, Inc.-/- ................................ US 789,900 17,279,063 3.4
LEISURE & TOURISM
Hilton Hotels Corp. ....................................... US 502,100 14,937,475 2.9
LEISURE & TOURISM
U.S. Office Products Co.-/- ............................... US 734,650 14,417,506 2.8
CONSUMER SERVICES
Caribiner International, Inc.-/- .......................... US 320,500 14,262,250 2.8
CONSUMER SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 264,900 13,774,800 2.7
BUSINESS & PUBLIC SERVICES
Mirage Resorts, Inc.-/- ................................... US 381,900 8,688,225 1.7
LEISURE & TOURISM
Nextel Communications, Inc. "A"-/- ........................ US 303,300 7,885,800 1.5
WIRELESS COMMUNICATIONS
Valassis Communications, Inc.-/- .......................... US 209,400 7,747,800 1.5
BROADCASTING & PUBLISHING
Paychex, Inc. ............................................. US 140,200 7,097,625 1.4
CONSUMER SERVICES
Service Corporation International ......................... US 137,500 5,078,906 1.0
CONSUMER SERVICES
Wolverine World Wide, Inc. ................................ US 201,600 4,561,200 0.9
RETAILERS-APPAREL
------------
186,685,518
------------
Finance (14.6%)
Conseco, Inc. ............................................. US 348,200 15,821,338 3.1
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................ US 154,100 11,181,881 2.2
BANKS-REGIONAL
CMAC Investment Corp. ..................................... US 149,700 9,038,138 1.8
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................ US 252,800 8,911,200 1.7
OTHER FINANCIAL
Exel Ltd. ................................................. US 120,500 7,636,688 1.5
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................ US 228,400 7,365,900 1.4
CONSUMER FINANCE
Consolidated Capital Corp.-/- ............................. US 323,500 6,571,094 1.3
INVESTMENT MANAGEMENT
Student Loan Marketing Association ........................ US 42,800 5,954,550 1.2
OTHER FINANCIAL
Ace Ltd. .................................................. US 20,100 1,939,650 0.4
INSURANCE - PROPERTY-CASUALTY
------------
74,420,439
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-38
<PAGE> 1207
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (11.1%)
AmeriSource Health Corp. "A"-/- ........................... US 214,600 $ 12,607,750 2.5
HEALTH CARE SERVICES
McKesson Corp. ............................................ US 114,600 12,398,288 2.4
HEALTH CARE SERVICES
HBO & Co. ................................................. US 203,800 9,782,400 1.9
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- .......................... US 246,100 9,413,325 1.8
HEALTH CARE SERVICES
Covance, Inc.-/- .......................................... US 337,000 6,697,875 1.3
HEALTH CARE SERVICES
Guidant Corp. ............................................. US 97,400 6,063,150 1.2
MEDICAL TECHNOLOGY & SUPPLIES
------------
56,962,788
------------
Technology (11.1%)
PeopleSoft, Inc.-/- ....................................... US 380,600 14,843,400 2.9
SOFTWARE
Sterling Commerce, Inc.-/- ................................ US 365,200 14,037,375 2.7
SOFTWARE
Ciena Corp.-/- ............................................ US 186,700 11,412,038 2.2
TELECOM TECHNOLOGY
CBT Group PLC - ADR-/- {\/} ............................... IRE 110,800 9,099,450 1.8
COMPUTERS & PERIPHERALS
Pegasystems, Inc.-/- ...................................... US 371,300 7,495,619 1.5
SOFTWARE
------------
56,887,882
------------
Materials/Basic Industry (9.7%)
Crompton & Knowles Corp. .................................. US 529,200 14,023,800 2.7
CHEMICALS
International Specialty Products, Inc.-/- ................. US 834,000 12,457,875 2.4
CHEMICALS
Sealed Air Corp.-/- ....................................... US 201,000 12,411,750 2.4
PLASTICS & RUBBER
J. Ray McDermott S.A.-/- .................................. US 263,900 11,347,700 2.2
BUILDING MATERIALS & COMPONENTS
------------
50,241,125
------------
Energy (8.6%)
Cooper Cameron Corp.-/- ................................... US 170,500 10,400,500 2.0
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ........................................ US 120,600 8,675,663 1.7
ENERGY EQUIPMENT & SERVICES
Anadarko Petroleum Corp. .................................. US 138,900 8,429,494 1.7
OIL
Smith International, Inc.-/- .............................. US 135,600 8,322,450 1.6
ENERGY EQUIPMENT & SERVICES
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-39
<PAGE> 1208
GT GLOBAL AMERICA MID CAP GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Santa Fe International Corp. .............................. US 198,200 $ 8,064,263 1.6
ENERGY EQUIPMENT & SERVICES
------------
43,892,370
------------
Consumer Durables (4.1%)
Avis Rent A Car, Inc.-/- .................................. US 326,900 10,440,369 2.0
AUTOMOBILES
Hertz Corp. "A" ........................................... US 152,500 6,138,125 1.2
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 235,000 4,817,500 0.9
AUTOMOBILES
------------
21,395,994
------------
Multi-Industry/Miscellaneous (2.4%)
Corrections Corporation of America-/- ..................... US 324,500 12,026,781 2.4
------------
MISCELLANEOUS
Consumer Non-Durables (1.3%)
International Home Foods, Inc.-/- ......................... US 240,400 6,731,200 1.3
------------
FOOD
Capital Goods (1.3%)
U.S. Filter Corp.-/- ...................................... US 213,100 6,379,681 1.3
ENVIRONMENTAL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $450,142,030) ................ 515,623,778 100.7
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,985,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $21,004,684,
including accrued interest).
(cost $20,589,000) ...................................... 20,589,000 4.0
------------ -----
TOTAL INVESTMENTS (cost $470,731,030) * .................... 536,212,778 104.7
Other Assets and Liabilities ................................ (23,930,616) (4.7)
------------ -----
NET ASSETS .................................................. $512,282,162 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $472,057,961 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,285,341
Unrealized depreciation: (8,130,524)
-------------
Net unrealized appreciation: $ 64,154,817
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-40
<PAGE> 1209
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.6%)
Student Loan Marketing Association ........................ US 5,175 $ 719,972 2.9
OTHER FINANCIAL
Travelers Group, Inc. ..................................... US 11,850 638,419 2.6
INSURANCE - MULTI-LINE
Allstate Corp. ............................................ US 6,875 624,766 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 5,675 621,413 2.5
BANKS-MONEY CENTER
Household International, Inc. ............................. US 4,600 586,779 2.4
OTHER FINANCIAL
NationsBank Corp. ......................................... US 9,600 583,800 2.3
BANKS-SUPER REGIONAL
First Union Corp. (N.C.) .................................. US 11,300 579,125 2.3
BANKS-SUPER REGIONAL
Exel Ltd. ................................................. US 8,900 564,038 2.3
INSURANCE - PROPERTY-CASUALTY
BankAmerica Corp. ......................................... US 7,250 529,250 2.1
BANKS-SUPER REGIONAL
Citicorp .................................................. US 4,100 518,394 2.1
BANKS-MONEY CENTER
Fleet Financial Group, Inc. ............................... US 5,800 434,638 1.8
BANKS-SUPER REGIONAL
GreenPoint Financial Corp. ................................ US 5,900 428,119 1.7
BANKS-REGIONAL
Norwest Corp. ............................................. US 10,950 422,944 1.7
BANKS-REGIONAL
Equity Office Properties Trust ............................ US 9,700 306,156 1.2
REAL ESTATE INVESTMENT TRUST
Crescent Real Estate Equities Co. ......................... US 7,200 283,500 1.1
REAL ESTATE INVESTMENT TRUST
Tower Realty Trust, Inc. .................................. US 11,100 273,338 1.1
REAL ESTATE INVESTMENT TRUST
Patriot American Hospitality, Inc. ........................ US 9,198 265,017 1.1
REAL ESTATE INVESTMENT TRUST
Equity Residential Property Trust ......................... US 4,875 246,492 1.0
REAL ESTATE INVESTMENT TRUST
Highwoods Properties, Inc. ................................ US 6,425 238,930 1.0
REAL ESTATE INVESTMENT TRUST
Felcor Suite Hotels, Inc. ................................. US 6,025 213,888 0.9
REAL ESTATE INVESTMENT TRUST
------------
9,078,978
------------
Energy (16.4%)
McDermott International, Inc. ............................. US 13,900 509,088 2.0
ENERGY EQUIPMENT & SERVICES
Mobil Corp. ............................................... US 6,300 454,781 1.8
OIL
Amerada Hess Corp. ........................................ US 8,025 440,372 1.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-41
<PAGE> 1210
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Tosco Corp. ............................................... US 10,600 $ 400,813 1.6
GAS PRODUCTION & DISTRIBUTION
Unocal Corp. .............................................. US 9,800 380,363 1.5
OIL
Ultramar Diamond Shamrock Corp. ........................... US 11,925 380,109 1.5
OIL
Pinnacle West Capital Corp. ............................... US 8,025 340,059 1.4
ELECTRICAL & GAS UTILITIES
Texaco, Inc. .............................................. US 5,850 318,094 1.3
OIL
Edison International ...................................... US 10,300 280,031 1.1
ELECTRICAL & GAS UTILITIES
Central & South West Corp. ................................ US 8,700 235,444 1.0
ELECTRICAL & GAS UTILITIES
GPU, Inc. ................................................. US 5,225 220,103 0.9
ELECTRICAL & GAS UTILITIES
CMS Energy Corp. .......................................... US 2,550 112,359 0.5
ELECTRICAL & GAS UTILITIES
------------
4,071,616
------------
Services (14.5%)
Bell Atlantic Corporation ................................. US 7,500 682,500 2.8
TELEPHONE - REGIONAL/LOCAL
Federated Department Stores, Inc.-/- ...................... US 15,800 680,388 2.7
RETAILERS-APPAREL
U.S. West, Inc. ........................................... US 12,500 564,063 2.3
TELEPHONE - REGIONAL/LOCAL
Burlington Northern, Inc. ................................. US 6,000 557,625 2.3
TRANSPORTATION - ROAD & RAIL
The Limited, Inc. ......................................... US 19,825 505,538 2.0
RETAILERS-APPAREL
Time Warner, Inc. ......................................... US 5,525 342,550 1.4
BROADCASTING & PUBLISHING
ITT Corp.-/- .............................................. US 3,100 256,913 1.0
LEISURE & TOURISM
------------
3,589,577
------------
Materials/Basic Industry (11.2%)
Imperial Chemical Industries PLC - ADR{\/} ................ UK 10,900 707,819 2.9
CHEMICALS
Hercules, Inc. ............................................ US 8,075 404,255 1.6
CHEMICALS
Stone Container Corp.-/- .................................. US 38,600 402,888 1.6
PAPER/PACKAGING
Crompton & Knowles Corp. .................................. US 14,400 381,600 1.5
CHEMICALS
W.R. Grace & Co. .......................................... US 4,225 339,848 1.4
CHEMICALS
Aluminum Company of America (ALCOA) ....................... US 4,400 309,650 1.2
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-42
<PAGE> 1211
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
PPG Industries, Inc. ...................................... US 4,200 $ 239,925 1.0
CHEMICALS
------------
2,785,985
------------
Consumer Durables (6.4%)
Ford Motor Co. ............................................ US 14,650 713,272 2.9
AUTOMOBILES
Chrysler Corp. ............................................ US 12,725 447,761 1.8
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- .................. US 20,000 410,000 1.7
AUTOMOBILES
------------
1,571,033
------------
Consumer Non-Durables (5.2%)
RJR Nabisco Holdings Corp. ................................ US 16,875 632,813 2.5
TOBACCO
Philip Morris Cos., Inc. .................................. US 8,550 387,422 1.6
TOBACCO
Fruit of the Loom, Inc.-/- ................................ US 10,700 274,188 1.1
TEXTILES & APPAREL
------------
1,294,423
------------
Technology (4.9%)
International Business Machines Corp. ..................... US 7,000 731,938 2.9
COMPUTERS & PERIPHERALS
Compaq Computer Corp.-/- .................................. US 8,950 505,116 2.0
COMPUTERS & PERIPHERALS
------------
1,237,054
------------
Capital Goods (1.2%)
Textron, Inc. ............................................. US 4,800 300,000 1.2
AEROSPACE/DEFENSE
------------ -----
TOTAL EQUITY INVESTMENTS (cost $21,927,922) ................. 23,928,666 96.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-43
<PAGE> 1212
GT GLOBAL AMERICA VALUE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $1,130,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $1,131,060,
including accrued interest).
(cost $1,104,000) ....................................... $ 1,104,000 4.4
------------ -----
TOTAL INVESTMENTS (cost $23,031,922) * ..................... 25,032,666 100.8
Other Assets and Liabilities ................................ (208,051) (0.8)
------------ -----
NET ASSETS .................................................. $ 24,824,615 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $23,069,999 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,281,685
Unrealized depreciation: (319,018)
-------------
Net unrealized appreciation: $ 1,962,667
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
FS-44
<PAGE> 1213
GT GLOBAL AMERICA FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
-------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $32,683,304; $470,731,030;
and $23,031,922, respectively) (Note 1)............................ $33,579,503 $536,212,778 $25,032,666
U.S. currency....................................................... 927 295 988
Dividends receivable................................................ 10,766 125,429 42,920
Interest receivable................................................. 142 3,317 177
Receivable for Fund shares sold..................................... 358,830 628,959 306,827
Receivable for securities sold...................................... 887,683 -- 90,237
Unamortized organizational costs (Note 1)........................... 49,458 -- 49,458
-------------- ------------- --------------
Total assets...................................................... 34,887,309 536,970,778 25,523,273
-------------- ------------- --------------
Liabilities:
Payable for custodian fees.......................................... 2,924 25,081 2,892
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,310 5,062 5,725
Payable for fund accounting fees (Note 2)........................... 1,488 9,945 652
Payable for Fund shares repurchased................................. 716,716 3,845,129 356,809
Payable for investment management and administration fees (Note
2)................................................................. 19,707 306,242 417
Payable for printing and postage expenses........................... 16,077 31,815 16,948
Payable for professional fees....................................... 15,217 27,546 19,018
Payable for registration and filing fees............................ 15,960 3,900 8,146
Payable for securities purchased.................................... 348,610 19,887,085 263,514
Payable for service and distribution expenses (Note 2).............. 21,124 285,634 15,365
Payable for transfer agent fees (Note 2)............................ 11,763 231,778 5,430
Other accrued expenses.............................................. 1,570 29,399 3,642
-------------- ------------- --------------
Total liabilities................................................. 1,176,466 24,688,616 698,558
Minority interest (Notes 1 & 2)..................................... 100 -- 100
-------------- ------------- --------------
Net assets............................................................ $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
Class A:
Net asset value and redemption price per share ($10,896,107 DIVIDED BY
763,367;
$255,674,204 DIVIDED BY 12,169,079; and $7,668,100 DIVIDED BY 444,643
shares outstanding, respectively) ................................... $ 14.27 $ 21.01 $ 17.25
-------------- ------------- --------------
-------------- ------------- --------------
Maximum offering price per share (100/95.25 of $14.27; 100/95.25 of
$21.01; and 100/95.25 of $17.25, respectively) *..................... $ 14.98 $ 22.06 $ 18.11
-------------- ------------- --------------
-------------- ------------- --------------
Class B:+
Net asset value and offering price per share $21,222,157 DIVIDED BY
1,509,212; $255,468,031 DIVIDED BY 12,580,716; and $16,717,458
DIVIDED BY 981,035 shares outstanding, respectively)................. $ 14.06 $ 20.31 $ 17.04
-------------- ------------- --------------
-------------- ------------- --------------
Advisor Class:
Net asset value and offering price per share, and redemption price per
share ($1,592,479 DIVIDED BY 110,687; $1,139,927 DIVIDED BY 54,025;
and $439,057 DIVIDED BY 25,283 shares outstanding, respectively)..... $ 14.39 $ 21.10 $ 17.37
-------------- ------------- --------------
-------------- ------------- --------------
Net assets consist of:
Paid in capital (Note 4)............................................ $31,557,971 $430,679,692 $22,421,981
Accumulated net realized gain on investments........................ 1,256,573 16,120,722 401,890
Net unrealized appreciation of investments.......................... 896,199 65,481,748 2,000,744
-------------- ------------- --------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $33,710,743 $512,282,162 $24,824,615
-------------- ------------- --------------
-------------- ------------- --------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-45
<PAGE> 1214
GT GLOBAL AMERICA FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------
AMERICA AMERICA
SMALL CAP MID CAP AMERICA
GROWTH GROWTH VALUE
FUND-CONSOLIDATED FUND FUND-CONSOLIDATED
------------- ------------ -------------
<S> <C> <C> <C>
Investment income: (Note 1)
Dividend income.............................................. $ 35,957 $2,095,256 $ 357,943
Interest income.............................................. 95,213 519,576 46,139
------------- ------------ -------------
Total investment income.................................... 131,170 2,614,832 404,082
------------- ------------ -------------
Expenses:
Investment management and administration fees (Note 2)....... 184,004 3,999,732 113,543
Amortization of organization costs (Note 1).................. 17,702 -- 17,702
Custodian Fees............................................... 21,876 137,385 9,431
Directors' and Trustees' fees and expenses (Note 2).......... 14,813 12,580 12,042
Fund accounting fees (Note 2)................................ 6,379 142,274 3,938
Printing and postage expenses................................ 61,435 102,242 51,829
Professional fees............................................ 63,468 72,533 71,745
Registration and filing fees................................. 72,360 73,688 65,399
Service and distribution expenses: (Note 2)
Class A.................................................... 33,776 958,593 17,701
Class B.................................................... 148,043 2,781,908 102,587
Transfer agent fees (Note 2)................................. 102,790 1,545,314 59,946
Other expenses (Note 1)...................................... 5,430 156,232 9,271
------------- ------------ -------------
Total expenses before reductions and reimbursement......... 732,076 9,982,481 535,134
------------- ------------ -------------
Expenses reimbursed by Chancellor LGT Asset Management,
Inc. (Note 2)........................................... (131,297) -- (151,962)
Expense reductions (Notes 1 & 5)......................... (20,049) (600,349) (1,332)
------------- ------------ -------------
Total net expenses......................................... 580,730 9,382,132 381,840
------------- ------------ -------------
Net investment income (loss)................................... (449,560) (6,767,300) 22,242
------------- ------------ -------------
Net realized and unrealized gain on investments: (Note 1)
Net realized gain on investments............................. 2,524,251 91,288,360 1,352,859
Net change in unrealized appreciation (depreciation) of
investments................................................. 1,674,235 (23,043,968) 2,016,032
------------- ------------ -------------
Net realized and unrealized gain on investments................ 4,198,486 68,244,392 3,368,891
------------- ------------ -------------
Net increase in net assets resulting from operations........... $ 3,748,926 $61,477,092 $ 3,391,133
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-46
<PAGE> 1215
GT GLOBAL AMERICA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
AMERICA SMALL CAP AMERICA MID CAP AMERICA VALUE
GROWTH FUND-CONSOLIDATED GROWTH FUND FUND-CONSOLIDATED
------------------------ ------------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER DECEMBER DECEMBER YEAR ENDED DECEMBER DECEMBER
31, 31, 31, DECEMBER 31, 31, 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $(449,560) $(110,516) $(6,767,300) $ (1,367,346) $ 22,242 $ (30,160)
Net realized gain on investments and
foreign currency transactions........ 2,524,251 1,264,689 91,288,360 24,339,369 1,352,859 733,904
Net change in unrealized appreciation
(depreciation) of investments........ 1,674,235 (782,829) (23,043,968) 76,318,599 2,016,032 (69,965)
----------- ----------- ----------- ------------ ----------- -----------
Net increase in net assets resulting
from operations.................... 3,748,926 371,344 61,477,092 99,290,622 3,391,133 633,779
----------- ----------- ----------- ------------ ----------- -----------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (12,256) --
From net realized gain on
investments.......................... (213,287) (564,752) (27,861,047) (21,518,831) (482,262) (7,007)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... (410,555) (727,944) (29,550,073) (20,232,121) (1,128,861) (14,950)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............ -- -- -- -- (1,610) --
From net realized gain on
investments.......................... (32,021) (28,106) (120,835) (167,680) (30,657) (443)
----------- ----------- ----------- ------------ ----------- -----------
Total distributions................. (655,863) (1,320,802) (57,531,955) (41,918,632) (1,655,646) (22,400)
----------- ----------- ----------- ------------ ----------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 60,411,522 43,976,336 783,255,935 2,122,781,710 33,884,259 11,770,124
Decrease from capital shares
repurchased.......................... (49,371,158) (27,455,528) (954,921,988) (2,246,270,951) (19,018,130) (6,364,460)
----------- ----------- ----------- ------------ ----------- -----------
Net increase (decrease) from capital
share transactions................. 11,040,364 16,520,808 (171,666,053) (123,489,241) 14,866,129 5,405,664
----------- ----------- ----------- ------------ ----------- -----------
Total increase (decrease) in net
assets................................. 14,133,427 15,571,350 (167,720,916) (66,117,251) 16,601,616 6,017,043
Net assets:
Beginning of year..................... 19,577,316 4,005,966 680,003,078 746,120,329 8,222,999 2,205,956
----------- ----------- ----------- ------------ ----------- -----------
End of year *........................ 3$3,710,743 1$9,577,316 $512,282,162 $680,003,078 2$4,824,615 $8,222,999
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
* Includes undistributed/accumulated
net investment income (loss) of...... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
FS-47
<PAGE> 1216
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.52 $ 11.80 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.18) ** (0.05) ** 0.04*
Net realized and unrealized gain on
investments.......................... 2.20 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.02 1.64 0.37
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.27 $ 12.52 $ 11.80
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.23 % 13.81 % 3.24 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 10,896 $ 8,448 $ 1,931
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.40)% (0.38)% 1.68 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.00)% (1.47)% (20.52)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.92 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.52 % 3.09 % 24.20 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-48
<PAGE> 1217
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.42 $ 11.78 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.26) ** (0.14) ** 0.02*
Net realized and unrealized gain on
investments.......................... 2.17 1.70 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 1.91 1.56 0.35
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.06 $ 12.42 $ 11.78
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 15.47 % 13.14 % 3.06 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 21,222 $ 10,694 $ 2,024
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (2.05)% (1.03)% 1.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.65)% (2.12)% (21.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.57 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.17 % 3.74 % 24.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-49
<PAGE> 1218
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.58 $ 11.81 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.14) ** --** 0.05*
Net realized and unrealized gain on
investments.......................... 2.22 1.69 0.33
------------ ------------ --------------
Net increase from investment
operations......................... 2.08 1.69 0.38
------------ ------------ --------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.27) (0.92) --
------------ ------------ --------------
Total distributions................. (0.27) (0.92) --
------------ ------------ --------------
Net asset value, end of period.......... $ 14.39 $ 12.58 $ 11.81
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 16.63 % 14.22 % 3.32 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,592 $ 435 $ 52
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (1.05)% (0.03)% 2.03 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.65)% (1.12)% (20.17)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.57 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.17 % 2.74 % 23.85 %(a)
Portfolio turnover rate+................ 233 % 150 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0517 $ 0.0489 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total Investment Return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.47), $(0.49), and
$(0.46) for Class A, Class B, and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.19), $(0.28), and
$(0.14) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(0.25), $(0.33), and
$(0.21) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-50
<PAGE> 1219
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.77 $ 19.07 $ 17.69 $ 17.17 $ 17.12
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.20) 0.03 0.24 0.04 (0.21)
Net realized and unrealized gain on
investments.......................... 3.00 2.96 3.93 2.55 1.56
---------- ---------- ---------- ---------- ----------
Net increase from investment
operations......................... 2.80 2.99 4.17 2.59 1.35
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.21) (0.02) --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- ----------
Total distributions................. (2.56) (1.29) (2.79) (2.07) (1.30)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 21.01 $ 20.77 $ 19.07 $ 17.69 $ 17.17
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 14.05% 15.65% 23.23% 15.69% 8.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,674 $ 343,427 $ 396,291 $ 196,937 $ 116,468
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.90)% 0.12% 1.24% 0.17% (0.7)%
Without expense reductions............ (1.01)% 0.07% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.37% 1.36% 1.46% 1.58% 1.6%
Without expense reductions............ 1.48% 1.41% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-51
<PAGE> 1220
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-------------------------------------------------------------
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 (D) 1993
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.28 $ 18.77 $ 17.50 $ 17.09 $ 15.90
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.34) (0.11) 0.10 (0.09) (0.29)
Net realized and unrealized gain on
investments.......................... 2.93 2.91 3.87 2.55 2.78
---------- ---------- ---------- ---------- -------------
Net increase from investment
operations......................... 2.59 2.80 3.97 2.46 2.49
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- (0.12) -- --
From net realized gain on
investments.......................... (2.56) (1.29) (2.58) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Total distributions................. (2.56) (1.29) (2.70) (2.05) (1.30)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 20.31 $ 20.28 $ 18.77 $ 17.50 $ 17.09
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 13.35% 14.82% 22.42% 15.06% 16.1%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 255,468 $ 334,590 $ 348,435 $ 80,060 $ 1,982
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.55)% (0.53)% 0.59% (0.48)% (1.3)%(a)
Without expense reductions............ (1.66)% (0.58)% N/A N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.02% 2.01% 2.11% 2.23% 2.2%(a)
Without expense reductions............ 2.13% 2.06% N/A N/A N/A
Portfolio turnover rate++++............. 190% 253% 71% 102% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-52
<PAGE> 1221
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
MID CAP GROWTH FUND
-----------------------------------------
ADVISOR CLASS+++
-----------------------------------------
JUNE 1, 1995
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.76 $ 19.05 $ 20.61
------------ ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.15) 0.09 0.21
Net realized and unrealized gain on
investments.......................... 3.05 2.91 1.09
------------ ------------ -------------
Net increase from investment
operations......................... 2.90 3.00 1.30
------------ ------------ -------------
Distributions to shareholders:
From net investment income............ -- -- (0.28)
From net realized gain on
investments.......................... (2.56) (1.29) (2.58)
------------ ------------ -------------
Total distributions................. (2.56) (1.29) (2.86)
------------ ------------ -------------
Net asset value, end of period.......... $ 21.10 $ 20.76 $ 19.05
------------ ------------ -------------
------------ ------------ -------------
Total investment return (c)............. 14.54 % 15.72 % 6.01%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,140 $ 1,986 $ 1,394
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.55)% 0.47 % 1.59%(a)
Without expense reductions............ (0.66)% 0.42 % N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.02 % 1.01 % 1.11%(a)
Without expense reductions............ 1.13 % 1.06 % N/A
Portfolio turnover rate++++............. 190 % 253 % 71%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0574 $ 0.0536 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-53
<PAGE> 1222
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS A
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.65 $ 12.76 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.09 * * (0.01) * * 0.03*
Net realized and unrealized gain on
investments.......................... 3.87 1.94 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 3.96 1.93 1.33
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... (1.33) (0.04) --
------------ ------------ --------------
Total distributions................. (1.36) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.25 $ 14.65 $ 12.76
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.23 % 15.12 % 11.64 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,668 $ 2,529 $ 870
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.56 % (0.10)% 1.10 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.42)% (3.61)% (47.44)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.99 % 2.00 % 2.00 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97 % 5.51 % 50.54 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-54
<PAGE> 1223
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
CLASS B
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.54 $ 12.75 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... (0.01) ** (0.10) * * 0.01*
Net realized and unrealized gain on
investments.......................... 3.83 1.93 1.31
------------ ------------ --------------
Net increase from investment
operations......................... 3.82 1.83 1.32
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ -- -- --
From net realized gain on
investments.......................... (1.32) (0.04) --
------------ ------------ --------------
Total distributions................. (1.32) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.04 $ 14.54 $ 12.75
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 26.44 % 14.35 % 11.55 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,717 $ 5,503 $ 1,254
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... (0.09)% (0.75)% 0.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.07)% (4.26)% (48.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 2.64 % 2.65 % 2.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 3.62 % 6.16 % 51.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-55
<PAGE> 1224
GT GLOBAL AMERICA FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
VALUE FUND
------------------------------------------
ADVISOR CLASS
------------------------------------------
OCTOBER 18,
1995
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED TO DECEMBER
DECEMBER 31, DECEMBER 31, 31,
1997 (D) 1996 (D) 1995 (D)
------------ ------------ --------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.72 $ 12.77 $ 11.43
------------ ------------ --------------
Income from investment operations:
Net investment income (loss).......... 0.15 * * 0.03* * 0.04*
Net realized and unrealized gain on
investments.......................... 3.91 1.96 1.30
------------ ------------ --------------
Net increase from investment
operations......................... 4.06 1.99 1.34
------------ ------------ --------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.34) (0.04) --
------------ ------------ --------------
Total distributions................. (1.41) (0.04) --
------------ ------------ --------------
Net asset value, end of period.......... $ 17.37 $ 14.72 $ 12.77
------------ ------------ --------------
------------ ------------ --------------
Total investment return (c)............. 27.78 % 15.58 % 11.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 439 $ 191 $ 81
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 0.91 % 0.25 % 1.45 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.07)% (3.26)% (47.09)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1, 2 & 5).... 1.64 % 1.65 % 1.65 %(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.62 % 5.16 % 50.19 %(a)
Ratio of interest expense to average net
assets................................. 0.03 % N/A N/A
Portfolio turnover rate+................ 93 % 256 % N/A
Average commission rate per share paid
on portfolio transactions+............. $ 0.0278 $ 0.0551 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(1.11), $(1.13), and
$(1.10) for Class A, Class B and Advisor Class, respectively, from
October 18, 1995 to December 31, 1995.
* * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment loss per share would have been $(.50), $(.59), and $(.46)
for Class A, Class B, and Advisor Class, respectively, for the year
ended December 31, 1996.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc. the net
investment gain (loss) per share would have been $(.07), $(.17), and
$(.01) for Class A, Class B, and Advisor Class, respectively, for the
year ended December 31, 1997.
+ Portfolio turnover rate and average commission rate paid on portfolio
transactions are calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
FS-56
<PAGE> 1225
GT GLOBAL AMERICA FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund,
and GT Global America Value Fund ("Funds"), are separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end management investment company. The Company has
eight diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The GT Global America Small Cap Growth Fund and GT Global America Value Fund
invest substantially all of their investable assets in Small Cap Growth
Portfolio and Value Portfolio ("Portfolios"), respectively. Each of these
Portfolios is organized as a New York Trust and is registered under the 1940 Act
as a diversified, open-end management investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the GT Global America Small Cap Growth Fund, the GT
Global America Value Fund, and their respective Portfolios have been presented
on a consolidated basis, and represent all activities of both the respective
Funds and Portfolios. Through December 31, 1997, all of the shares of beneficial
interest of each Portfolio were owned either by its respective fund or
Chancellor LGT Asset Management, Inc. (the "Manager"), which has a nominal
($100) investment in each Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Funds are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Funds. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost, adjusted for market fluctuation, if
any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio (the
phrase "Fund or Portfolio" herein after includes the GT Global America Mid Cap
Growth Fund and each of the two Portfolios), it is the Fund's or Portfolio's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund or Portfolio
under each agreement at its maturity.
(C) OPTION ACCOUNTING PRINCIPLES
When a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio's "Statement of Assets
and Liabilities" 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. The current market value of an option listed on a traded exchange
is valued at its last bid price, or, in the case of an over-the-counter option,
is valued at the average of the last bid prices obtained from brokers, unless a
quotation from only one broker is available, in which case only that broker's
price will be used. If an option expires on its stipulated expiration date or if
the Fund or Portfolio enters into a closing purchase transaction, a gain or loss
is realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
FS-57
<PAGE> 1226
GT GLOBAL AMERICA FUNDS
underlying security purchased would be decreased by the premium originally
received. The Fund or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security, and, for a put, requires the Fund or Portfolio to set aside cash, U.S.
government securities or other liquid securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in interest rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market" to reflect the
current market value of the option. If an option which the Fund or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio realizes
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund or Portfolio
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund or Portfolio
exercises a put option, it realizes a gain or loss from the sale of the
underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund or Portfolio may forego
the opportunity of profit if the market value of the underlying security or
index increases and the option is exercised. The risk in writing a put option is
that the Fund or Portfolio may incur a loss if the market value of the
underlying security or index decreases and the option is exercised. In addition,
there is the risk the Fund or Portfolio may not be able to enter into a closing
transaction because of an illiquid secondary market.
(D) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund or Portfolio is required to pledge to the broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the exchange on
which the contract is traded. Pursuant to the contract, the Fund or Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the Fund or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The potential risk
to the Fund or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. The Fund
or Portfolio may use futures contracts to manage its exposure to the stock
market and to fluctuations in interest rates.
(E) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund or Portfolio
may trade securities on other than normal settlement terms. This may increase
the risk if the other party to the transaction fails to deliver and causes the
Fund or Portfolio to subsequently invest at less advantageous prices.
(F) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the funds:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 YEAR ENDED
-------------------------------- DECEMBER 31, 1997
AGGREGATE VALUE CASH -----------------
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- -----------------
<S> <C> <C> <C>
America Small Cap Growth Fund........... $ 1,812,494 $ 1,869,550 $ 17,489
America Mid Cap Growth Fund............. 45,019,438 45,567,400 516,083
America Value Fund...................... 794,531 810,000 896
</TABLE>
Cash collateral is received by the Fund or Portfolio against loaned securities
in the amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of the loan. Security lending fees earned were used to reduce the
Portfolios' custodian fees.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global America Small Cap Growth Fund, the GT Global
America Value Fund, and their respective Portfolios in connection with their
organization, their initial registration with the Securities and Exchange
Commission and with various states and the initial public offering of their
shares aggregated $63,500 for each Fund and $25,000 for each Portfolio. These
expenses are being amortized on a straight-line basis over a five-year period.
(H) TAXES
It is the policy of the Funds and Portfolios to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the
FS-58
<PAGE> 1227
GT GLOBAL AMERICA FUNDS
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, or unrealized appreciation of
securities held, and excise tax on income and capital gains.
(I) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund or Portfolios and timing
differences.
(J) RESTRICTED SECURITIES
A Fund or Portfolio is permitted to invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult.
(K) INDEXED SECURITIES
A Fund or Portfolio may invest in indexed securities whose value is linked
either directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(L) LINE OF CREDIT
Each of the Funds, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Funds and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Funds' total assets. The Funds had no loans outstanding at December 31, 1997.
For the year ended December 31, 1997, the average outstanding daily balance of
bank loans (based on the number of days the loans were outstanding) for GT
Global America Small Cap Growth Fund, GT Global America Mid Cap Growth Fund, and
GT Global America Value Fund was $101,429, $6,068,763, and $284,000 with a
weighted average interest rate of 6.34%, 6.33%, and 6.31%, respectively.
Interest expense for GT Global America Small Cap Growth Fund, GT Global America
Mid Cap Growth Fund, and GT Global America Value Fund for the year ended
December 31, 1997 was $125, $125,935, and $50, respectively, included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. GT Global America Small Cap Growth Fund and GT Global
America Value Fund each pays the Manager administration fees at the annualized
rate of 0.25% of such Fund's average daily net assets. Each Portfolio pays
investment management and administration fees to the Manager at the annualized
rate of 0.475% on the first $500 million of average daily net assets of the
Portfolio; 0.45% on the next $500 million; 0.425% on the next $500 million; and
0.40% on amounts thereafter. GT Global America Mid Cap Growth Fund pays
investment management and administration fees to the Manager at the annualized
rate of 0.725% on the first $500 million of average daily net assets on the
Fund; 0.70% on the next $500 million; 0.675% on the next $500 million and 0.65%
on amounts thereafter. These fees are computed daily and paid monthly, and are
subject to reduction in any year to the extent that the Fund's or Portfolio's
expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained the
following sales charges: $5,417 for the GT Global America Small Cap Growth Fund,
$38,700 for the GT Global America Mid Cap Growth Fund, and $5,770 for the GT
Global America Value Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $23,780 for the year ended December 31, 1997 for the GT Global
America Mid Cap Growth Fund. GT Global also makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended December 31, 1997, GT Global collected such CDSCs
in the amount of: $60,107 for the GT Global America Small Cap Growth Fund,
$2,316,997 for the GT Global America Mid Cap Growth Fund, and $55,700 for the GT
Global America Value Fund. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the
FS-59
<PAGE> 1228
GT GLOBAL AMERICA FUNDS
Class A Plan, a Fund may pay GT Global a service fee at the annualized rate of
up to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and may pay GT Global a distribution fee at the annualized rate of up
to 0.35% of the average daily net assets of the Fund's Class A shares, less any
amounts paid by the Fund as the aforementioned service fee, for GT Global's
expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Funds' Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 1.75%, 2.40%, and 1.40% of the
average daily net assets of the Fund's Class A, Class B, Advisor Class Shares,
respectively. This undertaking may be changed or eliminated in the future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of a Fund's average daily net assets. The annual fee rate is derived by applying
0.03% to the first $5 billion of assets of all registered mutual funds advised
by the Manager and 0.02% to the assets in excess of $5 billion and allocating
the result according to a Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee. Each
Portfolio pays each of its Trustees who is not an employee, officer or director
of the Manager, GT Global or GT Services $500 per year plus $150 for each
meeting of the board or any committee thereof attended by the Trustees.
At December 31, 1997, all of the shares of beneficial interest of each Portfolio
were owned either by its Fund or the Manager.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases of investment securities by the
GT Global America Mid Cap Growth Fund, Small Cap Growth Portfolio, and Value
Portfolio, other than U.S. government obligations and short-term investments,
aggregated $1,037,388,895, $66,820,422 and $25,951,699, respectively. Sales of
investment securities by the GT Global America Mid Cap Growth Fund, Small Cap
Growth Portfolio, and Value Portfolio, other than U.S. government obligations
and short-term investments, aggregated $1,221,752,474, $55,910,483 and
$13,967,002, respectively. There were no purchases or sales of U.S. government
obligations by a Fund or Portfolio during the year.
FS-60
<PAGE> 1229
GT GLOBAL AMERICA FUNDS
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,067,494 $ 28,341,345 1,491,083 $ 20,216,595
Shares issued in connection with
reinvestment of distributions......... 14,194 195,720 39,998 505,573
------------ -------------- ------------ ---------------
2,081,688 28,537,065 1,531,081 20,722,168
Shares repurchased...................... (1,992,960) (27,546,271) (1,019,989) (13,880,892)
------------ -------------- ------------ ---------------
Net increase............................ 88,728 $ 990,794 511,092 $ 6,841,276
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,192,656 $ 29,216,057 1,665,796 $ 22,115,741
Shares issued in connection with
reinvestment of distributions......... 26,438 359,234 52,848 663,246
------------ -------------- ------------ ---------------
2,219,094 29,575,291 1,718,644 22,778,987
Shares repurchased...................... (1,570,899) (20,624,826) (1,029,367) (13,501,795)
------------ -------------- ------------ ---------------
Net increase............................ 648,195 $ 8,950,465 689,277 $ 9,277,192
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 156,123 $ 2,292,127 33,521 $ 447,953
Shares issued in connection with
reinvestment of distributions......... 507 7,039 2,144 27,228
------------ -------------- ------------ ---------------
156,630 2,299,166 35,665 475,181
Shares repurchased...................... (80,540) (1,200,061) (5,440) (72,841)
------------ -------------- ------------ ---------------
Net increase............................ 76,090 $ 1,099,105 30,225 $ 402,340
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-61
<PAGE> 1230
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA MID CAP GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 24,801,099 $ 522,081,212 89,962,964 $ 1,853,673,285
Shares issued in connection with
reinvestment of distributions......... 1,170,749 23,490,213 853,598 17,867,701
------------ -------------- ------------ ---------------
25,971,848 545,571,425 90,816,562 1,871,540,986
Shares repurchased...................... (30,338,852) (637,412,658) (95,061,922) (1,956,032,031)
------------ -------------- ------------ ---------------
Net decrease............................ (4,367,004) $ (91,841,233) (4,245,360) $ (84,491,045)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,218,434 $ 190,231,954 11,161,651 $ 224,412,718
Shares issued in connection with
reinvestment of distributions......... 1,240,395 24,063,873 803,575 16,429,676
------------ -------------- ------------ ---------------
10,458,829 214,295,827 11,965,226 240,842,394
Shares repurchased...................... (14,376,532) (293,260,545) (14,026,348) (280,392,879)
------------ -------------- ------------ ---------------
Net decrease............................ (3,917,703) $ (78,964,718) (2,061,122) $ (39,550,485)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,056,271 $ 23,267,932 485,169 $ 10,230,701
Shares issued in connection with
reinvestment of distributions......... 5,993 120,751 8,013 167,629
------------ -------------- ------------ ---------------
1,062,264 23,388,683 493,182 10,398,330
Shares repurchased...................... (1,103,923) (24,248,785) (470,673) (9,846,041)
------------ -------------- ------------ ---------------
Net increase (decrease)................. (41,659) $ (860,102) 22,509 $ 552,289
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
FS-62
<PAGE> 1231
GT GLOBAL AMERICA FUNDS
GT GLOBAL AMERICA VALUE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 781,797 $ 13,117,280 392,444 $ 5,443,835
Shares issued in connection with
reinvestment of distributions......... 26,859 454,725 365 5,408
------------ -------------- ------------ ---------------
808,656 13,572,005 392,809 5,449,243
Shares repurchased...................... (536,657) (9,148,725) (288,378) (3,812,666)
------------ -------------- ------------ ---------------
Net increase............................ 271,999 $ 4,423,280 104,431 $ 1,636,577
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,148,582 $ 19,043,834 445,266 $ 6,167,388
Shares issued in connection with
reinvestment of distributions......... 60,093 1,004,744 918 13,509
------------ -------------- ------------ ---------------
1,208,675 20,048,578 446,184 6,180,897
Shares repurchased...................... (606,167) (9,803,021) (166,052) (2,502,350)
------------ -------------- ------------ ---------------
Net increase............................ 602,508 $ 10,245,557 280,132 $ 3,678,547
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,203 $ 230,962 10,181 $ 139,541
Shares issued in connection with
reinvestment of distributions......... 1,920 32,714 30 443
------------ -------------- ------------ ---------------
16,123 263,676 10,211 139,984
Shares repurchased...................... (3,834) (66,384) (3,594) (49,444)
------------ -------------- ------------ ---------------
Net increase............................ 12,289 $ 197,292 6,617 $ 90,540
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended December 31, 1997, the
expenses of Small Cap Growth Portfolio, GT Global America Mid Cap Growth Fund
and Value Portfolio were reduced by $2,560, $84,266 and $436 respectively, under
these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the GT Global America Mid
Cap Growth Fund designates $9,085,505, and the GT Global America Value Fund
designates $23,905 as capital gains dividends for the fiscal year ended December
31, 1997.
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
December 31, 1997:
<TABLE>
<CAPTION>
FUND
- ----------------------------------------------------------------------
<S> <C>
GT Global America Small Cap Growth Fund............................... 3.06%
GT Global America Mid Cap Growth Fund................................. 3.13%
GT Global America Value Fund.......................................... 16.05%
</TABLE>
FS-63
<PAGE> 1232
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
Class A, Class B and Advisor Class shares of AIM New Pacific
Growth Fund, AIM Europe Growth Fund, AIM Japan Growth Fund, AIM
International Growth Fund, AIM Worldwide Growth Fund, AIM Mid
Cap Growth Fund, AIM Small Cap Equity Fund, AIM America Value
Fund
In Part A: Financial Highlights
In Part B: (1) Reports of Independent Accountants
(2) Portfolios of Investments as of December 31,
1997(audited), and June 30, 1998 (unaudited)
(3) Statements of Assets and Liabilities as of
December 31, 1997 (audited), and June 30,
1998 (unaudited)
(4) Statements of Operations for the year ended
December 31, 1997 (audited), and June 30,
1998 (unaudited)
(5) Statements of Changes in Net Assets for the
years ended December 31, 1997 and 1996
(b) Exhibits:
Exhibit
Number Description
- ------- -----------
(1) - Agreement and Declaration of Trust of the Registrant dated May 7,
1998 was filed as an Exhibit to Post-Effective Amendment No. 43
to the Registration Statement on Form N-1A, filed on June 1,
1998, and is hereby incorporated by reference.
(2) - By-Laws of the Registrant dated May 7, 1998 was filed as an
Exhibit to Post-Effective Amendment No. 43 to the Registration
Statement on Form N-1A, filed on June 1, 1998, and is hereby
incorporated by reference.
(3) - Voting Trust Agreements - None.
(4) - Provisions of instruments defining the rights of holders of
Registrant's securities contained in the Agreement and
Declaration of Trust Articles II, VI, VII, VIII and IX and
By-laws Articles IV, V, VI, VII and VIII were filed as Exhibits
to Post-Effective Amendment No. 44 to the Registration Statement
on Form N-1A, filed July 7, 1998, and are hereby incorporated by
reference.
(5) (a) - Investment Management and Administration Contract, dated May 29,
1998, between Registrant and A I M Advisors, Inc. is filed
herewith electronically.
(b) - Administration Contract, dated May 29, 1998, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(c) - Sub-Administration Contract, dated May 29, 1998, between A
I M Advisors, Inc. and INVESCO (NY), Inc. with respect to
Registrant is filed herewith electronically.
(d) - Sub-Advisory and Sub-Administration Contract, dated May 29, 1998,
between A I M Advisors, Inc. and INVESCO (NY), Inc. with respect
to Registrant is filed herewith electronically.
C-1
<PAGE> 1233
(e) - Investment Management and Administration Contract, dated May 29,
1998, between Growth Portfolio and A I M Advisors, Inc. is filed
herewith electronically.
(f) - Sub-Advisory and Sub-Administration Contract, dated May 29,
1998, between A I M Advisors, Inc. and INVESCO (NY), Inc. with
respect to Growth Portfolio is filed herewith electronically.
(6) (a) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Class A shares is
filed herewith electronically.
(b) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Class B shares is
filed herewith electronically.
(c) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Advisor Class shares
is filed herewith electronically.
(7) - Agreements Concerning Officers and Directors/Trustees Benefits -
None.
(9) (a) - (1) Form of Transfer Agency and Service Agreement between
Registrant and A I M Fund Services, Inc. is filed herewith
electronically.
- (2) Remote Access and Related Services Agreement, dated as of
December 23, 1994, between the Registrant and First Data Investor
Services Group, Inc. (formerly, The Shareholder Services Group,
Inc.) is filed herewith electronically.
- (3) Amendment No. 1, dated October 4, 1995, to the Remote Access
and Related Services Agreement, dated as of December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) is filed
herewith electronically.
- (4) Addendum No. 2, dated October 12, 1995, to the Remote Access
and Related Services Agreement, dated as of December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) is filed
herewith electronically.
- (5) Amendment No. 3, dated February 1, 1997, to the Remote Access
and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) is filed
herewith electronically.
- (6) Exhibit 1, effective as of August 4, 1997, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) is filed
herewith electronically.
- (7) Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, between Registrant and First Data Investor
Services Group, Inc. (formerly, The Shareholder Services Group,
Inc.) is filed herewith electronically.
(b) - Form of Fund Accounting and Pricing Agent Agreement between
Registrant and INVESCO (NY), Inc. is filed herewith
electronically.
(c) - (1) Selected Dealer Agreement was filed as an Exhibit to Post-
Effective Amendment No. 43 to the Registration Statement on Form
N-1A, filed June 1, 1998, and is hereby incorporated by
reference.
C-2
<PAGE> 1234
- (2) Bank Sales Contract was filed as an Exhibit to Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A,
filed June 1, 1998, and is hereby incorporated by reference.
- (3) Shareholder Service Agreement was filed as an Exhibit to
Post-Effective Amendment No. 43 to the Registration Statement on
Form N-1A, filed June 1, 1998, and is hereby incorporated by
reference.
- (4) Bank Shareholder Service Agreement was filed as an Exhibit to
Post-Effective Amendment No. 43 to the Registration Statement on
Form N-1A, filed June 1, 1998, and is hereby incorporated by
reference.
- (5) Service Agreement for Bank Trust Department and for Broker is
filed herewith electronically.
(10) (a) - Opinion and Consent of Kirkpatrick & Lockhart LLP was filed as
an Exhibit to Post-Effective Amendment No. 43 to the Registration
Statement on Form N-1A, filed on June 1, 1998, and is hereby
incorporated by reference.
(b) - Opinion and Consent of Delaware Counsel was filed as an Exhibit
to Post-Effective Amendment No. 43 to the Registration Statement
on Form N-1A, filed on June 1, 1998, and is hereby incorporated
by reference.
(11) (a) - Consent of PricewaterhouseCoopers LLP is filed herewith
electronically.
(11) (b) - Consent of Kirkpatrick & Lockhart LLP is filed herewith
electronically.
(12) - Financial Statements - None.
(13) - Agreements Concerning Initial Capitalization - None.
(14) (a) - IRA Application was filed as an Exhibit to Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A,
filed on June 1, 1998, and is hereby incorporated by reference.
(b) - SEP and SARSEP IRA Adoption Agreement was filed as an Exhibit to
Post-Effective Amendment No. 43 to the Registration Statement on
Form N-1A, filed on June 1, 1998, and is hereby incorporated by
reference.
(c) - Profit Sharing/Money Purchase Pension Plan was filed as an
Exhibit to Post-Effective Amendment No. 43 to the Registration
Statement on Form N-1A, filed on June 1, 1998, and is hereby
incorporated by reference.
(d) - 403(b) Plan was filed as an Exhibit to Post-Effective Amendment
No. 43 to the Registration Statement on Form N-1A, filed on June
1, 1998, and is hereby incorporated by reference.
(e) - SIMPLE IRA Application was filed as an Exhibit to Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A,
filed on June 1, 1998, and is hereby incorporated by reference.
(f) - Roth IRA Application was filed as an Exhibit to Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A,
filed on June 1, 1998, and is hereby incorporated by reference.
C-3
<PAGE> 1235
(15) (a) - Form of Distribution Plan adopted pursuant to Rule 12b-1 with
respect to Class A shares was filed as an Exhibit to
Post-Effective Amendment No. 43 to the Registration Statement on
Form N-1A, filed on June 1, 1998, and is hereby incorporated by
reference.
(b) - Form of Distribution Plan adopted pursuant to Rule 12b-1 with
respect to Class B shares was filed as an Exhibit to
Post-Effective Amendment No. 43 to the Registration Statement on
Form N-1A, filed on June 1, 1998, and is hereby incorporated by
reference.
(16) - Computation of Performance Quotations relating to the Class A,
Class B and Advisor Class shares of AIM Mid Cap Growth Fund, AIM
Europe Growth Fund, AIM International Growth Fund, AIM Japan
Growth Fund, AIM New Pacific Growth Fund, AIM Worldwide Growth
Fund, AIM Small Cap Equity Fund and AIM America Value Fund was
filed as an Exhibit to Post-Effective Amendment No. 43 to the
Registration Statement on Form N-1A, filed on June 1, 1998, and
is hereby incorporated by reference.
(18) - Rule 18f-3 Multiple Class Plan is filed herewith electronically.
(27) - Financial Data Schedules were filed as Exhibits to Post-Effective
Amendment No. 41 to the Registration Statement on Form N-1A,
filed on March 10, 1998, and are hereby incorporated by
reference.
Other Exhibits:
(a) - Power of Attorney for Helge K. Lee and Michael A. Silver for AIM
Growth Series was filed as an Exhibit to Post-Effective Amendment
No. 43 to the Registration Statement on Form N-1A, filed on June
1, 1998, and is hereby incorporated by reference.
(b) - Power of Attorney for Helge K. Lee and Michael A. Silver for
Growth Portfolio was filed as an Exhibit to Post-Effective
Amendment No. 43 to the Registration Statement on Form N-1A,
filed on June 1, 1998, and is hereby incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each such
person indicate (1) if a company, the state or other sovereign power under the
laws of which it is organized, and (2) the percentage of voting securities owned
or other basis of control by the person, if any, immediately controlling it.
None.
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a specified
date within 90 days prior to the date of filing, the number of record holders of
each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of August 13, 1998
-------------- ------------------------
<S> <C>
Shares of beneficial interest in:
AIM New Pacific Growth Fund Class A ............................22,549
AIM New Pacific Growth Fund Class B .............................9,964
AIM New Pacific Growth Fund Advisor Class .........................208
AIM Europe Growth Fund Class A .................................45,568
</TABLE>
C-4
<PAGE> 1236
AIM Europe Growth Fund Class B ..................................9,690
AIM Europe Growth Fund Advisor Class ..............................208
AIM Japan Growth Fund Class A ...................................6,446
AIM Japan Growth Fund Class B ...................................2,933
AIM Japan Growth Fund Advisor Class ................................81
AIM International Growth Fund Class A ..........................13,986
AIM International Growth Fund Class B ...........................5,397
AIM International Growth Fund Advisor Class ........................62
AIM Worldwide Growth Fund Class A ...............................8,749
AIM Worldwide Growth Fund Class B ...............................4,766
AIM Worldwide Growth Fund Advisor Class ...........................118
AIM Mid Cap Growth Fund Class A ................................20,160
AIM Mid Cap Growth Fund Class B ................................18,933
AIM Mid Cap Growth Fund Advisor Class .............................184
AIM Small Cap Equity Fund Class A ...............................1,561
AIM Small Cap Equity Fund Class B ...............................2,162
AIM Small Cap Equity Fund Advisor Class ...........................264
AIM America Value Fund Class A ..................................1,232
AIM America Value Fund Class B ..................................1,988
AIM America Value Fund Advisor Class ..............................169
Item 27. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified in any manner against any liability which may be
incurred in such capacity, other than insurance provided by any director,
officer, affiliated person or underwriter for their own protection.
The Registrant's Agreement and Declaration of Trust (the "Agreement"),
dated May 7, 1998, provides, among other things (1) that a Trustee shall
not be liable for any act, omission or obligation of the Registrant or
any Trustee (except for liability to the Registrant or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the Trustee's duties); (2) that the Trustees and
Officers shall be indemnified by the Registrant to the fullest extent
permitted by the Delaware Business Trust Act and other applicable law;
and (3) that the shareholders and former shareholders of the Registrant
shall be held harmless by the Registrant (or applicable portfolio or
class) from personal liability arising from their status as such, and
shall be 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 By-Laws and applicable law.
Item 28. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner, or trustee.
See the material under the heading "Management" included in Part A
(Prospectus) of this amendment and the material appearing under the
headings "Trustees and Executive Officers" and "Management" included in
Part B (Statement of Additional Information) of this
C-5
<PAGE> 1237
Amendment. Information as to the Directors and Officers of A I M
Advisors, Inc. and INVESCO (NY), Inc. is included in Schedule A and
Schedule D of Part I of each entity's Form ADV (File No. 801-12313 and
File No. 801-10254, respectively), filed with the Securities and
Exchange Commission, which are incorporated herein by reference.
Item 29. Principal Underwriters
(a) A I M Distributors, Inc., the Registrant's principal
underwriter, also acts as a principal underwriter to the
following investment companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Funds, Inc.
AIM Investment Portfolios, Inc.
AIM Investment Securities Funds
AIM Series Trust
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
(b)
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors None
Michael J. Cemo President & Director None
Gary T. Crum Director Vice President
Robert H. Graham Senior Vice President & Director Vice President
William G. Littlepage Senior Vice President & Director None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
James L. Salners 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
John J. Arthur Vice President & Treasurer Vice President
</TABLE>
- ------------------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-6
<PAGE> 1238
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Mary K. Coleman Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Charles R. Dewey Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
William H. Kleh Vice President None
Ofelia M. Mayo Vice President, General Counsel None
& Assistant Secretary
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Vice President
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Robert D. Van Sant, Jr. Vice President None
Gary K. Wendler Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer
& Controller
Kathleen J. Pflueger Secretary None
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Kathleen M. Douglas Assistant Vice President None
Terri N. Fiedler Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Jeffrey L. Horne Assistant Vice President None
</TABLE>
- ------------------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-7
<PAGE> 1239
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Melissa E. Hudson Assistant Vice President None
Jodie L. Johnson Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Wayne W. LaPlante Assistant Vice President None
Kim T. Lankford Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
David B. O'Neil Assistant Vice President None
Patricia M. Shyman Assistant Vice President None
Nicholas D. White Assistant Vice President None
Norman W. Woodson Assistant Vice President None
Nancy L. Martin Assistant General Counsel None
& Assistant Secretary
Samuel D. Sirko Assistant General Counsel Assistant Secretary
& Assistant Secretary
Stephen I. Winer Assistant Secretary None
Dana S. Sutton None Vice President and
Assistant Treasurer
Mary Benson None Assistant Treasurer
</TABLE>
- ------------------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) - Not Applicable
Item 30. Location of Accounts and Records
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and
held in the offices of the Registrant and its sub-advisor, INVESCO (NY),
Inc., 50 California Street, 27th Floor, San Francisco, CA 94111, and its
custodian, State Street Bank and Trust Company, 225 Franklin Street,
Boston, MA 02110.
C-8
<PAGE> 1240
Records covering shareholder accounts and portfolio transactions are
also maintained and kept by the Registrant's Transfer Agent, A I M Fund
Services, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046, and
by the Registrant's custodian, State Street Bank and Trust Company, 225
Franklin Street, Boston, MA 02110.
Item 31. Management Services
Furnish a summary of the substantive provisions of any
management-related service contract not discussed in Part A or Part B of this
Form (because the contract was not believed to be of interest to a purchaser of
securities of the Registrant) under which services are provided to the
Registrant, indicating the parties to the contract, the total dollars paid and
by whom, for the last three fiscal years.
None.
Item 32. Undertakings
None.
C-9
<PAGE> 1241
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment to this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of San
Francisco, and State of California, on the 26th day of August, 1998.
AIM GROWTH SERIES
By: William J. Guilfoyle*
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of AIM Growth Series has
been signed below by the following persons in the capacities indicated on the
26th day of August, 1998.
William J. Guilfoyle* President, Trustee and
Chairman of the Board
(Principal Executive Officer)
/s/ KENNETH W. CHANCEY
- ------------------------------- Vice President and
Kenneth W. Chancey Principal Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
*By: /s/ MICHAEL A. SILVER
-------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
<PAGE> 1242
SIGNATURES
Growth Portfolio has duly caused this Post-Effective Amendment of AIM
Growth Series to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of San Francisco, and the State of California, on the
26th day of August, 1998.
GROWTH PORTFOLIO
By: William J. Guilfoyle*
President
This Post-Effective Amendment has been signed below by the following
persons in the capacities indicated on the 26th day of August, 1998.
William J. Guilfoyle * President, Trustee and
Chairman of the Board
(Principal Executive Officer)
/s/ KENNETH W. CHANCEY
- -------------------------------- Vice President and
Kenneth W. Chancey Principal Accounting Officer
C. Derek Anderson* Trustee
Arthur C. Patterson* Trustee
Frank S. Bayley* Trustee
Ruth H. Quigley* Trustee
*By: /s/ MICHAEL A. SILVER
-------------------------------
Michael A. Silver
Attorney-in-Fact, pursuant to
Power of Attorney filed herewith
<PAGE> 1243
INDEX TO EXHIBITS
AIM GROWTH SERIES
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
5(a) Investment Management and Administration Contract, dated May 29,
1998, between Registrant and A I M Advisors, Inc.
5(b) Administration Contract, dated May 29, 1998, between Registrant and
A I M Advisors, Inc.
5(c) Sub-Administration Contract, dated May 29, 1998, between A I M
Advisors, Inc. and INVESCO (NY), Inc.
5(d) Sub-Advisory and Sub-Administration Contract, dated May 29, 1998,
between A I M Advisors, Inc. and INVESCO (NY), Inc.
5(e) Investment Management and Administration Contract, dated May 29,
1998, between Growth Portfolio and A I M Advisors, Inc.
5(f) Sub-Advisory and Sub-Administration Contract, dated May 29, 1998,
between A I M Advisors, Inc. and INVESCO (NY), Inc. with respect to
Growth Portfolio.
6(a) Distribution Agreement, dated May 29, 1998, between Registrant and A
I M Distributors, Inc. with respect to Class A shares
6(b) Distribution Agreement, dated May 29, 1998, between Registrant and A
I M Distributors, Inc. with respect to Class B shares
6(c) Distribution Agreement, dated May 29, 1998, between Registrant and A
I M Distributors, Inc. with respect to Advisor Class shares
9(a)(1) Form of Transfer Agency and Service Agreement between Registrant and
A I M Fund Services, Inc.
9(a)(2) Remote Access and Related Services Agreement, dated December 23,
1994, between Registrant and First Data Investor Services Group,
Inc.
9(a)(3) Amendment No. 1, dated October 4, 1995, to the Remote Access and
Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
9(a)(4) Addendum No. 2, dated October 12,1995, to the Remote Access and
Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
9(a)(5) Amendment No. 3, dated February 1, 1997, to the Remote Access and
Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
9(a)(6) 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.
9(a)(7) Preferred Registration Technology Escrow Agreement, dated September
10, 1997, between the Registrant and First Data Investor Services
Group, Inc.
</TABLE>
<PAGE> 1244
<TABLE>
<S> <C>
9(b) Form of Fund Accounting and Pricing Agent Agreement between
Registrant and INVESCO (NY), Inc.
9(c)(5) Service Agreement for Bank Trust Department and for Broker
11(a) Consent of PricewaterhouseCoopers LLP
11(b) Consent of Kirkpatrick & Lockhart LLP
18 Multiple Class Plan (Rule 18f-3)
</TABLE>
<PAGE> 1
EXHIBIT 5(a)
AIM GROWTH SERIES
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
AIM GROWTH SERIES
AND
A I M ADVISORS, INC.
Contract made as of May 29, 1998, between AIM Growth Series,
a Delaware business trust ("Company), and A I M Advisors, Inc., a Delaware
corporation (the "Adviser").
WHEREAS the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company,
and intends to offer for public sale shares of AIM Worldwide Growth Fund, AIM
International Growth Fund, AIM New Pacific Growth Fund, AIM Europe Growth Fund,
AIM Japan Growth Fund, and AIM Mid Cap Growth Fund, each being a series of the
Company's shares of beneficial interest; and
WHEREAS the Company hereafter may establish additional series of its
shares of beneficial interest (any such additional series, together with the
series named in the paragraph immediately preceding, are collectively referred
to herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS the Company desires to retain Adviser as investment manager
and administrator to furnish certain investment advisory, portfolio management
and administration services to the Company and the Funds, and Adviser is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Adviser as investment manager and
administrator of each Fund for the period and on the terms set forth in this
Contract. Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Duties as Investment Manager.
(a) Subject to the supervision of the Company's Board of Trustees
("Board"), Adviser will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities and
investments and cash equivalents of the Fund. Adviser will determine from time
to time what securities and other investments will be purchased, retained or
sold by each Fund, and the brokers and dealers through whom trades will be
executed.
<PAGE> 2
(b) Adviser agrees that in placing orders with brokers and dealers it
will attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of
the Funds or provide the Funds or Adviser's other clients with research,
analysis, advice and similar services. Adviser may pay to brokers and dealers,
in return for research and analysis, a higher commission or spread than may be
charged by other brokers and dealers, subject to Adviser's determining in good
faith that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of Adviser to the Funds
and its other clients and that the total commissions or spreads paid by each
Fund will be reasonable in relation to the benefits to the Fund over the long
term. In no instance will portfolio securities be purchased from or sold to
Adviser or any affiliated person thereof except in accordance with the federal
securities laws and the rules and regulations thereunder and any exemptive
orders currently in effect. Whenever Adviser simultaneously places orders to
purchase or sell the same security on behalf of a Fund and one or more other
accounts advised by Adviser, such orders will be allocated as to price and
amount among all such accounts in a manner believed to be equitable to each
account. The Company recognizes that in some cases this procedure may adversely
affect the results obtained for each Fund.
(c) Adviser will oversee the maintenance of all books and records with
respect to the securities transactions of the Funds, and will furnish the Board
with such periodic and special reports as the Board reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, Adviser
hereby agrees that all records which it maintains for the Company are the
property of the Company, agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any records which it maintains for the Company and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Company any records which it
maintains for the Company upon request by the Company.
3. Duties as Administrator. Adviser will administer the affairs of each Fund
subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each Fund,
including the oversight of transfer agency and custodial services, except as
hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or deprive the Board of its responsibility for control of
the conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the
Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's prospectus,
statement of additional information, proxy material, tax returns and required
reports with or to the Fund's
<PAGE> 3
shareholders, the Securities and Exchange Commission and other appropriate
federal or state regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain for
them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. Further Duties. In all matters relating to the performance of this
Contract, Adviser will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
5. Delegation of Adviser's Duties as Investment Manager and Administrator.
With respect to one or more of the Funds, Adviser may enter into one or more
contracts ("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or
sub-administrator in which Adviser delegates to such sub-adviser or
sub-administrator the performance of any or all of the services specified in
Paragraphs 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which Adviser is subject with
respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each
Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940
Act and rules thereunder, and (iii) Adviser shall not enter into a Sub-Advisory
or Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. Services Not Exclusive. The services furnished by Adviser hereunder are not
to be deemed exclusive and Adviser shall be free to furnish similar services to
others so long as its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of any director,
officer or employee of Adviser, who may also be a Trustee, officer or employee
of the Company, to engage in any other business or to devote his or her time
and attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Adviser, incurred in its operations and the
offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of
portfolio securities, including the cost (including brokerage commissions, if
any) of securities purchased or sold by the Fund and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Fund by Adviser under this Contract; (iii) investment consulting fees and
related costs; (iv) expenses of organizing the Company and the Fund; (v)
expenses of preparing filing reports and other documents with governmental and
<PAGE> 4
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons
of any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the
Fund for violation of any law; (xiii) interest charges; (xiv) legal, accounting
and auditing expenses, including legal fees of special counsel for the
Independent Trustees; (xv) charges of custodians, transfer agents, pricing
agents and other agents; (xvi) expenses of disbursing dividends and
distributions; (xvii) costs of preparing share certificates; (xviii) expenses
of setting in type, printing and mailing prospectuses and supplements thereto,
statements of additional information and supplements thereto, reports, notices
and proxy materials for existing shareholders; (xix) any extraordinary expenses
(including fees and disbursements of counsel, costs of actions, suits or
proceedings to which the Company is a party and the expenses the Company may
incur as a result of its legal obligation to provide indemnification to its
officers, Trustees, employees and agents) incurred by the Company or the Fund;
(xx) fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (xxi) costs of mailing and
tabulating proxies and costs of meetings of shareholders, the Board and any
committees thereof; (xxii) the cost of investment company literature and other
publications provided by the Company to its Trustees and officers; and (xxiii)
costs of mailing, stationery and communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by
Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the Company or
any Fund that Adviser is not required by this Contract to pay or assume shall
not obligate Adviser to pay or assume the same or any similar expense of the
Company or any Fund on any subsequent occasion.
8. Compensation.
(a) For the services provided to a Fund under this Contract, the Company
shall pay the Adviser an annual fee, payable monthly, based upon the average
daily net assets of
<PAGE> 5
such Fund as forth in Appendix A attached hereto. Such compensation shall be
paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as hereafter
may be established will pay to Adviser a fee in an amount to be agreed upon in a
written Appendix to this Contract executed by the Company on behalf of such Fund
and by Adviser.
(c) The fee shall be computed daily and paid monthly to Adviser on or
before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
9. Limitation of Liability of Adviser and Indemnification. Adviser shall not
be liable and each Fund shall indemnify Adviser and its directors, officers and
employees, for any costs or liabilities arising from any error of judgment or
mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Adviser in
the performance by Adviser of its duties or from reckless disregard by Adviser
of its obligations and duties under this Contract. Any person, even though also
an officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Company shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company, to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Adviser even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to any
Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of that Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if
not terminated, with respect to each Fund this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a
<PAGE> 6
meeting called for the purpose of voting on such approval, and (ii) by the
Board or by vote of a majority of the outstanding voting securities of
that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Adviser or by Adviser
at any time, without the payment of any penalty, on sixty days' written notice
to the Company. Termination of this Contract with respect to one Fund shall not
affect the continued effectiveness of this Contract with respect to any other
Fund. This Contract will automatically terminate in the event of its
assignment.
11. Amendment of this Contract. No provision of this Contract may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
12. Governing Law. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. License Agreement. The Company shall have the non-exclusive right to use
the name "AIM" to designate any current or future series of shares only so long
as A I M Advisors, Inc. serves as investment manager or adviser to the Company
with respect to such series of shares.
14. Limitation of Shareholder Liability. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has been executed and
delivered by an authorized officer of the Company acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
assets and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
15. Miscellaneous. The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Contract shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Contract shall not be affected thereby. This
Contract shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Contract, the terms
<PAGE> 7
"majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall
have the same meaning as such terms have in the 1940 Act, subject to such
exemption as may be granted by the Securities and Exchange Commission by any
rule, regulation or order. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Contract is made less restrictive by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: AIM GROWTH SERIES
By:/s/ MICHAEL A. SILVER By:/s/ HELGE K. LEE
----------------------------- -----------------------------
Name: Michael A. Silver Name: Helge K. Lee
Title: Assistant Secretary Title: Vice President
and Secretary
Attest: A I M ADVISORS, INC.
By:/s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
----------------------------- ----------------------------
Name: Kathleen J. Pflueger Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
<PAGE> 8
APPENDIX A
TO
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
AIM GROWTH SERIES
The Company shall pay the Adviser, out of the assets of a Fund, as
full compensation for all services rendered and all facilities furnished
hereunder, a management fee for such Fund set forth below. Such fee shall be
calculated by applying the following annual rates to the average daily net
assets of such Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of such Fund.
AIM EUROPE GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH
FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $ 500 million........................................ .975%
Next $ 500 million......................................... .95%
Next $ 500 million......................................... .925%
On amounts thereafter...................................... .90%
</TABLE>
AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $ 500 million........................................ .725%
Next $ 500 million......................................... .70%
Next $ 500 million......................................... .675%
On amounts thereafter...................................... .65%
</TABLE>
<PAGE> 1
EXHIBIT 5(b)
ADMINISTRATION CONTRACT
BETWEEN
AIM GROWTH SERIES
AND
A I M ADVISORS, INC.
Contract made as of May 29, 1998, between AIM Growth Series, a Delaware
business trust ("Company"), and A I M Advisors, Inc., a Delaware corporation
(the "Administrator").
WHEREAS the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company, and
intends to offer for public sale shares of AIM Small Cap Equity Fund and AIM
America Value Fund, each being a series of the Company's shares of beneficial
interest; and
WHEREAS the Company hereafter may establish additional series of its
shares of beneficial interest that invest substantially all of their assets in
another investment company (any such additional series, together with the series
named in the paragraph immediately preceding, are collectively referred to
herein as the "Funds," and singly may be referred to as a "Fund"); and
WHEREAS the Company desires to retain Administrator as administrator to
furnish certain administration services to the Company and the Funds, and
Administrator is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Administrator as administrator of
each Fund for the period and on the terms set forth in this Contract.
Administrator accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided.
2. Duties as Administrator. Administrator will administer the affairs of each
Fund subject to the supervision of the Company's Board of Trustees ("Board") and
the following understandings:
(a) Administrator will supervise all aspects of the operations of each
Fund, including the oversight of transfer agency and custodial services, except
as hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or deprive the Board of its responsibility for control of
the conduct of the affairs of the Funds.
(b) At Administrator's expense, Administrator will provide the Company
and the Funds with such corporate, administrative and clerical personnel
(including officers of the Company) and services as are reasonably deemed
necessary or advisable by the Board.
<PAGE> 2
(c) Administrator will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of each Fund's
prospectus, statement of additional information, proxy material, tax returns and
required reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Administrator will provide the Company and the Funds with, or
obtain for them, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery supplies and
similar items.
3. Further Duties. In all matters relating to the performance of this Contract,
Administrator will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
4. Delegation of Administrator's Duties as Administrator. With respect to one
or more of the Funds, Administrator may enter into one or more contracts (each a
"Sub-Administration Contract") with a sub-administrator pursuant to which
Administrator delegates to such sub-administrator the performance of any or all
of the services specified in Paragraph 2 of this Contract, provided that: (i)
each Sub-Administration Contract imposes on the sub-administrator bound thereby
all the duties and conditions to which Administrator is subject with respect to
the services under Paragraphs 2 and 3 of this Contract; (ii) each
Sub-Administration Contract meets all requirements of the 1940 Act and rules
thereunder, and (iii) Administrator shall not enter into a Sub-Administration
Contract unless it is approved by the Board prior to implementation.
5. Services Not Exclusive. The services furnished by Administrator hereunder
are not to be deemed exclusive and Administrator shall be free to furnish
similar services to others so long as its services under this Contract are not
impaired thereby. Nothing in this Contract shall limit or restrict the right of
any director, officer or employee of Administrator, who may also be a Trustee,
officer or employee of the Company, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
6. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Administrator, incurred in its operations and the
offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold
2
<PAGE> 3
by the Fund and any losses incurred in connection therewith; (ii) fees payable
to and expenses incurred on behalf of the Fund by Administrator under this
Contract; (iii) investment consulting fees and related costs; (iv) expenses of
organizing the Company and the Fund; (v) expenses of preparing filing reports
and other documents with governmental and regulatory agencies; (vi) filing fees
and expenses relating to the registration and qualification of the Fund's shares
and the Company under federal and/or state securities laws and maintaining such
registrations and qualifications; (vii) costs incurred in connection with the
issuance, sale or repurchase of the Fund's shares of beneficial interest; (viii)
fees and salaries payable to the Company's Trustees who are not parties to this
Contract or interested persons of any such party ("Independent Trustees"); (ix)
all expenses incurred in connection with the Independent Trustees' services,
including travel expenses; (x) taxes (including any income or franchise taxes)
and governmental fees; (xi) costs of any liability, uncollectible items of
deposit and other insurance and fidelity bonds; (xii) any costs, expenses or
losses arising out of a liability of or claim for damages or other relief
asserted against the Company or the Fund for violation of any law; (xiii)
interest charges; (xiv) legal, accounting and auditing expenses, including legal
fees of special counsel for the Independent Trustees; (xv) charges of
custodians, transfer agents, pricing agents and other agents; (xvi) expenses of
disbursing dividends and distributions; (xvii) costs of preparing share
certificates; (xviii) expenses of setting in type, printing and mailing
prospectuses and supplements thereto, statements of additional information and
supplements thereto, reports, notices and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company or the Fund; (xx) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xxi) costs of mailing and tabulating proxies and costs of
meetings of shareholders, the Board and any committees thereof; (xxii) the cost
of investment company literature and other publications provided by the Company
to its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Company and joint expenses of the Funds
shall be allocated among each Fund on a basis deemed fair and equitable by
Administrator, subject to the Board's supervision.
(d) Administrator will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Administrator of any expense of the
Company or any Fund that Administrator is not required by this Contract to pay
or assume shall not obligate Administrator to pay or assume the same or any
similar expense of the Company or any Fund on any subsequent occasion.
3
<PAGE> 4
7. Compensation.
(a) For the services provided to a Fund under this Contract, the
Company shall pay the Administrator an annual fee, payable monthly, based upon
the average daily net assets of such Fund as forth in Appendix A attached
hereto. Such compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as
hereafter may be established will pay to Administrator a fee in an amount to be
agreed upon in a written Appendix to this Contract executed by the Company on
behalf of such Fund and by Administrator.
(c) The fee shall be computed daily and paid monthly to Administrator
on or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. Limitation of Liability of Administrator and Indemnification. Administrator
shall not be liable and each Fund shall indemnify Administrator and its
directors, officers and employees, for any costs or liabilities arising from any
error of judgment or mistake of law or any loss suffered by the Fund or the
Company in connection with the matters to which this Contract relates except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Administrator in the performance by Administrator of its duties or from
reckless disregard by Administrator of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee, or agent
of Administrator, who may be or become an officer, Trustee, employee or agent of
the Company shall be deemed, when rendering services to a Fund or the Company or
acting with respect to any business of a Fund or the Company, to be rendering
such service to or acting solely for the Fund or the Company and not as an
officer, partner, employee, or agent or one under the control or direction of
Administrator even though paid by it.
9. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to any
Fund unless it has first been approved by a vote of a majority of the Company's
Trustees.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund this Contract shall continue automatically
for successive periods not to exceed
4
<PAGE> 5
twelve months each, provided that such continuance is specifically approved at
least annually by the Company's Board.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Administrator or by
Administrator at any time, without the payment of any penalty, on sixty days'
written notice to the Company. Termination of this Contract with respect to one
Fund shall not affect the continued effectiveness of this Contract with respect
to any other Fund. This Contract will automatically terminate in the event of
its assignment.
10. Amendment of this Contract. No provision of this Contract may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
11. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Delaware (without regard to Delaware conflict or choice of law
provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. Limitation of Shareholder Liability. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has been executed and delivered
by an authorized officer of the Company acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
13. Miscellaneous. The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this Contract
shall be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Contract shall not be affected thereby. This Contract
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors. As used in this Contract, the terms "majority of
the outstanding voting securities," "interested person," "assignment," "broker,"
"dealer," "investment adviser," "national securities exchange," "net assets,"
"prospectus," "sale," "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the
5
<PAGE> 6
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: /s/ MICHAEL A. SILVER AIM GROWTH SERIES
---------------------------
Michael A. Silver By: /s/ HELGE K. LEE
Assistant Secretary --------------------------------
Name: Helge K. Lee
Title: Vice President and Secretary
Attest: /s/ KATHLEEN J. PFLUEGER
--------------------------- A I M ADVISORS, INC.
Name: Kathleen J. Pflueger By: /s/ CAROL F. RELIHAN
Title: Assistant Secretary -------------------------------
Name: Carol F. Relihan
Title: Senior Vice President
6
<PAGE> 7
APPENDIX A
TO
ADMINISTRATION CONTRACT
OF
AIM GROWTH SERIES
The Company shall pay the Administrator, out of the assets of a Fund,
as full compensation for all services rendered and all facilities furnished
hereunder, an administration fee for such Fund set forth below. Such fee shall
be calculated by applying the following annual rates to the average daily net
assets of such Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of such Fund.
FUND ANNUAL RATE
- ---- -----------
AIM Small Cap Equity Fund 0.25%
AIM America Value Fund 0.25%
7
<PAGE> 1
EXHIBIT 5(c)
AIM GROWTH SERIES
SUB-ADMINISTRATION CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO (NY), INC.
Contract made as of May 29, 1998, between A I M Advisors, Inc., a
Delaware corporation ("Administrator"), and INVESCO (NY), Inc., a California
corporation ("Sub-Administrator").
WHEREAS Administrator has entered into an Administration Contract with
AIM Growth Series (the "Company"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
with respect to AIM Small Cap Equity Fund and AIM America Value Fund, each being
a series of the Company's shares of beneficial interest (collectively, the
"Funds" and singly, a "Fund"); and
WHEREAS Administrator desires to retain Sub-Administrator as
sub-administrator to furnish certain administrative services to the Funds, and
Sub-Administrator is willing to furnish such services;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Administrator hereby appoints Sub-Administrator as
sub-administrator of each Fund for the period and on the terms set forth in this
Contract. Sub-Administrator accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Duties as Sub-Administrator. Sub-Administrator will administer the affairs
of each Fund subject to the supervision of the Company's Board of Trustees
("Board"), the Administrator and the following understandings:
(a) Sub-Administrator will supervise all aspects of the operations of
each Fund, including the oversight of transfer agency and custodial services
except as hereinafter set forth; provided, however, that nothing herein
contained shall be deemed to relieve or deprive the Board of its responsibility
for control of the conduct of the affairs of the Funds.
(b) At Sub-Administrator's expense, Sub-Administrator will provide the
Company and the Funds with such corporate, administrative and clerical personnel
(including officers of the Company) and services as are reasonably deemed
necessary or advisable by the Board.
<PAGE> 2
(c) Sub-Administrator will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of each Fund's
prospectus, statement of additional information, proxy material, tax returns and
required reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
(d) Sub-Administrator will provide the Company and the Funds with, or
obtain for them, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery supplies and
similar items.
3. Further Duties. In all matters relating to the performance of this Contract,
Sub-Administrator will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration Statement of the Company and with the
instructions and directions of the Board and will comply with the requirements
of the 1940 Act, the rules thereunder, and all other applicable federal and
state laws and regulations.
4. Services Not Exclusive. The services furnished by Sub-Administrator
hereunder are not to be deemed exclusive and Sub-Administrator shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of Sub-Administrator, who may also be
a Trustee, officer or employee of the Company, to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.
5. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Administrator and Sub-Administrator, incurred in its
operations and the offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Sub-Administrator under this Contract; (iii) investment consulting fees and
related costs; (iv) expenses of organizing the Company and the Fund; (v)
expenses of preparing and filing reports and other documents with governmental
and regulatory agencies; (vi) filing fees and expenses relating to the
registration and qualification of the Fund's shares and the Company under
federal and/or state securities laws and maintaining such registrations and
qualifications; (vii) costs incurred in connection with the issuance, sale or
repurchase of the Fund's shares of beneficial interest; (viii) fees and salaries
payable to the Company's Trustees who are not parties to this Contract or
interested persons of any such party ("Independent Trustees"); (ix) all expenses
incurred in connection with the Independent Trustees' services, including
<PAGE> 3
travel expenses; (x) taxes (including any income or franchise taxes) and
governmental fees; (xi) costs of any liability, uncollectible items of deposit
and other insurance and fidelity bonds; (xii) any costs, expenses or losses
arising out of a liability of or claim for damages or other relief asserted
against the Company or the Fund for violation of any law; (xiii) interest
charges; (xiv) legal, accounting and auditing expenses, including legal fees of
special counsel for the Independent Trustees; (xv) charges of custodians,
transfer agents, pricing agents and other agents; (xvi) expenses of disbursing
dividends and distributions; (xvii) costs of preparing share certificates;
(xviii) expenses of setting in type, printing and mailing prospectuses and
supplements thereto, statements of additional information and supplements
thereto, reports, notices and proxy materials for existing shareholders; (xix)
any extraordinary expenses (including fees and disbursements of counsel, costs
of actions, suits or proceedings to which the Company is a party and the
expenses the Company may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees, employees and agents) incurred by the
Company or the Fund; (xx) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations;
(xxi) costs of mailing and tabulating proxies and costs of meetings of
shareholders, the Board and any committees thereof; (xxii) the cost of
investment company literature and other publications provided by the Company to
its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) Sub-Administrator will assume the cost of any compensation for
services provided to the Company received by the officers of the Company and by
the Trustees of the Company who are not Independent Trustees.
(d) The payment or assumption by Sub-Administrator of any expense of
the Company or any Fund that Sub-Administrator is not required by this Contract
to pay or assume shall not obligate Sub-Administrator to pay or assume the same
or any similar expense of the Company or any Fund on any subsequent occasion.
6. Compensation.
(a) The Sub-Administrator will not be paid any special compensation for
the services provided to a Fund under this Contract.
(b) For the services provided under this Contract to each Fund as
hereafter may be established, Administrator will pay to Sub-Administrator a fee
in an amount to be agreed upon in a written Appendix to this Contract executed
by Administrator and by Sub-Administrator.
7. Limitation of Liability of Sub-Administrator and Indemnification.
Sub-Administrator shall not be liable for any costs or liabilities arising from
any error of judgment or mistake of law or any loss suffered by the Fund or the
Company in connection with the matters to which this Contract relates except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Sub-Administrator in the performance by Sub-Administrator
<PAGE> 4
of its duties or from reckless disregard by Sub-Administrator of its obligations
and duties under this Contract. Any person, even though also an officer,
partner, employee, or agent of Sub-Administrator, who may be or become a
Trustee, officer, employee or agent of the Company, shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Sub-Administrator even though
paid by it.
8. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to any
Fund unless it has first been approved by a vote of a majority of the Company's
Trustees.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually by the
Company's Board.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Sub-Administrator or by
Sub-Administrator at any time, without the payment of any penalty, on sixty
days' written notice to the Company. Termination of this Contract with respect
to one Fund shall not affect the continued effectiveness of this Contract with
respect to any other Fund. This Contract will automatically terminate in the
event of its assignment.
9. Amendment. No provision of this Contract may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
10. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Delaware (without regard to Delaware conflict or choice of law
provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
11. Miscellaneous. The captions in this Contract are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of this
Contract shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Contract shall not be affected thereby. This
Contract shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Contract, the terms
"majority of the outstanding voting securities," "interested person,"
"assignment," "broker,"
<PAGE> 5
"dealer," "investment adviser," "national securities exchange," "net assets,"
"prospectus," "sale," "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: /s/ KATHLEEN J. PFLUEGER A I M ADVISORS, INC.
--------------------------
Name: Kathleen J. Pflueger By: /s/ CAROL F. RELIHAN
Title: Assistant Secretary ------------------------------
Name: Carol F. Relihan
Title: Senior Vice President
Attest: /s/ MICHAEL A. SILVER INVESCO (NY), INC.
--------------------------
By: /s/ HELGE K. LEE
------------------------------
Name: Helge K. Lee
Title: Chief Legal and Compliance
Officer and Secretary
<PAGE> 1
EXHIBIT 5(d)
AIM GROWTH SERIES
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO (NY), INC.
Contract made as of May 29, 1998, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and INVESCO (NY), INC., a California
corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and
Administration Contract with AIM Growth Series ("Company"), an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), with respect to AIM Worldwide Growth Fund, AIM
International Growth Fund, AIM New Pacific Growth Fund, AIM Europe Growth Fund,
AIM Japan Growth Fund and AIM Mid Cap Growth Fund, each Fund being a series of
the Company's shares of beneficial interest; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Funds, and Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of each Fund for the period and on the terms set forth in this
Contract. Sub-Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of the Company's Board of Trustees
("Board") and Adviser, the Sub-Adviser will provide a continuous investment
program for each Fund, including investment research and management, with
respect to all securities and investments and cash equivalents of the Fund. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by each Fund, and the brokers
and dealers through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers and
dealers, it will attempt to obtain the best net result in terms of price and
execution. Consistent with this obligation, the Sub-Adviser may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who sell shares of the Funds or provide the Funds, Adviser's other
clients, or Sub-Adviser's other clients with research, analysis, advice and
<PAGE> 2
similar services. The Sub-Adviser may pay to brokers and dealers, in return for
such research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, subject to the Sub-Adviser determining in good faith
that such commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of the Adviser and the Sub-Adviser
to the Funds and their other clients and that the total commissions or spreads
paid by each Fund will be reasonable in relation to the benefits to the Fund
over the long term. In no instance will portfolio securities be purchased from
or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rules and regulations
thereunder and any exemptive orders currently in effect. Whenever the
Sub-Adviser simultaneously places orders to purchase or sell the same security
on behalf of a Fund and one or more other accounts advised by the Sub-Adviser,
such orders will be allocated as to price and amount among all such accounts in
a manner believed to be equitable to each account.
(c) The Sub-Adviser will maintain all books and records with respect to
the securities transactions of the Funds, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the
Company are the property of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Company and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Company any records which
it maintains for the Company upon request by the Company.
3. Duties as Sub-Administrator. Sub-Adviser will administer the affairs of each
Fund subject to the supervision of the Company's Board of Trustees ("Board"),
the Adviser and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of each
Fund, including the oversight of transfer agency and custodial services except
as hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or deprive the Board of its responsibility for control of
the conduct of the affairs of the Funds.
(b) At Sub-Adviser's expense, Sub-Adviser will provide the Company and
the Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Sub-Adviser will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of each Fund's
prospectus, statement of additional information, proxy material, tax returns and
required reports with or to the Fund's shareholders, the Securities and Exchange
Commission and other appropriate federal or state regulatory authorities.
<PAGE> 3
(d) Sub-Adviser will provide the Company and the Funds with, or obtain
for them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
4. Further Duties. In all matters relating to the performance of this Contract,
Sub-Adviser will act in conformity with the Agreement and Declaration of Trust,
By-Laws and Registration Statement of the Company and with the instructions and
directions of the Board and will comply with the requirements of the 1940 Act,
the rules thereunder, and all other applicable federal and state laws and
regulations.
5. Services Not Exclusive. The services furnished by Sub-Adviser hereunder are
not to be deemed exclusive and Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of Sub-Adviser, who may also be a Trustee, officer
or employee of the Company, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Adviser and Sub-Adviser, incurred in its operations
and the offering of its shares.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Sub-Adviser under this Contract; (iii) investment consulting fees and related
costs; (iv) expenses of organizing the Company and the Fund; (v) expenses of
preparing and filing reports and other documents with governmental and
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions;
<PAGE> 4
(xvii) costs of preparing share certificates; (xviii) expenses of setting in
type, printing and mailing prospectuses and supplements thereto, statements of
additional information, reports, notices and proxy materials for existing
shareholders; (xix) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Company is a
party and the expenses the Company may incur as a result of its legal obligation
to provide indemnification to its officers, Trustees, employees and agents)
incurred by the Company; (xx) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations;
(xxi) costs of mailing and tabulating proxies and costs of meetings of
shareholders, the Board and any committees thereof; (xxii) the cost of
investment company literature and other publications provided by the Company to
its Trustees and officers; and (xxiii) costs of mailing, stationery and
communications equipment.
(c) Sub-Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(d) The payment or assumption by Sub-Adviser of any expense of the
Company or any Fund that Sub-Adviser is not required by this Contract to pay or
assume shall not obligate Sub-Adviser to pay or assume the same or any similar
expense of the Company or any Fund on any subsequent occasion.
7. Compensation.
(a) For the services provided to a Fund under this Contract, Adviser
will pay Sub-Adviser a fee, computed weekly and paid monthly, as set forth in
Appendix A hereto.
(b) For the services provided under this Contract to each Fund as
hereafter may be established, Adviser will pay to Sub-Adviser a fee in an amount
to be agreed upon in a written Appendix to this Contract executed by Adviser and
by Sub-Adviser.
(c) The fee shall be computed weekly and paid monthly to Sub-Adviser on
or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. Limitation of Liability of Sub-Adviser and Indemnification. Sub-Adviser shall
not be liable for any costs or liabilities arising from any error of judgment or
mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Sub-Adviser in
the performance by Sub-Adviser of its duties or
<PAGE> 5
from reckless disregard by Sub-Adviser of its obligations and duties under this
Contract. Any person, even though also an officer, partner, employee, or agent
of Sub-Adviser, who may be or become a Trustee, officer, employee or agent of
the Company, shall be deemed, when rendering services to a Fund or the Company
or acting with respect to any business of a Fund or the Company to be rendering
such service to or acting solely for the Fund or the Company and not as an
officer, partner, employee, or agent or one under the control or direction of
Sub-Adviser even though paid by it.
9. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to any
Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of that Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Sub-Adviser or by
Sub-Adviser at any time, without the payment of any penalty, on sixty days'
written notice to the Company. Termination of this Contract with respect to one
Fund shall not affect the continued effectiveness of this Contract with respect
to any other Fund. This Contract will automatically terminate in the event of
its assignment.
10. Amendment. No provision of this Contract may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Contract shall be effective until approved by
vote of a majority of the Fund's outstanding voting securities, when required by
the 1940 Act.
11. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Delaware (without regard to Delaware conflict or choice of law
provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. Miscellaneous. The captions in this Contract are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their
<PAGE> 6
construction or effect. If any provision of this Contract shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Contract shall not be affected thereby. This Contract shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors. As used in this Contract, the terms "majority of the outstanding
voting securities," "interested person," "assignment," "broker," "dealer,"
"investment adviser," "national securities exchange," "net assets,"
"prospectus," "sale," "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
AIM ADVISORS, INC.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
------------------------ -------------------------------
Name: Kathleen J. Pflueger Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President &
Secretary
INVESCO (NY), INC.
Attest: /s/ MICHAEL A. SILVER By: /s/ HELGE K. LEE
---------------------- -------------------------------
Michael A. Silver Name: Helge K. Lee
Title: Chief Legal and Compliance
Officer and Secretary
<PAGE> 7
APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
AIM GROWTH SERIES
AIM EUROPE GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH
FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $ 500 million............................................ 0.39%
Next $ 500 million............................................. 0.38%
Next $ 500 million............................................. 0.37%
On amounts thereafter.......................................... 0.36%
</TABLE>
AIM MID CAP GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $ 500 million............................................ 0.29%
Next $ 500 million............................................. 0.28%
Next $ 500 million............................................. 0.27%
On amounts thereafter.......................................... 0.26%
</TABLE>
<PAGE> 1
EXHIBIT 5(e)
GROWTH PORTFOLIO
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
GROWTH PORTFOLIO
AND
A I M ADVISORS, INC.
Contract made as of May 29, 1998, between Growth Portfolio, a Delaware
business trust ("Company), and A I M Advisors, Inc., a Delaware corporation
(the "Adviser").
WHEREAS the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
has established the following subtrusts with each subtrust having its own
assets and investment policies: Small Cap Portfolio and Value Portfolio
(collectively, the "Funds" and singly a "Fund"); and
WHEREAS the Company desires to retain Adviser as investment manager
and administrator to furnish certain investment advisory, portfolio management
and administration services to the Company and the Funds, and Adviser is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Adviser as investment manager and
administrator of each Fund for the period and on the terms set forth in this
Contract. Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Duties as Investment Manager.
(a) Subject to the supervision of the Company's Board of Trustees
("Board"), Adviser will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities and
investments and cash equivalents of the Fund. Adviser will determine from time
to time what securities and other investments will be purchased, retained or
sold by each Fund, and the brokers and dealers through whom trades will be
executed.
(b) Adviser agrees that in placing orders with brokers and dealers it
will attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation Adviser may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who sell shares of
the Funds or provide the Funds or Adviser's other clients with research,
analysis, advice and similar services. Adviser may pay to brokers and dealers,
in return for research and analysis, a higher commission or spread than may be
charged by other brokers and dealers, subject to Adviser's determining in good
faith that such
<PAGE> 2
commission or spread is reasonable in terms either of the particular
transaction or of the overall responsibility of Adviser to the Funds and its
other clients and that the total commissions or spreads paid by each Fund will
be reasonable in relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to Adviser or any
affiliated person thereof except in accordance with the federal securities laws
and the rules and regulations thereunder and any exemptive orders currently in
effect. Whenever Adviser simultaneously places orders to purchase or sell the
same security on behalf of a Fund and one or more other accounts advised by
Adviser, such orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable to each account. The Company
recognizes that in some cases this procedure may adversely affect the results
obtained for each Fund.
(c) Adviser will oversee the maintenance of all books and records
with respect to the securities transactions of the Funds, and will furnish the
Board with such periodic and special reports as the Board reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
Adviser hereby agrees that all records which it maintains for the Company are
the property of the Company, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the Company
and which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Company any records which it
maintains for the Company upon request by the Company.
3. Duties as Administrator. Adviser will administer the affairs of each Fund
subject to the supervision of the Board and the following understandings:
(a) Adviser will supervise all aspects of the operations of each
Fund, including the oversight of transfer agency and custodial services, except
as hereinafter set forth; provided, however, that nothing herein contained
shall be deemed to relieve or deprive the Board of its responsibility for
control of the conduct of the affairs of the Funds.
(b) At Adviser's expense, Adviser will provide the Company and the
Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Adviser will arrange, but not pay, for the periodic preparation,
updating, filing and dissemination (as applicable) of each Fund's proxy
material, tax returns and required reports with or to the Fund's shareholders,
the Securities and Exchange Commission and other appropriate federal or state
regulatory authorities.
(d) Adviser will provide the Company and the Funds with, or obtain
for them, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery supplies and
similar items.
4. Further Duties. In all matters relating to the performance of this
Contract, Adviser will act in conformity with the Agreement and Declaration of
Trust, By-Laws and Registration
<PAGE> 3
Statement of the Company and with the instructions and directions of the Board
and will comply with the requirements of the 1940 Act, the rules thereunder,
and all other applicable federal and state laws and regulations.
5. Delegation of Adviser's Duties as Investment Manager and Administrator.
With respect to one or more of the Funds, Adviser may enter into one or more
contracts ("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or
sub-administrator in which Adviser delegates to such sub-adviser or
sub-administrator the performance of any or all of the services specified in
Paragraphs 2 and 3 of this Contract, provided that: (i) each Sub-Advisory and
Sub-Administration Contract imposes on the sub-adviser or sub-administrator
bound thereby all the duties and conditions to which Adviser is subject with
respect to the services under Paragraphs 2, 3 and 4 of this Contract; (ii) each
Sub-Advisory and Sub-Administration Contract meets all requirements of the 1940
Act and rules thereunder, and (iii) Adviser shall not enter into a Sub-Advisory
or Sub-Administration Contract unless it is approved by the Board prior to
implementation.
6. Services Not Exclusive. The services furnished by Adviser hereunder are not
to be deemed exclusive and Adviser shall be free to furnish similar services to
others so long as its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of any director,
officer or employee of Adviser, who may also be a Trustee, officer or employee
of the Company, to engage in any other business or to devote his or her time
and attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, each Fund will bear all
expenses, not specifically assumed by Adviser.
(b) Expenses borne by each Fund will include but not be limited to
the following: (i) all direct charges relating to the purchase and sale of
portfolio securities, including the cost (including brokerage commissions, if
any) of securities purchased or sold by the Fund and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Fund by Adviser under this Contract; (iii) investment consulting fees and
related costs; (iv) expenses of organizing the Company and the Fund; (v)
expenses of preparing filing reports and other documents with governmental and
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons
of any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs,
<PAGE> 4
expenses or losses arising out of a liability of or claim for damages or other
relief asserted against the Company or the Fund for violation of any law;
(xiii) interest charges; (xiv) legal, accounting and auditing expenses,
including legal fees of special counsel for the Independent Trustees; (xv)
charges of custodians, transfer agents, pricing agents and other agents; (xvi)
expenses of disbursing dividends and distributions; (xvii) expenses of setting
in type, printing and mailing reports, notices and proxy materials for existing
shareholders; (xviii) any extraordinary expenses (including fees and
disbursements of counsel, costs of actions, suits or proceedings to which the
Company is a party and the expenses the Company may incur as a result of its
legal obligation to provide indemnification to its officers, Trustees,
employees and agents) incurred by the Company or the Fund; (xix) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (xx) costs of mailing and tabulating
proxies and costs of meetings of shareholders, the Board and any committees
thereof; (xxi) the cost of investment company literature and other publications
provided by the Company to its Trustees and officers; and (xxii) costs of
mailing, stationery and communications equipment.
(c) All general expenses of the Company and joint expenses of the
Funds shall be allocated among each Fund on a basis deemed fair and equitable
by Adviser, subject to the Board's supervision.
(d) Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(e) The payment or assumption by Adviser of any expense of the
Company or any Fund that Adviser is not required by this Contract to pay or
assume shall not obligate Adviser to pay or assume the same or any similar
expense of the Company or any Fund on any subsequent occasion.
8. Compensation.
(a) For the services provided to a Fund under this Contract, the
Company shall pay the Adviser an annual fee, payable monthly, based upon the
average daily net assets of such Fund as forth in Appendix A attached hereto.
Such compensation shall be paid solely from the assets of such Fund.
(b) For the services provided under this Contract, each Fund as
hereafter may be established will pay to Adviser a fee in an amount to be
agreed upon in a written Appendix to this Contract executed by the Company on
behalf of such Fund and by Adviser.
(c) The fee shall be computed daily and paid monthly to Adviser on or
before the last business day of the next succeeding calendar month.
<PAGE> 5
(d) If this Contract becomes effective or terminates before the end
of any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
9. Limitation of Liability of Adviser and Indemnification. Adviser shall not
be liable and each Fund shall indemnify Adviser and its directors, officers and
employees, for any costs or liabilities arising from any error of judgment or
mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Adviser in
the performance by Adviser of its duties or from reckless disregard by Adviser
of its obligations and duties under this Contract. Any person, even though also
an officer, partner, employee, or agent of Adviser, who may be or become an
officer, Trustee, employee or agent of the Company shall be deemed, when
rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company, to be rendering such service to or acting
solely for the Fund or the Company and not as an officer, partner, employee, or
agent or one under the control or direction of Adviser even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to any
Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of that Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if
not terminated, with respect to each Fund this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Adviser or by Adviser
at any time, without the payment of any penalty, on sixty days' written notice
to the Company. Termination of this Contract with respect to one Fund shall not
affect the continued effectiveness of this Contract with respect to any other
Fund. This Contract will automatically terminate in the event of its
assignment.
<PAGE> 6
11. Amendment of this Contract. No provision of this Contract may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Contract shall be effective
until approved by vote of a majority of the Fund's outstanding voting
securities, when required by the 1940 Act.
12. Governing Law. This Contract shall be construed in accordance with the
laws of the State of Delaware (without regard to Delaware conflict or choice of
law provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
13. License Agreement. The Company shall have the non-exclusive right to use
the name "AIM" to designate any current or future series of shares only so long
as A I M Advisors, Inc. serves as investment manager or adviser to the Company
with respect to such series of shares.
14. Limitation of Shareholder Liability. It is expressly agreed that the
obligations of the Company hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Company
personally, but shall only bind the assets and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust. The execution and
delivery of this Contract have been authorized by the Trustees of the Company
and shareholders of the Funds, and this Contract has been executed and
delivered by an authorized officer of the Company acting as such; neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
assets and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
15. Miscellaneous. The captions in this Contract are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Contract shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Contract shall not be affected thereby. This
Contract shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. As used in this Contract, the terms
"majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell" and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Contract is made less restrictive by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
Attest: GROWTH PORTFOLIO
By: /s/ MICHAEL A. SILVER By: /s/ HELGE K. LEE
-------------------------------- ---------------------------------
Name: Michael A. Silver Name: Helge K. Lee
Title: Assistant Secretary Title: Vice President and
Secretary
Attest: A I M ADVISORS, INC.
By: /s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
-------------------------------- ---------------------------------
Name: Kathleen J. Pflueger Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
<PAGE> 8
APPENDIX A
TO
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
OF
GROWTH PORTFOLIO
The Company shall pay the Adviser, out of the assets of a Fund, as
full compensation for all services rendered and all facilities furnished
hereunder, a management fee for such Fund set forth below. Such fee shall be
calculated by applying the following annual rates to the average daily net
assets of such Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of such Fund.
SMALL CAP PORTFOLIO, VALUE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $ 500 million........................................ .475%
Next $ 500 million......................................... .45%
Next $ 500 million......................................... .425%
On amounts thereafter...................................... .40%
</TABLE>
<PAGE> 1
EXHIBIT 5(f)
GROWTH PORTFOLIO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO (NY), INC.
Contract made as of May 29, 1998, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and INVESCO (NY), INC., a California
corporation ("Sub-Adviser").
WHEREAS Adviser has entered into an Investment Management and
Administration Contract with Growth Portfolio ("Company"), an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"), which has established several subtrusts with each
subtrust having its own assets and investment policies; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser and
sub-administrator to furnish certain advisory and administrative services to the
Funds, and Sub-Adviser is willing to furnish such services;
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser as sub-adviser and
sub-administrator of each Fund for the period and on the terms set forth in this
Contract. Sub-Adviser accepts such appointment and agrees to render the services
herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of the Company's Board of Trustees
("Board") and Adviser, the Sub-Adviser will provide a continuous investment
program for each Fund, including investment research and management, with
respect to all securities and investments and cash equivalents of the Fund. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by each Fund, and the brokers
and dealers through whom trades will be executed.
(b) The Sub-Adviser agrees that, in placing orders with brokers and
dealers, it will attempt to obtain the best net result in terms of price and
execution. Consistent with this obligation, the Sub-Adviser may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who sell shares of the Funds or provide the Funds, Adviser's other
clients, or Sub-Adviser's other clients with research, analysis, advice and
similar services. The Sub-Adviser may pay to brokers
<PAGE> 2
and dealers, in return for such research and analysis, a higher commission or
spread than may be charged by other brokers and dealers, subject to the
Sub-Adviser determining in good faith that such commission or spread is
reasonable in terms either of the particular transaction or of the overall
responsibility of the Adviser and the Sub-Adviser to the Funds and their other
clients and that the total commissions or spreads paid by each Fund will be
reasonable in relation to the benefits to the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to the Sub-Adviser,
or any affiliated person thereof, except in accordance with the federal
securities laws and the rules and regulations thereunder and any exemptive
orders currently in effect. Whenever the Sub-Adviser simultaneously places
orders to purchase or sell the same security on behalf of a Fund and one or more
other accounts advised by the Sub-Adviser, such orders will be allocated as to
price and amount among all such accounts in a manner believed to be equitable to
each account.
(c) The Sub-Adviser will maintain all books and records with respect to
the securities transactions of the Funds, and will furnish the Board and Adviser
with such periodic and special reports as the Board or Adviser reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the
Company are the property of the Company, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Company and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Company any records which
it maintains for the Company upon request by the Company.
3. Duties as Sub-Administrator. Sub-Adviser will administer the affairs of each
Fund subject to the supervision of the Company's Board of Trustees ("Board"),
the Adviser and the following understandings:
(a) Sub-Adviser will supervise all aspects of the operations of each
Fund, including the oversight of transfer agency and custodial services except
as hereinafter set forth; provided, however, that nothing herein contained shall
be deemed to relieve or deprive the Board of its responsibility for control of
the conduct of the affairs of the Funds.
(b) At Sub-Adviser's expense, Sub-Adviser will provide the Company and
the Funds with such corporate, administrative and clerical personnel (including
officers of the Company) and services as are reasonably deemed necessary or
advisable by the Board.
(c) Sub-Adviser will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of each Fund's
proxy material, tax returns and required reports with or to the Fund's
shareholders, the Securities and Exchange Commission and other appropriate
federal or state regulatory authorities.
(d) Sub-Adviser will provide the Company and the Funds with, or obtain
for them, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
<PAGE> 3
4. Further Duties. In all matters relating to the performance of this Contract,
Sub-Adviser will act in conformity with the Agreement and Declaration of Trust,
By-Laws and Registration Statement of the Company and with the instructions and
directions of the Board and will comply with the requirements of the 1940 Act,
the rules thereunder, and all other applicable federal and state laws and
regulations.
5. Services Not Exclusive. The services furnished by Sub-Adviser hereunder are
not to be deemed exclusive and Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Contract are not impaired
thereby. Nothing in this Contract shall limit or restrict the right of any
director, officer or employee of Sub-Adviser, who may also be a Trustee, officer
or employee of the Company, to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
6. Expenses.
(a) During the term of this Contract, each Fund will bear all expenses,
not specifically assumed by Sub-Adviser, incurred in its operations.
(b) Expenses borne by each Fund will include but not be limited to the
following: (i) all direct charges relating to the purchase and sale of portfolio
securities, including the cost (including brokerage commissions, if any) of
securities purchased or sold by the Fund and any losses incurred in connection
therewith; (ii) fees payable to and expenses incurred on behalf of the Fund by
Sub-Adviser under this Contract; (iii) investment consulting fees and related
costs; (iv) expenses of organizing the Company and the Fund; (v) expenses of
preparing and filing reports and other documents with governmental and
regulatory agencies; (vi) filing fees and expenses relating to the registration
and qualification of the Fund's shares and the Company under federal and/or
state securities laws and maintaining such registrations and qualifications;
(vii) costs incurred in connection with the issuance, sale or repurchase of the
Fund's shares of beneficial interest; (viii) fees and salaries payable to the
Company's Trustees who are not parties to this Contract or interested persons of
any such party ("Independent Trustees"); (ix) all expenses incurred in
connection with the Independent Trustees' services, including travel expenses;
(x) taxes (including any income or franchise taxes) and governmental fees; (xi)
costs of any liability, uncollectible items of deposit and other insurance and
fidelity bonds; (xii) any costs, expenses or losses arising out of a liability
of or claim for damages or other relief asserted against the Company or the Fund
for violation of any law; (xiii) interest charges; (xiv) legal, accounting and
auditing expenses, including legal fees of special counsel for the Independent
Trustees; (xv) charges of custodians, transfer agents, pricing agents and other
agents; (xvi) expenses of disbursing dividends and distributions; (xvii)
expenses of setting in type, printing and mailing reports, notices and proxy
materials for existing shareholders; (xviii) any extraordinary expenses
(including fees and disbursements of counsel, costs of actions, suits or
proceedings to which the Company is a party and the expenses the Company may
incur as a result of its legal obligation to provide indemnification to its
officers, Trustees, employees and agents) incurred by the Company;
<PAGE> 4
(xix) fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (xx) costs of mailing and
tabulating proxies and costs of meetings of shareholders, the Board and any
committees thereof; (xxi) the cost of investment company literature and other
publications provided by the Company to its Trustees and officers; and (xxii)
costs of mailing, stationery and communications equipment.
(c) Sub-Adviser will assume the cost of any compensation for services
provided to the Company received by the officers of the Company and by the
Trustees of the Company who are not Independent Trustees.
(d) The payment or assumption by Sub-Adviser of any expense of the
Company or any Fund that Sub-Adviser is not required by this Contract to pay or
assume shall not obligate Sub-Adviser to pay or assume the same or any similar
expense of the Company or any Fund on any subsequent occasion.
7. Compensation.
(a) For the services provided to a Fund under this Contract, Adviser
will pay Sub-Adviser a fee, computed weekly and paid monthly, as set forth in
Appendix A hereto.
(b) For the services provided under this Contract to each Fund as
hereafter may be established, Adviser will pay to Sub-Adviser a fee in an amount
to be agreed upon in a written Appendix to this Contract executed by Adviser and
by Sub-Adviser.
(c) The fee shall be computed weekly and paid monthly to Sub-Adviser on
or before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
8. Limitation of Liability of Sub-Adviser and Indemnification. Sub-Adviser shall
not be liable for any costs or liabilities arising from any error of judgment or
mistake of law or any loss suffered by the Fund or the Company in connection
with the matters to which this Contract relates except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Sub-Adviser in
the performance by Sub-Adviser of its duties or from reckless disregard by
Sub-Adviser of its obligations and duties under this Contract. Any person, even
though also an officer, partner, employee, or agent of Sub-Adviser, who may be
or become a Trustee, officer, employee or agent of the Company, shall be deemed,
when rendering services to a Fund or the Company or acting with respect to any
business of a Fund or the Company to be rendering such service to or acting
solely for the Fund or the
<PAGE> 5
Company and not as an officer, partner, employee, or agent or one under the
control or direction of Sub-Adviser even though paid by it.
9. Duration and Termination.
(a) This Contract shall become effective upon the date hereabove
written, provided that this Contract shall not take effect with respect to any
Fund unless it has first been approved (i) by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of that Fund's
outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, with respect to each Fund, this Contract shall continue
automatically for successive periods not to exceed twelve months each, provided
that such continuance is specifically approved at least annually (i) by a vote
of a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by the Board or by vote of
a majority of the outstanding voting securities of that Fund.
(c) Notwithstanding the foregoing, with respect to any Fund this
Contract may be terminated at any time, without the payment of any penalty, by
vote of the Board or by a vote of a majority of the outstanding voting
securities of the Fund on sixty days' written notice to Sub-Adviser or by
Sub-Adviser at any time, without the payment of any penalty, on sixty days'
written notice to the Company. Termination of this Contract with respect to one
Fund shall not affect the continued effectiveness of this Contract with respect
to any other Fund.
This Contract will automatically terminate in the event of its assignment.
10. Amendment. No provision of this Contract may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Contract shall be effective until approved by
vote of a majority of the Fund's outstanding voting securities, when required by
the 1940 Act.
11. Governing Law. This Contract shall be construed in accordance with the laws
of the State of Delaware (without regard to Delaware conflict or choice of law
provisions) and the 1940 Act. To the extent that the applicable laws of the
State of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. Miscellaneous. The captions in this Contract are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this Contract
shall be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Contract shall not be affected thereby. This Contract
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors. As used in this Contract, the terms "majority of
the outstanding voting securities," "interested person," "assignment," "broker,"
"dealer,"
<PAGE> 6
"investment adviser," "national securities exchange," "net assets,"
"prospectus," "sale," "sell" and "security" shall have the same meaning as such
terms have in the 1940 Act, subject to such exemption as may be granted by the
Securities and Exchange Commission by any rule, regulation or order. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first above
written.
AIM ADVISORS, INC.
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ CAROL F. RELIHAN
--------------------------- -------------------------------------
Name: Kathleen J. Pflueger Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President & Secretary
INVESCO (NY), INC.
Attest: /s/ MICHAEL A. SILVER By: /s/ HELGE K. LEE
--------------------------- -------------------------------
Michael A. Silver Name: Helge K. Lee
Title: Chief Legal and Compliance
Officer and Secretary
<PAGE> 7
APPENDIX A
TO
SUB-ADVISORY AND SUB-ADMINISTRATION CONTRACT
SMALL CAP PORTFOLIO, VALUE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $ 500 million...................................... 0.29%
Next $ 500 million....................................... 0.28%
Next $ 500 million....................................... 0.27%
On amounts thereafter.................................... 0.26%
</TABLE>
<PAGE> 1
EXHIBIT 6(a)
DISTRIBUTION AGREEMENT
BETWEEN
AIM GROWTH SERIES
AND
A I M DISTRIBUTORS, INC.
CLASS A SHARES
THIS AGREEMENT made this 29th day of May, 1998, by and between AIM
Growth Series, a Delaware business trust (the "Company"), with respect to the
series of beneficial interest set forth on Appendix A to this Agreement, and any
applicable classes thereof, (the "Portfolios"), and A I M Distributors, Inc., a
Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged,
the parties hereto agree as follows:
FIRST: The Company on behalf of the Portfolios hereby appoints the
Distributor as its exclusive agent for the sale of shares of the Portfolios to
the public directly and through investment dealers and financial institutions
in the United States and throughout the world.
SECOND: The Company shall not sell any shares of the Portfolios except
through the Distributor and under the terms and conditions set forth in
paragraph FOURTH below. Notwithstanding the provisions of the foregoing
sentence, however:
(A) the Company may issue shares of the Portfolios to any other
investment company or personal holding company, or to the shareholders thereof,
in exchange for all or a majority of the shares or assets of any such company;
and
(B) the Company may issue shares of the Portfolios at their net asset
value in connection with certain classes of transactions or to certain classes
of persons, in accordance with Rule 22d-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), provided that any such class is specified in
the then current prospectus of the applicable Portfolio.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the shares of the Portfolios and agrees that it will use its
best efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf
of a Portfolio shall, suspend its efforts to effectuate such sales at any time
when, in the opinion of the Distributor or of the
<PAGE> 2
Company, no sales should be made because of market or other economic
considerations or abnormal circumstances of any kind; and
(B) the Company may withdraw the offering of the shares of a
Portfolio (i) at any time with the consent of the Distributor, or (ii) without
such consent when so required by the provisions of any statute or of any order,
rule or regulation of any governmental body having jurisdiction. It is
mutually understood and agreed that the Distributor does not undertake to sell
any specific amount of the shares of the Portfolios. The Company shall have
the right to specify minimum amounts for initial and subsequent orders for the
purchase of shares of any Portfolio.
FOURTH:
(A) The public offering price of Class A shares of a Portfolio
(the "offering price") shall be the net asset value per share of the applicable
Portfolio plus a sales charge, if any. Net asset value per share shall be
determined in accordance with the provisions of the then current prospectus and
statement of additional information of the applicable Portfolio. The sales
charge shall be established by the Distributor, may reflect scheduled
variations in, or the elimination of, sales charges on sales of a Portfolio's
Class A shares either generally to the public, or to any specified class of
investors or in connection with any specified class of transactions, in
accordance with Rule 22d-1 and as set forth in the then current prospectus and
statement of additional information of the applicable Portfolio. The
Distributor shall apply any scheduled variation in, or elimination of, the
selling commission uniformly to all offerees in the class specified. The
Distributor shall be entitled to receive the amount of any applicable
contingent deferred sales charge that has been subtracted from gross redemption
proceeds (the "CDSC"), provided that the Shares being redeemed were (i) issued
by a Portfolio during the term of this Agreement and any predecessor Agreement
between the Company and the Distributor or Distributor's predecessor, GT
Global, Inc. ("GT Global"), or (ii) issued by a Portfolio during or after the
term of this Agreement or any predecessor Agreement between the Company and the
Distributor or GT Global in one or a series of free exchanges of Shares for
shares of the same class of another portfolio, which can be traced to Shares or
shares of the same class of another portfolio initially issued by a Portfolio
or such other portfolio during the term of this Agreement, any predecessor
Agreement or any other distribution agreement with the Distributor or GT Global
with respect to such other portfolio (the "Distributor's Earned CDSC"). The
Company shall pay or cause the Company's transfer agent to pay the
Distributor's Earned CDSC to the Distributor on the date net redemption
proceeds are payable to the redeeming shareholder.
(B) The Company shall allow directly to investment dealers and
other financial institutions through whom Class A shares of the Portfolios are
sold such portion of the sales charge as may be payable to them and specified
by the Distributor, up to but not exceeding the amount of the total sales
charge. The difference between any commissions so payable and the total sales
charges included in the offering price shall be paid to the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by a Portfolio to the Distributor or by a Portfolio or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
on behalf of a Portfolio pursuant to Rule 12b-1 under the 1940 Act.
FIFTH: The Distributor shall act as agent of the Company on behalf of
the Portfolios in connection with the sale and repurchase of shares of the
Portfolios. Except with respect to such sales and repurchases, the Distributor
shall act as principal in all matters relating to the promotion of the sale of
shares of the Portfolios and shall enter into all of its own engagements,
agreements and contracts as
2
<PAGE> 3
principal on its own account. The Distributor shall enter into agreements with
investment dealers and financial institutions selected by the Distributor,
authorizing such investment dealers and financial institutions to offer and sell
shares of the Portfolios to the public upon the terms and conditions set forth
therein, which shall not be inconsistent with the provisions of this Agreement.
Each agreement shall provide that the investment dealer and financial
institution shall act as a principal, and not as an agent, of the Company on
behalf of the Portfolios.
SIXTH: The Portfolios shall bear:
(A) the expenses of qualification of shares of the Portfolios for
sale in connection with such public offerings in such states as shall be
selected by the Distributor, and of continuing the qualification therein until
the Distributor notifies the Company that it does not wish such qualification
continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the
final proof and distributing the Portfolios' prospectuses and statements of
additional information (including supplements thereto) relating to public
offerings made by the Distributor pursuant to this Agreement (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to shareholders of the Portfolios), and
any other promotional or sales literature used by the Distributor or furnished
by the Distributor to dealers in connection with such public offerings, and
expenses of advertising in connection with such public offerings.
(B) The Distributor may be reimbursed for all or a portion of such
expenses, or may receive reasonable compensation for distribution related
services, to the extent permitted by a distribution plan adopted by the Company
on behalf of a Portfolio pursuant to Rule 12b-1 under the 1940 Act.
EIGHTH: The Distributor will accept orders for the purchase of shares
of the Portfolios only to the extent of purchase orders actually received and
not in excess of such orders, and it will not avail itself of any opportunity
of making a profit by expediting or withholding orders. It is mutually
understood and agreed that the Company may reject purchase orders where, in the
judgment of the Company, such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Portfolios, and the Distributor
shall each comply with all applicable provisions of the 1940 Act, the
Securities Act of 1933 and all other federal and state laws, rules and
regulations governing the issuance and sale of shares of the Portfolios.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Distributor, the Company on behalf of the Portfolios agrees to indemnify
the Distributor against any and all claims, demands, liabilities and expenses
which the Distributor may incur under the Securities Act of 1933, or common law
or otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of a
Portfolio, or any omission to state a material fact therein, the omission of
which makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or a Portfolio in connection therewith by or on
3
<PAGE> 4
behalf of the Distributor. The Distributor agrees to indemnify the Company and
the Portfolios against any and all claims, demands, liabilities and expenses
which the Company or a Portfolio may incur arising out of or based upon any act
or deed of the Distributor or its sales representatives which has not been
authorized by the Company or a Portfolio in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the
Portfolios against any and all claims, demands, liabilities and expenses which
the Company or the Portfolios may incur under the Securities Act of 1933, or
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in any registration statement or
prospectus of a Portfolio, or any omission to state a material fact therein if
such statement or omission was made in reliance upon, and in conformity with,
information furnished to the Company or a Portfolio in connection therewith by
or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Portfolios' transfer
agent(s), or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Agreement and Declaration of Trust,
or to any applicable statute or regulation.
TWELFTH: This Agreement shall become effective with respect to each
Portfolio as of the date hereof, shall continue in force and effect for two
years from the date hereof, and shall continue in force and effect from year to
year thereafter, provided, that such continuance is specifically approved with
respect to such Portfolio at least annually (a)(i) by the Board of Trustees of
the Company or (ii) by the vote of a majority of the outstanding voting
securities (as defined in Section 2(a)(42) of the 1940 Act), and (b) by vote of
a majority of the Company's trustees who are not parties to this Agreement or
"interested persons" (as defined in Section 2(a)(19) of the 1940 Act) of any
party to this Agreement cast in person at a meeting called for such purpose.
THIRTEENTH:
(A) This Agreement may be terminated with respect to any Portfolio
at any time, without the payment of any penalty, by vote of the Board of
Trustees of the Company or by vote of a majority of the outstanding voting
securities of the applicable Portfolio, or by the Distributor, on sixty (60)
days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston,
Texas 77046.
FIFTEENTH: Notice is hereby given that, as provided by applicable law,
the obligations of or arising out of this Agreement are not binding upon any of
the shareholders of the Company individually, but are binding only upon the
assets and property of the Company and that the shareholders shall be entitled,
to the fullest extent permitted by applicable law, to the same limitation on
personal liability as stockholders of private corporations for profit.
4
<PAGE> 5
SIXTEENTH: This Agreement shall be deemed to be a contract made in
the State of Delaware and governed by, construed in accordance with and
enforced pursuant to the internal laws of the State of Delaware without
reference to its conflicts of laws rules.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM GROWTH SERIES
By: /s/ WILLIAM J. GUILFOYLE
-----------------------------
Name: William J. Guilfoyle
Title: President
Attest:
/s/ MICHAEL A. SILVER
- -----------------------------
Name: Michael A. Silver
Title: Assistant Secretary
A I M DISTRIBUTORS, INC.
By: /s/ JOHN CALDWELL
-----------------------------
Name: John Caldwell
Title: Senior Vice President
Attest:
/s/ KATHLEEN J. PFLUEGER
- -----------------------------
Name: Kathleen J. Pflueger
Title: Secretary
6
<PAGE> 7
APPENDIX A
TO
DISTRIBUTION AGREEMENT
OF
AIM GROWTH SERIES
CLASS A SHARES
- --------------
AIM Worldwide Growth Fund
AIM International Growth Fund
AIM New Pacific Growth Fund
AIM Europe Growth Fund
AIM Japan Growth Fund
AIM Small Cap Equity Fund
AIM Mid Cap Growth Fund
AIM America Value Fund
7
<PAGE> 1
EXHIBIT 6(b)
DISTRIBUTION AGREEMENT
BETWEEN
AIM GROWTH SERIES
AND
A I M DISTRIBUTORS, INC.
CLASS B SHARES
THIS AGREEMENT made this 29th day of May, 1998, by and
between AIM Growth Series, a Delaware business trust (the "Company"), with
respect to each of the Class B shares (the "Shares") of each series of shares of
beneficial interest set forth on Schedule A to this agreement (the
"Portfolios"), and A I M Distributors, Inc., a Delaware corporation (the
"Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company hereby appoints the Distributor as its exclusive
agent for the sale of the Shares to the public directly and through investment
dealers in the United States and throughout the world. If subsequent to the
termination of the Distributor's services to the Company pursuant to this
Agreement, the Company retains the services of another distributor, the
distribution agreement with such distributor shall contain provisions comparable
to Clauses FOURTH and SEVENTH hereof and Exhibit A hereto, and without limiting
the generality of the foregoing, will require such distributor to maintain and
make available to the Distributor records regarding sales, redemptions and
reinvestments of Shares necessary to implement the terms of Clauses FOURTH,
SEVENTH and EIGHTH hereof.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Shares to any other investment company or
personal holding company, or to the shareholders thereof, in exchange for all or
a majority of the shares or assets of any such company;
(B) the Company may issue Shares at their net asset value in connection
with certain classes of transactions or to certain classes of persons, in
accordance with Rule 22d-1 under the Investment Company Act of 1940, as amended
(the "1940 Act"), provided that any such class is specified in the then current
prospectus of the applicable Shares; and
(C) the Company shall have the right to specify minimum amounts for
initial and subsequent orders for the purchase of Shares.
<PAGE> 2
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Shares and agrees that it will use its best efforts to sell
such Shares; provided, however, that:
(A) the Distributor may, and when requested by the Company on behalf of
the Shares shall, suspend its efforts to effectuate such sales at any time when,
in the opinion of the Distributor or of the Company, no sales should be made
because of market or other economic considerations or abnormal circumstances of
any kind;
(B) the Company may withdraw the offering of the Shares (i) at any time
with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation of
any governmental body having jurisdiction; and
(C) the Distributor, as agent, does not undertake to sell any specific
amount of the Shares.
FOURTH:
(A) The public offering price of the Shares shall be the net asset
value per share of the applicable Shares. Net asset value per share shall be
determined in accordance with the provisions of the then current prospectus and
statement of additional information of the applicable Portfolio. The Distributor
may establish a schedule of contingent deferred sales charges to be imposed at
the time of redemption of the Shares, and such schedule shall be disclosed in
the current prospectus of each Portfolio. Such schedule of contingent deferred
sales charges may reflect variations in or waivers of such charges on
redemptions of Shares, either generally to the public or to any specified class
of shareholders and/or in connection with any specified class of transactions,
in accordance with applicable rules and regulations and exemptive relief granted
by the Securities and Exchange Commission, and as set forth in the Portfolios'
current prospectus(es). The Distributor and the Company shall apply any then
applicable scheduled variation in or waiver of contingent deferred sales charges
uniformly to all shareholders and/or all transactions belonging to a specified
class.
(B) The Distributor may pay to investment dealers and other financial
institutions through whom Shares are sold, such sales commission as the
Distributor may specify from time to time. Payment of any such sales commissions
shall be the sole obligation of the Distributor.
(C) No provision of this Agreement shall be deemed to prohibit any
payments by the Company to the Distributor or by the Company or the Distributor
to investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under a distribution plan adopted by the Company
pursuant to Rule 12b-1 under the 1940 Act.
(D) The Company shall redeem the Shares from shareholders in accordance
with the terms set forth from time to time in the current prospectus and
statement of additional information of each Portfolio. The price to be paid to a
shareholder to redeem the Shares shall be equal to the net asset value of the
Shares being redeemed ("gross redemption proceeds"), less any applicable
contingent deferred sales charge, calculated pursuant to the then applicable
schedule of contingent deferred sales charges ("net redemption proceeds"). The
Distributor shall be entitled to receive the amount of the contingent deferred
sales charge that has been subtracted from gross redemption proceeds (the
"CDSC"), provided that the Shares being redeemed were (i) issued by a Portfolio
during the term of this Agreement and any predecessor Agreement between the
Company and the Distributor or Distributor's predecessor, GT Global, Inc. ("GT
Global"), or (ii) issued by a Portfolio during or after the term of this
Agreement or any predecessor Agreement between the Company and the Distributor
or GT Global in one or a series of free exchanges of Shares for Class B
2
<PAGE> 3
shares of another portfolio, which can be traced to Shares or Class B shares of
another portfolio initially issued by a Portfolio or such other portfolio during
the term of this Agreement, any predecessor Agreement or any other distribution
agreement with the Distributor or GT Global with respect to such other portfolio
(the "Distributor's Earned CDSC"). The Company shall pay or cause the Company's
transfer agent to pay the Distributor's Earned CDSC to the Distributor on the
date net redemption proceeds are payable to the redeeming shareholder.
(E) The Distributor shall maintain adequate books and records to
identify Shares (i) issued by a Portfolio during the term of this Agreement and
any predecessor Agreement between the Company and the Distributor or GT Global
or (ii) issued by a Portfolio during or after the term of this Agreement or any
predecessor Agreement between the Company and the Distributor or GT Global in
one or a series of free exchanges of Shares for class B shares of another
portfolio, which can be traced to Shares or class B shares of another portfolio
initially issued by a Portfolio or such other portfolio during the term of this
Agreement, any predecessor Agreement or any other distribution agreement with
the Distributor or GT Global with respect to such other portfolio and shall
calculate the Distributor's Earned CDSC, if any, with respect to such Shares,
upon their redemption. The Company shall be entitled to rely on Distributor's
books, records and calculations with respect to Distributor's Earned CDSC.
FIFTH: The Distributor shall act as an agent of the Company in
connection with the sale and redemption of Shares. Except with respect to such
sales and redemptions, the Distributor shall act as principal in all matters
relating to the promotion of the sale of Shares and shall enter into all of its
own engagements, agreements and contracts as principal on its own account. The
Distributor shall enter into agreements with investment dealers and financial
institutions selected by the Distributor, authorizing such investment dealers
and financial institutions to offer and sell the Shares to the public upon the
terms and conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each agreement shall provide that the investment
dealer or financial institution shall act as a principal, and not as an agent,
of the Company.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of Shares for sale in connection with
such public offerings in such states as shall be selected by the Distributor,
and of continuing the qualification therein until the Distributor notifies the
Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH:
(A) The Distributor shall bear the expenses of printing from the final
proof and distributing the prospectuses and statements of additional information
for the Shares (including supplements thereto) relating to public offerings made
by the Company pursuant to such prospectuses (which shall not include those
prospectuses and statements of additional information, and supplements thereto,
to be distributed to existing shareholders of the Shares), and any other
promotional or sales literature used by the Distributor or furnished by the
Distributor to dealers in connection with such public offerings, and expenses of
advertising in connection with such public offerings.
(B) Subject to the limitations, if any, of applicable law including the
NASD Conduct Rules (formerly, the NASD Rules of Fair Practice) regarding
asset-based sales charges, the Company shall pay to the Distributor as a
reimbursement for all or a portion of such expenses, or as reasonable
compensation for
3
<PAGE> 4
distribution of the Shares, an asset-based sales charge in an amount
equal to 0.75% per annum of the average daily net asset value of the
Shares of each Portfolio from time to time (the "Distributor's 12b-1 Share"),
such sales charge to be payable pursuant to the distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"). The Distributor's 12b-1
Share shall be a percentage, which shall be recomputed periodically (but not
less than monthly) in accordance with Exhibit A to this Agreement. The
Distributor's 12b-1 Share shall accrue daily and be paid to the Distributor as
soon as practicable after the end of each calendar month within which it accrues
but in any event within 10 business days after the end of each such calendar
month (unless the Distributor shall specify a later date in written instructions
to the Company) provided, however, that any notices and calculation required by
Section EIGHTH: (B) and (C) have been received by the Company.
(C) The Distributor shall maintain adequate books and records to permit
calculations periodically (but not less than monthly) of, and shall calculate on
a monthly basis, the Distributor's 12b-1 Share to be paid to the Distributor.
The Company shall be entitled to rely on Distributor's books, records and
calculations relating to Distributor's 12b-1 Share.
EIGHTH:
(A) The Distributor may, from time to time, assign, transfer or pledge
("Transfer") to one or more designees (each an "Assignee"), its rights to all or
a designated portion of (i) the Distributor's 12b-1 Share (but not the
Distributor's duties and obligations pursuant hereto or pursuant to the Plan),
and (ii) the Distributor's Earned CDSC, free and clear of any offsets or claims
the Company may have against the Distributor. Each such Assignee's ownership
interest in a Transfer of a designated portion of a Distributor's 12b-1 Share
and a Distributor's Earned CDSC is hereinafter referred to as an "Assignee's
12b-1 Portion" and an "Assignee's CDSC Portion," respectively. A Transfer
pursuant to this Section EIGHTH: (A) shall not reduce or extinguish any claim of
the Company against the Distributor.
(B) The Distributor shall promptly notify the Company in writing of
each Transfer pursuant to Section EIGHTH: (A) by providing the Company with the
name and address of each such Assignee.
(C) The Distributor may direct the Company to pay directly to an
Assignee such Assignee's 12b-1 Portion and Assignee's CDSC Portion. In such
event, Distributor shall provide the Company with a monthly calculation of (i)
the Distributor's Earned CDSC and Distributor's 12b-1 Share and (ii) each
Assignee's 12b-1 Portion and Assignee's CDSC Portion, if any, for such month
(the "Monthly Calculation"). The Monthly Calculation shall be provided to the
Company by the Distributor promptly after the close of each month or such other
time as agreed to by the Company and the Distributor which allows timely payment
of the Distributor's 12b-1 Share and Distributor's Earned CDSC and/or the
Assignee's 12b-1 Portion and Assignee's CDSC Portion. The Company shall not be
liable for any interest on such payments occasioned by delayed delivery of the
Monthly Calculation by the Distributor. In such event following receipt from the
Distributor of (i) notice of Transfer referred to in Section EIGHTH: (B) and
(ii) each Monthly Calculation, the Company shall make all payments directly to
the Assignee or Assignees in accordance with the information provided in such
notice and Monthly Calculation, on the same terms and conditions as if such
payments were to be paid directly to the Distributor. The Company shall be
entitled to rely on Distributor's notices, and Monthly Calculations in respect
of amounts to be paid pursuant to this Section EIGHTH: (B).
(D) Alternatively, in connection with a Transfer the Distributor may
direct the Company to pay all of such Distributor's 12b-1 Share and
Distributor's Earned CDSC from time to time to a depository or collection agent
designated by any Assignee, which depository or collection agent may be
4
<PAGE> 5
delegated the duty of dividing such Distributor's 12b-1 Share and Distributor's
Earned CDSC between the Assignee's 12b-1 Portion and Assignee's CDSC Portion and
the balance of the Distributor's 12b-1 Share (such balance, when distributed to
the Distributor by the depository or collection agent, the "Distributor's 12b-1
Portion") and of the Distributor's Earned CDSC (such balance, when distributed
to the Distributor by the depository or collection agent, the "Distributor's
Earned CDSC Portion"), in which case only the Distributor's 12b-1 Portion and
Distributor's Earned CDSC Portion may be subject to offsets or claims the
Company may have against the Distributor.
(E) The Company shall not amend the Plan to reduce the amount payable
to the Distributor or any Assignee under Section SEVENTH: (B) hereof with
respect to the Shares for any Shares which have been issued prior to the date of
such amendment.
NINTH: The Distributor will accept orders for the purchase of Shares
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a profit
by expediting or withholding orders.
TENTH:
(A) Pursuant to the Plan and this Agreement, the Distributor, as agent,
shall enter into Shareholder Service Agreements with investment dealers,
financial institutions and certain 401(K) plan service providers (collectively
"Service Providers") selected by the Distributor for the provision of certain
continuing personal services to customers of such Service Providers who have
purchased Shares. Such agreements shall authorize Service Providers to provide
continuing personal shareholder services to their customers upon the terms and
conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each Shareholder Service Agreement shall provide
that the Service Provider shall act as principal, and not as an agent of the
Company.
(B) Shareholder Service Agreements may provide that the Service
Providers may receive a service fee in the amount of 0.25% of the average daily
net assets of the Shares held by customers of such Service Providers provided
that such Service Providers furnish continuing personal shareholder services to
their customers in respect of such Shares. The continuing personal services to
be rendered by Service Providers under the Shareholder Service Agreements may
include, but shall not be limited to, some or all of the following: distributing
sales literature; answering routine customer inquiries concerning the Company;
assisting customers in changing dividend elections, options, account
designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of Shares; assisting in
the establishment and maintenance of or establishing and maintaining customer
accounts and records and the processing of purchase and redemption transactions;
performing subaccounting; investing dividends and any capital gains
distributions automatically in the Company's shares; providing periodic
statements showing a customer's account balance and the integration of such
statements with those of other transactions and balances in the customer's
account serviced by the Service Provider; forwarding applicable prospectus,
proxy statements, reports and notices to customers who hold Shares and providing
such other information and services as the Company or the customers may
reasonably request.
(C) The Distributor may advance service fees payable to Service
Providers pursuant to the Plan or any other distribution plan adopted by the
Company with respect to Shares of one or more of the Portfolios pursuant to Rule
12b-1 under the 1940 Act; and thereafter the Distributor may be reimbursed for
such advances through retention of service fee payments during the period for
which the service fees were advanced.
5
<PAGE> 6
ELEVENTH: The Company and the Distributor shall each comply with all
applicable provisions of the 1940 Act, the Securities Act of 1933, as amended,
and of all other federal and state laws, rules and regulations governing the
issuance and sale of the Shares.
TWELFTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Distributor, the Company shall indemnify the Distributor against any and all
claims, demands, liabilities and expenses which the Distributor may incur under
the Securities Act of 1933, or common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in any
registration statement or prospectus of the Shares, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon,
and in conformity with, information furnished to the Company in connection
therewith by or on behalf of the Distributor. The Distributor shall indemnify
the Company and the Shares against any and all claims, demands, liabilities and
expenses which the Company or the Shares may incur arising out of or based upon
(i) any act or deed of the Distributor or its sales representatives which has
not been authorized by the Company in its prospectus or in this Agreement and
(ii) the Company's reliance on the Distributor's books, records, calculations
and notices in Sections FOURTH: (E), SEVENTH: (C), EIGHTH: (B), EIGHTH: (C) and
EIGHTH: (D).
(B) The Distributor shall indemnify the Company and the Shares against
any and all claims, demands, liabilities and expenses which the Company or the
Shares may incur under the Securities Act of 1933, as amended, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of the
Shares, or any omission to state a material fact therein if such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company in connection therewith by or on behalf of the
Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the transfer agent(s) of the
Shares, or for any failure of any such transfer agent to perform its duties.
THIRTEENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Agreement and Declaration of Trust,
as amended, or to any applicable statute or regulation.
FOURTEENTH: This Agreement shall become effective with respect to the
Shares of each Portfolio upon its approval by the Board of Trustees of the
Company and by vote of a majority of the Company's trustees who are not
interested parties to this Agreement or "interested persons" (as defined in
Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person
at a meeting called for such purpose, shall continue in force and effect for two
years from the date hereof, and from year to year thereafter, provided, that
such continuance is specifically approved with respect to the Shares of each
Portfolio at least annually (a)(i) by the Board of Trustees of the Company or
(ii) by the vote of a majority of the outstanding Shares of such class of such
Portfolio, and (b) by vote of a majority of the Company's trustees who are not
parties to this Agreement or "interested persons" (as defined in Section
2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a
meeting called for such purpose.
FIFTEENTH:
6
<PAGE> 7
(A) This Agreement may be terminated with respect to the Shares of any
Portfolio, at any time, without the payment of any penalty, by vote of the Board
of Trustees of the Company or by vote of a majority of the outstanding Shares of
such Portfolio, or by the Distributor, on sixty (60) days' written notice to the
other party; and
(B) This Agreement shall also automatically terminate in the event of
its assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act; provided, that, subject to the provisions of the
following sentence, if this Agreement is terminated for any reason, the
obligations of the Company and the Distributor pursuant to Sections FOURTH: (D),
FOURTH: (E), SEVENTH: (B), SEVENTH: (C), EIGHTH: (A) through (E) and TWELFTH:
(A) of this Agreement will continue and survive any such termination.
Notwithstanding the foregoing, upon Complete Termination of the Plan (as such
term is defined in Section 8 of the Plan in effect at the date of this
Agreement), the obligations of the Company pursuant to the terms of Sections
SEVENTH: (B), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D) and EIGHTH: (E) (with
respect to payments of Distributor's 12b-1 Share and Assignee's 12b-1 Portion)
of this Agreement shall terminate. A termination of the Plan with respect to any
or all Shares of any or all Portfolios shall not affect the obligations of the
Company pursuant to Sections FOURTH: (D), EIGHTH: (A), EIGHTH: (C), EIGHTH: (D)
and EIGHTH: (E) (with respect to payments of Distributor's Earned CDSC or
Assignee's CDSC Portion) hereof or of the obligations of the Distributor
pursuant to Section FOURTH: (E) or EIGHTH: (B) hereof.
(C) The Transfer of the Distributor's rights to Distributor's 12b-1
Share or Distributor's Earned CDSC shall not cause a termination of this
Agreement or be deemed to be an assignment for purposes of Section FIFTEENTH:
(B) above.
SIXTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, the addresses of both the Company and the
Distributor shall be 11 Greenway Plaza, Suite 100, Houston. Texas 77046-1173.
SEVENTEENTH: Notice is hereby given that, as provided by applicable
law, the obligations of or arising out of this Agreement are not binding upon
any of the shareholders of the Company or any Portfolio individually, but are
binding only upon the assets and property of the Company or such Portfolio and
that the shareholders shall be entitled, to the fullest extent permitted by
applicable law, to the same limitation on personal liability as stockholders of
private corporations for profit.
EIGHTEENTH: This Agreement shall be deemed to be a contract made in the
State of Delaware and governed by, construed in accordance with and enforced
pursuant to the internal laws of the State of Delaware without reference to its
conflicts of laws rules.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM GROWTH SERIES
By:/s/ WILLIAM J. GUILFOYLE
--------------------------------
Name: William J. Guilfoyle
Title: President
Attest:
/s/ MICHAEL A. SILVER
- --------------------------------
Name: Michael A. Silver
Title: Assistant Secretary
A I M DISTRIBUTORS, INC.
By:/s/ JOHN CALDWELL
--------------------------------
Name: JOHN CALDWELL
Title: Senior Vice President
Attest:
/s/ KATHLEEN J. PFLUEGER
- --------------------------------
Name: Kathleen J. Pflueger
Title: Secretary
8
<PAGE> 9
SCHEDULE A
TO
DISTRIBUTION AGREEMENT
OF
AIM GROWTH SERIES
<TABLE>
<CAPTION>
CLASS B SHARES
- --------------
<S> <C>
AIM Worldwide Growth Fund
AIM International Growth Fund
AIM New Pacific Growth Fund
AIM Europe Growth Fund
AIM Japan Growth Fund
AIM Small Cap Equity Fund
AIM Mid Cap Growth Fund
AIM America Value Fund
</TABLE>
9
<PAGE> 10
EXHIBIT A
The Distributor's 12b-1 Share in respect of each Portfolio shall be 100
percent until such time as the Distributor shall cease to serve as exclusive
distributor of the Shares of such Portfolio and thereafter shall be a
percentage, recomputed first on the date of any termination of the Distributor's
services as exclusive distributor of Shares of any Portfolio and thereafter
periodically (but not less than monthly), representing the percentage of Shares
of such Portfolio outstanding on each such computation date allocated to the
Distributor in accordance with the following rules:
1. DEFINITIONS. For purposes of this Exhibit A defined terms used
herein shall have the meaning assigned to such terms in the Distribution
Agreement and the following terms shall have the following meanings:
"Commission Shares" shall mean shares of the Portfolio or another
portfolio the redemption of which would, in the absence of the application of
some standard waiver provision, give rise to the payment of a CDSC and shall
include Commission Shares which due to the expiration of the CDSC period no
longer bear a CDSC.
"Distributor" shall mean the Distributor and the Distributor's
predecessor, GT Global,
Inc.
"Other Distributor" shall mean each person appointed as the
exclusive distributor for the Shares of the Portfolio after the Distributor
ceases to serve in that capacity.
2. ALLOCATION RULES. In determining the Distributor's 12b-1 Share in
respect of a particular Portfolio:
(a) There shall be allocated to the Distributor and each Other
Distributor all Commission Shares of such Portfolio which were sold while such
Distributor or such Other Distributor, as the case may be, was the exclusive
distributor for the Shares of the Portfolio, determined in accordance with the
transfer records maintained for such Portfolio.
(b) Reinvested Shares: On the date that any Shares are issued by a
Portfolio as a result of the reinvestment of dividends or other distributions,
whether ordinary income, capital gains or exempt-interest dividend or
distributions ("Reinvested Shares"), Reinvested Shares shall be allocated to the
Distributor and each Other Distributor in a number obtained by multiplying the
total number of Reinvested Shares issued on such date by a fraction, the
numerator of which is the total number of all Shares outstanding in such Fund as
of the opening of business on such date and allocated to the Distributor or
Other Distributor as of such date of determination pursuant to these allocation
procedures and the denominator is the total number of Shares outstanding as of
the opening of business on such date.
(c) Exchange Shares: There shall be allocated to the Distributor and
each Other Distributor, as the case may be, all Commission Shares of such
Portfolio which were issued during or after the period referred to in (a) as a
consequence of one or more free exchanges of Commission Shares of the Portfolio
or of another portfolio (other than Free Appreciation Shares) (the "Exchange
Shares"), which in accordance with the transfer records maintained for such
Portfolio can be traced to Commission Shares of the Portfolio or another
portfolio initially issued by the Company or such other portfolio during
A-1
<PAGE> 11
the time the Distributor or such Other Distributor, as the case
may be, was the exclusive distributor for the Shares of the Portfolio or such
other portfolio.
(d) Free Appreciation Shares: Shares (other than Exchange Shares)
that were acquired by the holders of such Shares in a free exchange of Shares
of any other Portfolio, which represent the appreciated value of the Shares of
the exiting portfolio over the initial purchase price paid for the Shares being
redeemed and exchanged and for which the original purchase date and the original
purchase price are not identified on an on-going basis, shall be allocated to
the Distributor and each Other Distributor ("Free Appreciation Shares") daily in
a number obtained by multiplying the total number of Free Appreciation Shares
issued by the exiting portfolio on such date by a fraction, the numerator of
which is the total number of all Shares outstanding as of the opening of
business on such date allocated to the Distributor or such Other Distributor as
of such date of determination pursuant to these allocation procedures and the
denominator is the total number of Shares outstanding as of the opening of
business on such date.
(e) Redeemed Shares: Shares (other than Reinvested Shares and Free
Appreciation Shares) that are redeemed will be allocated to the Distributor and
each Other Distributor to the extent such Share was previously allocated to the
Distributor or such Other Distributor in accordance with the rules set forth in
2(a) or (c) above. Reinvested Shares and Free Appreciation Shares that are
redeemed will be allocated to the Distributor and each Other Distributor daily
in an amount equal to the number of Free Appreciation Shares and Reinvested
Shares of such Portfolio being redeemed on such date, which amount is obtained
by multiplying the total number of Free Appreciation Shares and Reinvested
Shares being redeemed by such Portfolio on such date by a fraction, the
numerator of which is the total number of all Free Appreciation Shares and
Reinvested Shares of such Portfolio outstanding as of the opening of business on
such date allocated to the Distributor or to such Other Distributor as of such
date of determination and the denominator is the total number of Free
Appreciation Shares and Reinvested Shares of such Portfolio outstanding as of
the opening of business on such date.
The Fund shall use its best efforts to assure that the transfer agents
and sub-transfer agents for each Portfolio maintain the data necessary to
implement the foregoing rules. If, notwithstanding the foregoing, the transfer
agents or sub-transfer agents for such Portfolio are unable to maintain the data
necessary to implement the foregoing rules as written, and if the Distributor
shall cease to serve as exclusive distributor of the Shares of the Portfolio,
the Distributor and the Portfolio agree to negotiate in good faith with each
other, with the transfer agents and sub-transfer agents for such Portfolio and
with any third party that has obtained an interest in the Distributor's 12b-1
Share in respect of such Portfolio with a view to arriving at mutually
satisfactory modifications to the foregoing rules designed to accomplish
substantially identical results on the basis of data which can be made
available.
A-2
<PAGE> 1
EXHIBIT 6(c)
DISTRIBUTION AGREEMENT
BETWEEN
AIM GROWTH SERIES
AND
A I M DISTRIBUTORS, INC.
ADVISOR CLASS SHARES
THIS AGREEMENT made this 29th day of May, 1998, by and between AIM
Growth Series, a Delaware business trust (the "Company"), with respect to the
Advisor Class shares (the "Shares") of each series of beneficial interest set
forth on Appendix A to this Agreement (the "Portfolios"), and A I M
Distributors, Inc., a Delaware corporation (the "Distributor").
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other
good and valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereto agree as follows:
FIRST: The Company on behalf of the Portfolios hereby appoints the
Distributor as its exclusive agent for the sale of Shares to the public directly
and through investment dealers and financial institutions in the United States
and throughout the world.
SECOND: The Company shall not sell any Shares except through the
Distributor and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however:
(A) the Company may issue Shares to any other investment company or
personal holding company, or to the shareholders thereof, in exchange for all or
a majority of the shares or assets of any such company; and
(B) the Company shall have the right to specify minimum amounts for
initial and subsequent orders for the purchase of Shares in connection with
certain classes of transactions or to certain classes of persons, in accordance
with Rule 22d-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), provided that any such class is specified in the then current prospectus
of the applicable Portfolio.
THIRD: The Distributor hereby accepts appointment as exclusive agent
for the sale of the Shares and agrees that it will use its best efforts to sell
such Shares; provided, however, that:
<PAGE> 2
(A) the Distributor may, and when requested by the Company on
behalf of the Shares shall, suspend its efforts to effectuate such sales at any
time when, in the opinion of the Distributor or of the Company, no sales should
be made because of market or other economic considerations or abnormal
circumstances of any kind;
(B) the Company may withdraw the offering of the Shares (i) at any
time with the consent of the Distributor, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation of
any governmental body having jurisdiction; and
(C) the Distributor, as agent, does not undertake to sell any
specific amount of the Shares.
FOURTH:
(A) The public offering price of Shares (the "offering price")
shall be the net asset value per share of the applicable Portfolio. Net asset
value per share shall be determined in accordance with the provisions of the
then current prospectus and statement of additional information of the
applicable Portfolio.
FIFTH: The Distributor shall act as agent of the Company in connection
with the sale and repurchase of Shares. Except with respect to such sales and
repurchases, the Distributor shall act as principal in all matters relating to
the promotion of the sale of Shares and shall enter into all of its own
engagements, agreements and contracts as principal on its own account. The
Distributor shall enter into agreements with investment dealers and financial
institutions selected by the Distributor, authorizing such investment dealers
and financial institutions to offer and sell the Shares to the public upon the
terms and conditions set forth therein, which shall not be inconsistent with the
provisions of this Agreement. Each agreement shall provide that the investment
dealer and financial institution shall act as a principal, and not as an agent,
of the Company.
SIXTH: The Shares shall bear:
(A) the expenses of qualification of Shares for sale in connection
with such public offerings in such states as shall be selected by the
Distributor, and of continuing the qualification therein until the Distributor
notifies the Company that it does not wish such qualification continued; and
(B) all legal expenses in connection with the foregoing.
SEVENTH: The Distributor shall bear the expenses of printing from the
final proof and distributing the prospectuses and statements of additional
information for the Shares (including supplements thereto) relating to public
offerings made by the Company pursuant to such prospectuses (which shall not
include those prospectuses and statements of additional information, and
supplements thereto, to be distributed to existing shareholders of the Shares),
and any other promotional or sales literature used by the Distributor or
furnished by
2
<PAGE> 3
the Distributor to dealers in connection with such public offerings, and
expenses of advertising in connection with such public offerings.
EIGHTH: The Distributor will accept orders for the purchase of Shares
only to the extent of purchase orders actually received and not in excess of
such orders, and it will not avail itself of any opportunity of making a profit
by expediting or withholding orders. It is mutually understood and agreed that
the Company may reject purchase orders where, in the judgment of the Company,
such rejection is in the best interest of the Company.
NINTH: The Company, on behalf of the Portfolios, and the Distributor
shall each comply with all applicable provisions of the 1940 Act, the Securities
Act of 1933 and all other federal and state laws, rules and regulations
governing the issuance and sale of Shares.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Distributor, the Company on behalf of the Portfolios agrees to indemnify
the Distributor against any and all claims, demands, liabilities and expenses
which the Distributor may incur under the Securities Act of 1933, or common law
or otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in any registration statement or prospectus of a
Portfolio, or any omission to state a material fact therein, the omission of
which makes any statement contained therein misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company or a Portfolio in connection therewith by or on behalf
of the Distributor. The Distributor agrees to indemnify the Company and the
Portfolios against any and all claims, demands, liabilities and expenses which
the Company or a Portfolio may incur arising out of or based upon any act or
deed of the Distributor or its sales representatives which has not been
authorized by the Company or a Portfolio in its prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Company and the
Portfolios against any and all claims, demands, liabilities and expenses which
the Company or the Portfolios may incur under the Securities Act of 1933, or
common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in any registration statement or
prospectus of a Portfolio, or any omission to state a material fact therein if
such statement or omission was made in reliance upon, and in conformity with,
information furnished to the Company or a Portfolio in connection therewith by
or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the
Distributor shall not be liable for any errors of the Portfolios' transfer
agent(s), or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Company to take
any action contrary to any provision of its Agreement and Declaration of Trust,
or to any applicable statute or regulation.
3
<PAGE> 4
TWELFTH: This Agreement shall become effective with respect to the
Shares of each Portfolio as of the date hereof, shall continue in force and
effect for two years from the date hereof, and shall continue in force and
effect from year to year thereafter, provided, that such continuance is
specifically approved with respect to such Portfolio at least annually (a)(i) by
the Board of Trustees of the Company or (ii) by the vote of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
and (b) by vote of a majority of the Company's trustees who are not parties to
this Agreement or "interested persons" (as defined in Section 2(a)(19) of the
1940 Act) of any party to this Agreement cast in person at a meeting called for
such purpose.
THIRTEENTH:
(A) This Agreement may be terminated with respect to the Shares of
any Portfolio at any time, without the payment of any penalty, by vote of the
Board of Trustees of the Company or by vote of a majority of the outstanding
voting securities of the applicable Portfolio, or by the Distributor, on sixty
(60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" having the meaning set forth in Section
2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston,
Texas 77046.
FIFTEENTH: Notice is hereby given that, as provided by applicable law,
the obligations of or arising out of this Agreement are not binding upon any of
the shareholders of the Company individually, but are binding only upon the
assets and property of the Company and that the shareholders shall be entitled,
to the fullest extent permitted by applicable law, to the same limitation on
personal liability as stockholders of private corporations for profit.
SIXTEENTH: This Agreement shall be deemed to be a contract made in the
State of Delaware and governed by, construed in accordance with and enforced
pursuant to the internal laws of the State of Delaware without reference to its
conflicts of laws rules.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate on the day and year first above written.
AIM SERIES TRUST
By: /s/ WILLIAM J. GUILFOYLE
-----------------------------
Name: William J. Guilfoyle
Title: President
Attest:
/s/ MICHAEL A. SILVER
- -----------------------------
Name: Michael A. Silver
Title: Assistant Secretary
A I M DISTRIBUTORS, INC.
By: /s/ JOHN CALDWELL
-----------------------------
Name: John Caldwell
Title: Senior Vice President
Attest:
/s/ KATHLEEN J. PFLUEGER
- -----------------------------
Name: Kathleen J. Pflueger
Title: Secretary
5
<PAGE> 6
APPENDIX A
TO
DISTRIBUTION AGREEMENT
OF
AIM GROWTH SERIES
ADVISOR CLASS SHARES
AIM Worldwide Growth Fund
AIM International Growth Fund
AIM New Pacific Growth Fund
AIM Europe Growth Fund
AIM Japan Growth Fund
AIM Small Cap Equity Fund
AIM Mid Cap Growth Fund
AIM America Value Fund
6
<PAGE> 1
EXHIBIT 9(a)(1)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM GROWTH SERIES
AND
A I M FUND SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 5 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 6 COVENANTS OF THE FUND AND THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 7 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 8 ADDITIONAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 9 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 10 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 11 TEXAS LAW TO APPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 12 MERGER OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 13 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 14 LIMITATION OF SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the _______ day of __________, 1998, by and
between AIM GROWTH SERIES, as Delaware business trust, having its principal
office and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas
77046 (the "Fund"), and A I M Fund Services, Inc., a Delaware corporation
having its principal office and place of business at 11 Greenway Plaza, Suite
100, Houston, Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities
and Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue shares in separate series and
classes, with each such series representing interests in a separate portfolio
of securities and other assets and each such class having different
distribution arrangements; and
WHEREAS, the Fund on behalf of each portfolio thereof (the
"Portfolios") desires to appoint the Transfer Agent as its transfer agent, and
agent in connection with certain other activities, with respect to the
Portfolios, and the Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Transfer Agent to act as,
and the Transfer Agent agrees to act as, its transfer agent for the authorized
and issued shares of beneficial interest of the Fund representing interests of
each of the respective Portfolios ("Shares"), dividend disbursing agent, and
agent in connection with any accumulation or similar plans provided to
shareholders of each of the Portfolios (the "Shareholders"), including without
limitation any periodic investment plan or periodic withdrawal program, as
provided in the currently effective prospectus and statement of additional
information (the "Prospectus") of the Fund on behalf of the Portfolios.
1.02 The Transfer Agent agrees that it will perform the following
services:
(a) The Transfer Agent shall, in accordance with procedures
established from time to time by agreement between the Fund on behalf of each
of the Portfolios, as applicable, and the Transfer Agent:
(i) receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund
authorized pursuant to the Agreement and Declaration
of Trust and Bylaws of the Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;
1
<PAGE> 4
(iii) receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) at the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by
the Fund;
(v) effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
Shares;
(vii) maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(viii) record the issuance of Shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of
the total number of Shares which are authorized,
based upon data provided to it by the Fund, and
issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with
the total number of Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph
(a), the Transfer Agent shall: (i) perform the customary services of a transfer
agent, including but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and prospectuses to current Shareholders, preparing
and mailing confirmation forms and statements of accounts to Shareholders for
all purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Fund
on behalf of each Portfolio and the Transfer Agent. The Transfer Agent may at
times perform only a portion of these services and the Fund or its agent may
perform these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 For performance by the Transfer Agent pursuant to this
Agreement, the Fund agrees on behalf of each of the Portfolios to pay the
Transfer Agent fees as set out in the initial fee schedule attached hereto.
Such fees and out-of-pocket expenses and advances identified under Section 2.02
below may be changed from time to time subject to mutual written agreement
between the Fund and the Transfer Agent.
2
<PAGE> 5
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by the Transfer
Agent at the request or with the consent of the Fund, will be reimbursed by the
Fund on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses following the mailing of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all Shareholder accounts shall be advanced to the Transfer Agent by
the Fund at least seven (7) days prior to the mailing date of such materials.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware.
3.02 It is duly qualified to carry on its business in Delaware and
in Texas.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 It is registered as a Transfer Agent as required by the
federal securities laws.
3.07 This Agreement is a legal, valid and binding obligation to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and Bylaws to enter into and perform this Delaware.
4.03 All corporate proceedings required by said Agreement and
Declaration of Trust and Bylaws have been taken to authorize it to enter into
and perform this Agreement.
3
<PAGE> 6
4.04 It is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, with respect to all Shares of the Fund being offered for
sale.
ARTICLE 5
INDEMNIFICATION
5.01 The Transfer Agent shall not be responsible for, and the Fund
shall on behalf of the applicable Portfolio, indemnify and hold the Transfer
Agent harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) all actions of the Transfer Agent or its agents or
subcontractors required to be taken pursuant to this Agreement, provided that
such actions are taken in good faith and without negligence or willful
misconduct;
(b) the Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder;
(c) the reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents or services which (i) are
received or relied upon by the Transfer Agent or its agents or subcontractors
and/or furnished to it or performed by on behalf of the Fund, and (ii) have
been prepared, maintained and/or performed by the Fund or any other person or
firm on behalf of the Fund; provided such actions are taken in good faith and
without negligence or willful misconduct;
(d) the reliance on, or the carrying out by the Transfer Agent or
its agents or subcontractors of any instructions or requests of the Fund on
behalf of the applicable Portfolio; provided such actions are taken in good
faith and without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless
from and against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to any action
or failure or omission to act by the Transfer Agent as result of the Transfer
Agent's lack of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Transfer
Agent under this Agreement, and the Transfer Agent and its agents or
subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the applicable Portfolio for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The
Transfer Agent shall be protected and indemnified in acting upon
4
<PAGE> 7
any paper or document furnished by or on behalf of the Fund, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided to
the Transfer Agent or its agents or subcontractors by machine readable input,
telex, CRT data entry or other similar means authorized by the Fund, and shall
not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to
the other for any damages resulting from such failure to perform or otherwise
from such causes.
5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for
any consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 The Fund shall, upon request, on behalf of each of the
Portfolios promptly furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Trustees of
the Fund authorizing the appointment of the Transfer Agent and the execution
and delivery of this Agreement; and
(b) a copy of the Agreement and Declaration of Trust and Bylaws of
the Fund and all amendments thereto.
6.02 The Transfer Agent shall keep records relating to the services
to be performed hereunder, in the form and manner as it may deem advisable. To
the extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Transfer Agent agrees that all such
records prepared or maintained by the Transfer Agent relating to the services
to be performed by the Transfer Agent hereunder are the property of the Fund
and will be preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the
5
<PAGE> 8
negotiation or the carrying out of this Agreement shall remain confidential,
and shall not be voluntarily disclosed to any other person, except as may be
required by law.
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit
the Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder records
to such person.
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty
(60) days written notice to the other.
7.02 Should the Fund exercise its right to terminate this
Agreement, all out-of-pocket expenses associated with the movement of records
and material will be borne by the Fund on behalf of the applicable Portfolios.
Additionally, the Transfer Agent reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge equivalent
to the average of three (3) months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of
Shares in addition to the Portfolios with respect to which it desires to have
the Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
ARTICLE 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of
the Fund, subcontract for the performance hereof with any entity which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that
the Transfer Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
6
<PAGE> 9
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution
of the Board of Trustees of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
ARTICLE 14
LIMITATION OF SHAREHOLDER LIABILITY
14.01 Notice is hereby given that this Agreement is being executed
by the Fund by a duly authorized officer thereof acting as such and not
individually. The obligations of this Agreement are not binding upon any of
the Trustees, officers, shareholders or the investment advisor of the Fund
individually but are binding only upon the assets and property belonging to the
Fund, on its own behalf or on behalf of a Portfolio, for the benefit of which
the Trustees or officers have caused this Agreement to be executed.
7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
AIM GROWTH SERIES
By:
---------------------------
President
ATTEST:
- ---------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By:
---------------------------
President
ATTEST:
- ---------------------------
Assistant Secretary
8
<PAGE> 11
FEE SCHEDULE
1. For performance by the Transfer Agent pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annualized fee for shareholder accounts that are open during any monthly
period as set forth below, and an annualized fee of $.70 per shareholder
account that is closed during any monthly period. Both fees shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------- ---------------
<S> <C>
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividend 17.15
Class A Daily Accrual 19.65
Class B 19.65
Advisor Class 19.65
</TABLE>
2. The Transfer Agent shall provide the various mutual funds that are advised
by A I M Advisors, Inc. or its affiliates and distributed by A I M
Distributors, Inc. (the "AIM Funds") with an annualized credit to the
monthly billings of (a) $1.50 for each open account in excess of 100,000
open AIM Funds Accounts up to and including 125,000 open AIM Funds
Accounts; (b) $1.75 for each open account in excess of 125,000 open AIM
Funds Accounts up to and including 150,000 open AIM Funds Accounts; (c)
$2.00 for each open AIM Funds Account in excess of 150,000 open AIM Funds
Accounts up to and including 200,000 open AIM Funds Accounts; (d) $2.25
for each open AIM Funds Account in excess of 200,000 open AIM Funds
Accounts up to and including 500,000 open AIM Funds Accounts; (e) $2.50
for each open AIM Funds Account in excess of 500,000 open AIM Funds
Accounts up to and including 1,000,000 open AIM Funds Accounts; and (f)
$3.00 for each open AIM Funds Account in excess of 1,000,000 open AIM
Funds Accounts.
3. In addition, beginning on the anniversary date of the execution of the
Remote Services Agreement with The Shareholder Services Group, Inc., and
on each subsequent anniversary date, the per account fees shall each be
increased by a percentage amount equal to the percentage increase in the
then current Consumer Price Index (all urban consumers) or its successor
index, though in no event shall such increase be greater than a 7%
increase over the previous fees.
4. Other Fees
IRA Annual Maintenance Fee $10 per IRA account per year (paid by
investor per tax I.D. number).
Balance Credit The total fees due to the Transfer
Agent from all funds affiliated with
the Fund shall be reduced by an amount
equal to one half of investment income
earned by the Transfer Agent on the DDA
balances of the disbursement accounts
for those funds.
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<PAGE> 12
Remote Services Fee $3.60 per open account per year,
payable monthly and $1.80 per closed
account per year, payable monthly.
5. OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production & equipment
- Magnetic media tapes and freight
- Printing costs, including, without limitation, certificates,
envelopes, checks, stationery, confirmations
and statements
- Postage (bulk, pre-sort, ZIP+4, bar coding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Banking charges, including without limitation incoming and
outgoing wire charges @ $8.00 per wire
- Rendering fees as billed
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
- Third party audit reviews
- All client specific Systems enhancements will be at the Funds'
cost.
- Certificate Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities
under this Agreement
- Check writing fee of $.75 per check redemption.
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer
Agent whenever the Fund and the Transfer Agent mutually agree that such
expenses are not otherwise properly borne by the Transfer Agent as part of
its duties and obligations under the Agreement.
10
<PAGE> 1
EXHIBIT 9(a)(2)
REMOTE ACCESS
-------------
AND
---
RELATED SERVICES AGREEMENT
--------------------------
AGREEMENT dated as December 23, 1994 between each registered investment
company listed on the signature pages hereof, either for itself or, with respect
to each such company that is a series investment company, on behalf of each of
the series or class named on the signature pages hereof (the "Fund") and THE
SHAREHOLDER SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with
principal offices at One Exchange Place, Boston, Massachusetts 02109.
W I T N E S S E T H
-------------------
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and TSSG agree as follows:
1. Appointment of TSSG. The Fund appoints TSSG as servicing agent to provide
and support remote terminal access through dedicated transmission lines to
its computerized data processing record keeping system for Fund shareholder
accounting more fully described on the attached Schedule A (the "TSSG
System") installed on TSSG computer hardware and using TSSG software ("TSSG
Facilities") to provide and support remote terminal access to the TSSG
System and the TSSG Facilities for the maintenance of Fund shareholder
records, processing of information and generation of information with
respect thereto. TSSG hereby accepts such appointment for the compensation
described below.
2. Oral and Written Instructions. "Written Instructions" shall mean a written
communication signed by a person reasonably believed by TSSG to be a person
named on the list of authorized persons as it may be amended by amendment
provided by the Fund to TSSG from time to time ("Schedule B"). "Oral
Instructions" shall mean instructions, other than Written Instructions,
actually received by TSSG from a person reasonably believed by TSSG to be
an Authorized Person listed on Schedule B. Written communication shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original or
other process.
3. Compensation.
(a) The Fund will compensate TSSG for the performance of its obligations
hereunder in accordance with the Fee Schedule attached hereto as
Schedule C. Such fees may be adjusted from time to time by attaching
to or substituting for Schedule C a revised Fee Schedule, dated and
signed by an authorized officer of each party hereto.
<PAGE> 2
(b) In addition to the fees payable pursuant to Schedule C, the Fund will
pay all out-of-pocket expenses incurred by TSSG in performing its
duties hereunder. Out-of-pocket expenses shall include the items
specified in the written schedule of out-of-pocket charges attached
hereto as Schedule D. Upon written approval of the Fund, Schedule D
may be modified by TSSG. The Fund agrees to approve all reasonable
changes in Schedule D. Unscheduled out-of-pocket expenses shall be
limited to those out-of-pocket expenses directly related to TSSG's
performance of its obligations hereunder.
(c) TSSG will provide an invoice as soon as practicable after the end of
each calendar month detailed in accordance with Schedule C and
Schedule D. The Fund will pay to TSSG the amount so billed within
fifteen (15) days after the Fund's receipt of the invoice.
4. Duties of TSSG.
(a) Subject to the provisions of this Agreement, the Fund hereby agrees to
use or employ the TSSG System and the TSSG Facilities to maintain
certain Fund shareholder records and generate output with respect to
the Fund's shareholders, and subject to the provisions of this
Agreement, TSSG will provide the use of the TSSG System and the TSSG
Facilities to maintain Fund shareholder records and generate such
output with respect to the Fund's shareholders.
(b) TSSG agrees to provide to the Fund at its facility located at Eleven
Greenway Plaza, Suite 1919, Houston, Texas 77046 or at such other
location as may be mutually agreed upon in writing by TSSG and the
Fund (the "Fund Facility") remote access to the use of information
processing capabilities of the TSSG System as it may be modified from
time to time by TSSG.
5. Changes and Modifications.
(a) During the term of this Agreement, TSSG will make available for Fund
use, without additional costs, all modifications and improvements to
the TSSG System (excluding those modifications and improvements TSSG
views as additional products and/or those developed exclusively for
other TSSG clients) made in the ordinary course of business. In
addition, TSSG will use its best efforts to make reasonable changes to
the TSSG System requested by the Fund, subject to payment of
additional fees as mutually agreed upon in writing and as reflected in
Schedule C.
(b) TSSG shall have the right, at any time, and from time to time, to
alter and modify any systems, programs, procedures or facilities used
or employed in performing its duties and obligations hereunder (a
"System Modification"), provided that no
2
<PAGE> 3
System Modification shall, without the consent of the Fund, materially
adversely change or affect the operations and procedures of the Fund
in using or employing the TSSG System or the TSSG Facilities
hereunder. TSSG will use its best efforts to notify the Fund in
writing at least five business days prior to implementing any System
Modification which impacts or effects AFS' day to day operations, and
in any event by 8 a.m. CST the following business day.
(c) TSSG agrees to make any System Modifications necessary to meet
federal, state or local government or self-regulatory organization
requirements ("Regulatory Adherence Enhancements") in a timely
fashion. TSSG agrees to advise the Fund promptly upon notification of
any change in or receipt of any information or advice concerning any
change in the requirements of any federal, state, local or
self-regulatory organization which might require such System
Modifications. The Fund shall obtain any additional software required
to comply with such changes in federal, state, and local government or
self regulatory organization requirements. Regulatory Adherence
Enhancements shall be limited to technically and commercially
practical System modifications which are within the scope of the
functions, capabilities and any database of the TSSG System. TSSG will
provide Regulatory Adherence Enhancements only after final
specification, agreed upon by TSSG, the Fund and affected third
parties, have been established and delivered to TSSG.
(d) During the term of this Agreement TSSG shall expend no less than
$1,000,000 (one million dollars) per calendar year for the enhancement
and maintenance of TSSG's recordkeeping and associated system that are
utilized by TSSG to provide services to the Fund under this Agreement
(or a successor Remote Service Agreement). At least once each calendar
year, TSSG shall provide the Fund with a schedule of the enhancements
planned by the TSSG for the succeeding 12 month period.
6. Duties of the Fund.
(a) The Fund will transmit all information and data required by TSSG
hereunder to the TSSG Facilities in the format and form specified by
TSSG, so that the output produced by the Fund shall be complete and
accurate when it is generated by the TSSG System and the TSSG
Facilities. The Fund shall be responsible and liable for the costs and
expenses of regenerating any output if the Fund provides nonconforming
or erroneous data or shall have failed to transmit any such data or
information or verify any such data and information when it is
generated by the TSSG System and the TSSG Facilities.
(b) In the event the Fund shall erroneously transmit information or shall
transmit incorrect information or data to the TSSG System or the TSSG
Facilities, the Fund
3
<PAGE> 4
shall correct such information and data and retransmit the same to the
TSSG System or to the TSSG Facilities. Upon consent of the Fund, which
shall not be unreasonably withheld, TSSG shall take the necessary
steps at Fund expense to correct any files affected by the original
incorrect transmission.
(c) In the event the TSSG System malfunctions or a TSSG programming error
(other than programming changes made pursuant to paragraph 5(a)
above), causes an error or mistake in any of the output generated by
the TSSG System under the terms of this Agreement, TSSG will, at its
expense, correct and retransmit such output so long as the Fund has
notified TSSG of such error or mistake within five (5) business days
of its discovery and the data used to generate such output is
available as set forth in Schedule E attached hereto.
If such data is available as set forth in Schedule E, the Fund shall
take reasonable necessary steps to manually correct any records due to
a TSSG system malfunction or programming error that TSSG is unable to
correct systematically and the parties shall mutually agree upon the
allocation of expenses related to such manual processing.
7. System Access and Training.
(a) TSSG shall provide the Fund on-line access as provided for and set
forth in the attached Schedule F, and agrees to meet the performance
standards set forth therein. Additional access to the TSSG System may
be arranged by mutual agreement of the parties.
(b) The Fund will reimburse TSSG for any reasonable costs and expenses
incurred for training hereunder. All travel and other out-of-pocket
expenses incurred by Fund personnel in connection with and during the
training periods shall be borne by the Fund.
8. Indemnification. TSSG shall not be responsible for and the Fund shall
indemnify and hold TSSG harmless from and against any and all claims,
costs, expenses (including reasonable attorneys' fees), losses, damages,
charges, payments and liabilities of any sort or kind which may be asserted
against TSSG or for which TSSG may be held to be liable (a "Claim")
arising out of or attributable to any of the following:
(a) Any actions of TSSG required to be taken pursuant to this Agreement
unless such Claim resulted from a negligent act or omission to act or
bad faith by TSSG in the performance of its duties hereunder.
(b) The Fund's failure to use and employ the TSSG System and the TSSG
Facilities in accordance with the procedures set forth in any on-line
documentation made
4
<PAGE> 5
available to the Fund, the Fund's failure to utilize the control
procedures set forth and described in the on-line user documentation,
or the Fund's failure to verify promptly reports or output received
through use of the TSSG System and the TSSG Facilities.
(c) The Fund's errors and mistakes in the use of the TSSG System, TSSG
Facilities and control procedures.
(d) TSSG's reasonable reliance on, or reasonable use of information, data,
records and documents received by TSSG from the Fund in the
performance of TSSG's duties and obligations hereunder.
(e) The reliance on, or the implementation of, any Written or Oral
Instructions or any other instructions or requests of the Fund.
(f) The Fund's refusal or failure to comply with the terms of this
Agreement, or any Claim which arises out of the Fund's negligence or
misconduct or the breach of any representation or warranty of the Fund
made herein.
(g) Unavailability of communications or utilities facilities or other
equipment failures provided TSSG has maintained such equipment
appropriately, Acts of God, acts of the public enemy,
governmentally-mandated priorities in allocating its services, labor
disputes, fires, floods, strikes, riots or war or other causes beyond
its control.
9. Standard of Care.
(a) TSSG shall at all times act in good faith and agrees to use its best
efforts within commercially reasonable standards to insure the
accuracy of all services performed under this Agreement, but assumes
no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees.
(b) Notwithstanding the foregoing Section 9(a) or anything else contained
in this Agreement to the contrary, TSSG's liability hereunder shall,
in no event exceed four million dollars ($4,000,000.00).
The parties agree to review the limitation of liability provision set
forth in this Section 9(b) on an annual basis.
10. Instructions. TSSG may apply at any time to a person listed as an
Authorized Person identified on Schedule B for instructions with respect to
any matter arising in connection with this Agreement. TSSG may also consult
with legal counsel for the Fund or, at
5
<PAGE> 6
TSSG's expense, its own legal counsel with respect to actions to be taken
hereunder. TSSG shall not be liable for, and shall be indemnified by the
Fund against, any Claim arising from any action taken or omitted to be
taken by TSSG in good faith in reliance upon such instruction from the
Fund or upon the advice of such legal counsel.
11. Consequential Damages. In no event and under no circumstances shall either
party under this Agreement be liable to the other party for consequential
or indirect loss of profits, reputation or business or any other special
damages under any provision of this Agreement or for any act or failure to
act hereunder.
12. Covenants of TSSG.
(a) TSSG shall maintain the appropriate computer files of all required
information and data transmitted to the TSSG Facilities by the Fund,
provided, however, that TSSG shall not be responsible or liable for
any damage, alterations, modifications thereto or failure to maintain
the same if the Fund made, or TSSG made at the Fund's request, such
changes, alterations or modifications or if the Fund causes the
failure. It is expressly understood that all such shareholder records
transmitted by the Fund and maintained by TSSG remain the exclusive
property of the Fund.
(b) All information furnished by the Fund to TSSG is confidential and TSSG
agrees that it shall not disclose such information to any third party
except pursuant to Written or Oral Instructions received from the Fund
or to the extent that TSSG is required by law to make such disclosure.
13. Covenants of the Fund. The Fund shall utilize and employ all reasonable
control procedures available under the TSSG System of which the Fund may be
advised. The Fund will promptly advise TSSG of any errors or mistakes in
the data or information transmitted to the TSSG Facilities or in the
records maintained by TSSG or output generated hereunder. The Fund will
verify the accuracy of all output it receives consistent with industry
custom and practice by utilizing proper auditing procedures.
All information furnished to or obtained by the Fund pertaining to the TSSG
Facilities, the TSSG System, or TSSG procedures, data bases and programs is
confidential and proprietary to TSSG. The Fund shall not disclose such
information to any third party except to the extent that the Fund is
required by law to make such disclosures.
14. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above and shall continue in effect through December 31, 1997 ("Initial
Term").
6
<PAGE> 7
(b) Unless it is the intention of either party for this Agreement to
terminate upon the expiration of the Initial Term, within six (6)
months prior to the end of the Initial Term but no later than such
date, AIM and TSSG will negotiate diligently and in good faith and
either (i) enter into an agreement extending the term of this
Agreement; or (ii) enter into a new agreement for TSSG to provide
remote services substantially similar to those contemplated hereunder.
(c) Notwithstanding the foregoing, if a party hereto is guilty of a
material failure to perform its duties and obligations hereunder
(a "Defaulting Party") the other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if such
material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written notice of
such termination to the Defaulting Party. If TSSG is the
Non-Defaulting Party, its termination of this Agreement shall not
constitute a waiver of any other rights or remedies of TSSG with
respect to services performed prior to such termination or rights of
TSSG to be reimbursed for out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a
waiver by the Non-Defaulting Party of any other rights it might have
under this Agreement or otherwise against the Defaulting Party.
15. Post-Termination Procedures. Upon termination for any reason by either
party to this Agreement TSSG shall promptly, at the Fund's expense, provide
immediate and full access to the Fund data files on magnetic tape in
machine readable form and shall cooperate with the Fund in its efforts to
transfer all such data files to another person chosen by the Fund. In
addition, TSSG agrees to return, at the expense of the terminating party,
all backup tapes and other storage media upon which Fund data is then
stored.
16. Amendment. This Agreement may only be amended or modified by written
agreement executed by both parties.
17. Assignment. This Agreement and any interest hereunder shall inure to
the benefit of and be binding upon the Parties and their respective
successors, legal representatives and permitted assigns including the
successor entity in any merger or reorganization of the Funds. Except as
otherwise expressly provided for in this Agreement, neither Party may
assign or delegate this Agreement or any of its rights or obligations
without the other Party's prior approval which shall not be unreasonably
withheld. Upon prior notice to the Fund, TSSG may assign this Agreement to
(i) any person in connection with the merger or consolidation of TSSG into
such person, or the sale of all or substantially all of the assets of TSSG
to such person or (ii) any direct or indirect subsidiary of First Data
Corporation in connection with any corporate reorganization. Any attempt to
assign, delegate or otherwise transfer this Agreement in violation of this
Section will be voidable by the other party.
7
<PAGE> 8
18. Subcontracting. TSSG may subcontract to agents the services required to be
performed pursuant to this Agreement and the Schedules hereto, if any. The
appointment of any such agent shall not relieve TSSG of its
responsibilities hereunder.
19. Use of TSSG's Name. The Fund shall not use TSSG's name in any Prospectus,
Statement of Additional Information, Shareholders's Report, sales
literature or other material relating to the Fund without TSSG's prior
written approval unless such use is required by law or merely refers in
accurate terms to the services rendered hereunder. Any reference to TSSG
shall include a statement to the effect that it is an indirect, wholly
owned subsidiary of First Data Corporation.
20. Use of the Fund's Name. Except as provided herein, TSSG shall not use the
name of the Fund, its Advisor or material relating to any of them on any
documents or forms (other than internal documents) without the Fund's prior
written approval unless such use is required by law or merely refers in
accurate terms to the services rendered hereunder.
21. Security.
(a) TSSG will provide the Fund with a User Identifier (also known as
"User I.D.") and a User Password. TSSG will also assign the initial
Operator Password to each of the Fund's employees who are authorized
to access the TSSG System. The Operator Passwords may be changed at
any time in the discretion of the Fund without any notice to or
knowledge of TSSG by using procedures set forth in the user manual.
(b) The Fund agrees that it is responsible for selection, use and
protection of the confidentiality of passwords; however, TSSG may for
security reasons at any time and from time to time, upon seven days
written notice to the Fund (or immediately upon notice by telephone,
confirmed in writing, in the event of an emergency), deny access to
the TSSG System until one or more User I.D.s is changed by the Fund.
(c) TSSG will provide the Fund with online procedures enabling the Fund to
reset passwords, correct password violations and add/change/delete
User I.D.s within existing security profiles.
(d) TSSG will use its best efforts to ensure that the Fund's data files
which are input into the TSSG System will remain confidential and
protected from unauthorized access by third persons. Specifically,
TSSG will adhere to its normal security procedures for protection of
computer-stored files or programs from unauthorized access. It is
agreed that such procedures will be subject to review by the Fund and
audit by its independent accountants and that TSSG will take under
advisement
8
<PAGE> 9
recommendations of such independent accountants concerning changes to
such procedures.
(e) The Fund or duly authorized independent auditors will have the right
upon 5 business days' notice under this Agreement to perform on-site
audits of records and accounts directly pertaining to Fund shareholder
accounts serviced by TSSG facilities in accordance with reasonable
procedures and at reasonable frequencies.
(f) The parties agree that all tapes, books, user manuals, instructions,
records, information and data pertaining to the business of the other
party, the TSSG System and the Fund clients services by the Fund which
are exchanged or received pursuant to the negotiation of or carrying
out of this Agreement shall remain confidential except to the extent
required by applicable laws, and shall not be voluntarily disclosed to
any other person and that all such tapes, books, reference manuals,
instructions, records, information and data in the possession of each
of the parties hereto shall be returned to the party from whom it was
obtained upon the termination or expiration of this Agreement.
(g) The Fund acknowledges that TSSG has proprietary rights in and to the
TSSG System and any other TSSG programs, data basis, supporting
documentation or procedures ("TSSG Protected Information") of which
the Fund or its employees or agents become aware as a result of the
Fund's access to the TSSG System or TSSG Facilities and that the TSSG
Protected Information constitutes confidential material and trade
secrets of TSSG. The Fund agrees to maintain the confidentiality of
the TSSG Protected Information. The Fund acknowledges that any
unauthorized use, misuse, disclosure or taking of TSSG Protected
Information which is confidential or which is a trade secret, whether
residing or existing internally or externally to a computer, computer
system or computer network, or the knowing and unauthorized accessing
or causing to be accessed of any computer, computer system or computer
network, may be subject to civil liabilities and criminal penalties
under applicable law. The Fund will advise all of its employees and
agents who have access to any TSSG Protected Information or to any
computer equipment capable of accessing TSSG Facilities of the
foregoing.
22. Additional Funds. In the event that additional funds, within the same family
as the Funds, are established ("Additional Funds") and such Additional Funds
desire to avail themselves of the benefits of and become a party to this
Agreement, the Additional Funds shall notify TSSG in writing, and if TSSG agrees
in writing, such Additional Funds shall become a party to this Agreement.
9
<PAGE> 10
23. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or TSSG shall be
sufficiently given if addressed to that party and received by it at
its office set forth below or at such other place as it may from time
to time designate in writing.
To: AIM Family of Funds
c/o John Caldwell, President
AIM Fund Services, Inc.
Eleven Greenway Plaza, Suite 1919
Houston, Texas 77046
Attention: William Kleh, Secretary
with a copy to:
Fund Legal Department at the same address
Attention: Carol Relihan, VP and General Counsel
To: The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to:
General Counsel at the same address
(b) Successors. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors upon the parties
hereto, and their respective successors and assigns; provided,
however, that this Agreement may not be assigned without the written
consent of the other party.
(c) Governing Law. This Agreement shall be governed exclusively by and
interpreted in accordance with the internal substantive laws of the
Commonwealth of Massachusetts without reference to the choice of the
law provisions thereof.
(d) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
10
<PAGE> 11
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
of which together will constitute only one instrument.
(f) Captions. The captions of this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(g) Sole Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with
respect to the subject matter hereof.
(h) Specific Performance. Each of the parties hereto agrees that the other
party would be irreparably damaged by breaches of this Agreement
relating to confidential or proprietary information and accordingly
each agrees that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of the
provisions of this Agreement relating to such information.
(i) It is understood and agreed that all services performed hereunder by
TSSG shall be as an independent contractor and not as an employee,
joint venturer, or partner of the Fund. This Agreement is between the
Fund and TSSG, and there are no third party beneficiaries hereto.
(j) Limitation of Shareholder Liability. Notice is hereby given that the
Declaration of Trust of each Fund which is a Delaware business trust,
is on file with the Secretary of State of Delaware, and this Agreement
was executed on behalf of each such Trust by a duly authorized officer
thereof acting as such and not individually. The obligations of this
Agreement are not binding upon any of the Trustees, officers or
Shareholders of any such Trust individually but are binding only upon
the assets and property of the respective portfolio of each such Trust
for the benefit of which the Trustees have caused this Agreement to be
executed.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
AIM EQUITY FUNDS, INC.
on behalf of the Retail Classes of its AIM Charter
Fund, AIM Constellation Fund, AIM Weingarten Fund
and AIM Aggressive Growth Fund Portfolios
By: /s/ ROBERT H. GRAHAM
------------------
Title: President
---------------
AIM FUNDS GROUP,
on behalf of the Class A and Class B Shares of its
AIM Balanced Fund, AIM Government Securities Fund,
AIM Growth Fund, AIM High Yield Fund, AIM Income
Fund, AIM Municipal Bond Fund, AIM Utilities Fund
and AIM Value Fund portfolios and on behalf of the
Class A, Class B and Class C Shares of its AIM
Money Market Fund Portfolio
By: /s/ ROBERT H. GRAHAM
------------------
Title: President
---------------
AIM INTERNATIONAL FUNDS, INC.,
on behalf of the Class A and Class B shares of its
AIM International Equity Fund, AIM Global
Aggressive Growth Fund, AIM Global Growth Fund and
AIM Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
12
<PAGE> 13
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Adjustable Rate Government
Fund portfolio and the AIM Limited Maturity
Treasury Shares class of its Limited Maturity
Treasury Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut portfolios and
the AIM Tax-Free Intermediate Shares class of its
Intermediate Portfolio
By: /s/ ROBERT H. GRAHAM
---------------------
Title: President
------------------
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ JACK PUTNER
----------------
Title: EVP - COO
-------------
13
<PAGE> 14
SCHEDULE A
SYSTEM FEATURES AND CAPABILITIES
The FSR System consists of computer hardware, operating system software and
application software which contains functions as defined below. The operating
environment configuration consists of IBM-compatible mainframe computers
running on an MVS operating system. The configuration includes controllers,
direct access storage devices, tape drives, security access software and other
operating system hardware and software that enable TSSG to meet the contractual
commitments herein.
The Transfer Agent Application includes Job Control Language (JCL), Catalog
Procedures (PROCS) and program modules written primarily in COBOL.
The FSR Transfer Agency System supports the following subsystems and third
party systems:
NSCC (National Securities Clearing Corporation) support:
- FundSERV
- Networking
- Commissions
- Exchanges
- ACATS (Automated Customer Account Transfer System)
- TNET
Cost basis accounting
UNISYS Interface
Sales file download
Price Waterhouse Blue Sky download
File downloads to support DDA (Demand Deposit Account) Reconciliation
<PAGE> 15
Year-End Statements and Tax Reporting:
- 1099D
- 1099R
- 1042S
- 5498
- 1099B
Transmission send/receive functionality for broker/dealers and other third
parties
Electronic Funds Transfer processing to move in and out of funds using automated
clearing house facilities
KMS Microfilm Interface
Third part interfaces with:
Applied Mailing Systems for print/mail support
Microdata for checkbook production
Mellon and Texas Commerce for banking services
Other third party software packages i.e. ACE/DISC
<PAGE> 16
SCHEDULE B
AIM FAMILY OF FUNDS - LIST OF AUTHORIZED PERSONS
/s/ ROBERT H. GRAHAM
-----------------------
Robert Graham
President, A I M Management Group Inc.
/s/ JOHN CALDWELL (JACK)
------------------------
Jack Caldwell
President, A I M Fund Services, Inc.
/s/ CAROL F. RELIHAN
-----------------------
Carol Relihan
Secretary and General Counsel,
A I M Management Group Inc.
/s/ NANCY MARTIN
-----------------------
Nancy Martin
Counsel, A I M Management Group Inc.
<PAGE> 17
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The fund shall pay the following fees
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
December 31, 1997, the Fund shall pay TSSG an annualized fee of $3.60 per
shareholder account that is open during any monthly period ("Open Account
Fee"). The Fund also shall pay TSSG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and the Closed Account Fees hereafter collectively referred
to as "Shareholder Account Fees"). The Shareholder Account Fees shall be billed
by TSSG monthly in arrears on a prorated basis of 1/12 of the annualized fee
for all such accounts.
In addition, beginning on the one year anniversary date of this Agreement, and
on each yearly anniversary date thereafter, the Shareholder Account fees may be
increased by TSSG in an amount equal to the lesser of (i) the cumulative
percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U)
U.S. City Average, All Items (unadjusted -- (1982-84 + 100), published by the
U.S. Department of Labor, or (ii) seven percent (7%) of the Shareholder Account
Fees charged by TSSG to the Fund for the preceding twelve (12) month period.
II. FEES FOR DEDICATED PROGRAMMING SUPPORT
TSSG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. At the Fund's
expense, TSSG agrees to use reasonable efforts to make dedicated programming
support available for all projects required by the Fund. The amount of the
resources required and the projects to be worked on shall be determined jointly
based upon joint periodic review of project requirements; however, the Fund
will decide the priorities which will be assigned to each project and will
determine what projects the dedicated resources are to work on. Such resources
will be charged to the Fund at the rates set forth below. All enhancement,
improvements, modifications or new features added to the TSSG System shall be,
and shall remain, the confidential, exclusive property of, and proprietary to,
TSSG. Request for software changes may be initiated by those representatives of
the Fund identified in Exhibit 1 of this Schedule C. The Fund will use its best
efforts to notify TSSG in writing of requests for software changes within 72
hours of an initial verbal request. TSSG reserves the right to stop work on a
request for which written specifications have not been received.
1
<PAGE> 18
a. SUPPORT TO BE PROVIDED TO THE FUND FREE OF CHARGE. TSSG will provide
the following support at no additional cost to the fund:
1. Coding to correct deficiencies in the system, unless such deficiencies
are included in item (II)(b)(9) below in which event the Fund will be
charged for such services. A system deficiency is defined as a system
process which does not operate according to the design of the computer
application or system specifications. To correct system deficiencies,
TSSG will, at its own expense, expend whatever resources are necessary
to analyze the deficiency and apply an appropriate remedy, in the form
of corrected application code as expeditiously as possible. An
alternate process, in the form of a functional work around, may be a
suitable substitute for the actual system fix, if the level of effort
to develop the system fix is deemed to be impractical or the elapsed
time to develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be mutually agreed
upon by the parties.
TSSG will evaluate all reported referrals, to validate deficiency
status or reclassify as a system enhancement, based on the above
definition.
2. Simple Maintenance determined to be core processing.
3. TSSG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes; provided,
however, TSSG will only make such changes to the extent that they are
technically and commercially practical and are within the scope of the
software functions, capabilities and database.
b. SUPPORT TO BE PROVIDED TO THE FUND, BUT WHICH WILL BE BILLED AS
"DEDICATED PROGRAMING SUPPORT": The following activities are examples
of "dedicated programming support" which will be billed to the Fund:
1. Customized form output (i.e., statements, confirmation statements,
commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial funds
being live.
(continued on next page)
2
<PAGE> 19
8. Clean-up/Recovery project resulting from Fund error or causes beyond
the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to code
developed, and currently maintained by the dedicated teams.
10. Customization of existing functions specific to the Fund.
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. 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, TSSG or other TSSG clients agree to share
in the expense of the enhancements.
b). At any time during the 9 months following implementation, TSSG or
other TSSG clients agree to share the expense for the enhancements.
Access and Capability. The Funds' dedicated programmers will have access
and capability to update any part of the System. However, depending on the
skill set of the programmers, as well as the scope of the requested
enhancement, it may be in the best interest of both the Fund and TSSG to
utilize non-dedicated programmers to address certain enhancements. In
addition, because many programs are shared by multiple clients, some
enhancements may require approval from those clients. These enhancements
should be handled on an item by item basis.
c. FEES FOR DEDICATED PERSONNEL WHICH WILL BE BILLED TO THE FUND. TSSG
will bill the Fund monthly in arrears on a prorated basis of 1/12 of
the following annualized charges for each person dedicated to the
following positions:
<TABLE>
<S> <C>
Manager $100,000
Programmer $ 90,000
Business System Analyst/Tester $ 85,000
Non-dedicated programmer-hourly charge $100 per hour
</TABLE>
TSSG may adjust these salaries on the anniversary date of this agreement to
reflect salary increases, provided that they do not exceed seven percent (7%)
of the fees charged to the Fund for the identical positions during the
immediately preceding twelve (12) month period.
3
<PAGE> 20
SCHEDULE C
EXHIBIT 1
AIM FAMILY OF FUNDS
AUTHORIZED PERSONS REQUESTING
SYSTEM MODIFICATIONS
/s/ JOHN CALDWELL
-------------------------
John Caldwell
/s/ RICHARD SNYDER
---------------------
Richard Snyder
/s/ JOSEPH CHARPENTIER
----------------------
Joseph Charpentier
/s/ MARC VARGAS
---------------------
Marc Vargas
4
<PAGE> 21
SCHEDULED
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Telephone and telecommunication cost, including all lease, maintenance
and line costs
- NSCC transaction charges at $.15/per financial transaction
- Shipping, Certified and Overnight mail and insurance
- Year-End form production and mailings
- Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- Duplicating services, as per-approved by the Fund
- Courier services
- Due Diligence Mailings
- Rendering fees as billed
- Overtime, as pre-approved by the Fund
- Temporary staff, as pre-approved by the Fund
- Travel and entertainment, as pre-approved by the Fund
- Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
- Third party audit review
- All conversion costs: including System start up costs, but excluding
costs associated with conversations between TSSG systems.
- Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement. Such
expenses incurred with consent of the Fund, not to be unreasonably
withheld.
- The costs associated with the Year-End Support Services set forth on
the attached Exhibit 1 of this Schedule D.
- The costs associated with the Broker Dealer Support Services set forth
on the attached Exhibit 2 of this Schedule D.
<PAGE> 22
EXHIBIT 1 OF SCHEDULE D
Year-End Support Services: Flat rate of $.12/per shareholder account open as of
December 31, 1994.
The services listed below will be performed by TSSG for the Fund in support of
reporting for tax year 1994 and compliance mailings for calendar year 1994.
TSSG assumes responsibility for performing the services in compliance with
current IRS rules and regulations.
(a) Up-front year-end planning and communication of year-end related system
modifications.
(b) Production of IRS required tax forms and amended/corrected tax forms as
requested by the Fund.
(c) Production of IRS required 1099 magnetic tape filings.
(d) Production of tax forms on microfiche.
(e) Maintenance of year-end data files and the handling of transaction code
updates to those files.
(f) Submission of year-end jobs.
(g) B-notice processing as follows:
- receipt of B-notice listing from IRS or
- AFS upload of data entry of all accounts to B-Notice subsystem
- execution and generation of B-Notice defense reports
- analysis of B-Notice Defense Reports to ensure accurate coding
- coordination of mailings with vendor, including generation of vendor
tapes
- notification to Client Services of anticipated and actual mailing
dates, including volume, sample letters and confirmation of the date
backup withholding will be imposed if no response is received
- systematic upload of W-9 responses as volumes warrant
(h) Correction processing resulting from the monthly review of the year-end
files - "balancing."
(i) Production of cost basis information on 1099B forms.
(j) All required state filings as requested by the Fund.
(k) All IRS required mailings requested by the Fund: B-Notice, Safe Harbor,
W-9, TEFRA election, IRS Penalty Notice, and TIN solicitation.
<PAGE> 23
EXHIBIT 1 OF SCHEDULE D (cont'd)
(1) C-Notice processing as follows:
o receipt of C-Notice; imposition and release letters as received
from Fund or IRS
o performance of search function to identify all accounts associated
with the notice
o provide written instructions to Fund for proper account coding
(m) Initialization of Fund File in support of balancing tax reporting data
<PAGE> 24
EXHIBIT 2 OF SCHEDULE D
Broker/Dealer Support: Annualized fee of $.03/per shareholder account open
during any monthly period.
(a) NSCC Testing
(b) Back-up for NSCC redemption release
(c) Research and Problem Resolution
(d) Compliance and Support
<PAGE> 25
SCHEDULE E
DATA RETENTION AND RECOVERY STANDARDS
Data files included in the System are backed up according to a defined
retention schedule. This ensures availability of data for processing and
application recovery as well as compliance with regulatory requirements.
Critical files that are included in the retention process:
Shareholder Master
Shareholder History
Fund File
Dealer File
Global File
Certificate File
Broker/Client Cross Reference File
Additional Address File
Maintenance History File
Blue Sky Master
Price File
Rate File
Order Clearance File
These files are backed up as follows: daily and retained for six generations;
weekly and retained for 5 generations. The Shareholder Master, Shareholder
History and Fund Files are also backed up annually and retained for 7
generations.
In addition, the Acceptance File containing post-processing daily activity, and
the Daily File containing pre-processing transaction input, are backed up daily
and retained for six generations.
<PAGE> 26
SCHEDULE F
SYSTEM AVAILABILITY STANDARDS
These systems standards shall apply on business days.
<TABLE>
<S> <C>
o On-line systems availability between 7:00 a.m. and 7:00 p.m. CST - 95% measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CST) of 3 seconds or less, in response to the system
employed by A I M Fund Services, Inc. as of September 1. 1994 - 95% measured monthly.
o Daily report bundles in queue for transmission no later than 7:00 a.m. CST each business day - 95%
measured monthly each bundle measured separately.
o Daily job PFSRXOED containing the Acceptance File download in queue for transmission no later than 4:00
a.m. CST each business day - 95% measured monthly.
o Daily job PFSRXCAD containing the Cap Stock File download in queue for transmission no later than 6:30
a.m. CST each business day - 95% measured monthly.
o Weekly job PFSXOHW containing the Dealer File download in queue for transmission no later than 9:00
a.m. CST each Saturday - 95% measured quarterly.
</TABLE>
<PAGE> 1
EXHIBIT 9(a)(3)
AMENDMENT NUMBER 1 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
This Amendment Number 1 effective October 4, 1995 is made to the
Remote Access and Related Services Agreement dated December 23, 1994 (the
"Remote Agreement") by and between each registered investment company listed on
the signature pages hereof, either for itself or, with respect to each such
company that is a series investment company, on behalf of each of the series or
class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER
SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal
offices at One Exchange Place, Boston, Massachusetts 02109.
WHEREAS, the Fund desires to incorporate any changes or deletions to
those registered investment companies listed on the signature page of the
Remote Agreement as set forth on the signature page hereof;
WHEREAS, the Fund in connection with its access to the TSSG System,
desires to access and use TSSG's proprietary software known as the Structured
Query Language Application Programming Interface Product Release 5.0 (the
"SQL/API Product"); and
WHEREAS, TSSG desires to provide such access to the Fund solely in
conjunction with the Fund's use of the TSSG System.
In consideration of their mutual promises contained herein, the Fund
and TSSG agree to modify the Remote Access and Related Services Agreement (the
"Remote Agreement") as follows:
1. TSSG grants to the Fund a non-transferable and non-exclusive license
to access and use TSSG's SQL/API Product, maintained on the TSSG
System at the TSSG Facility, solely to process data with respect to
the Fund's internal business. The Fund is authorized to use the
SQL/API product only in connection with the Fund's remote use of the
TSSG System. The Fund shall be prohibited from the further sale,
lease, transfer, license or sub-license, assignment or marketing in
any manner of the SQL/API Product, or any other proprietary software
used in conjunction with the TSSG System. The Fund shall also be
prohibited from the sale, lease, transfer, license, sub-license,
assignment, or marketing in any manner of any software product
developed in conjunction with the SQL/API Product.
2. It is acknowledged that the Fund acquires only the right to use the
SQL/API Product while the Remote Agreement is in effect between the
parties and such right and said license shall terminate upon
termination of the Remote Agreement. The Fund acknowledges that it
does not acquire any rights of ownership in the SQL/API Product. This
Agreement and the license granted pursuant hereto may not be assigned,
sublicensed or transferred.
<PAGE> 2
3. The Fund shall not have the right to use the SQL/API Product other
than in connection with the use of the TSSG System in compliance with
the Remote Agreement. The Fund may use the SQL/API Product to access
the TSSG System using only TSSG Proprietary Software or software
developed internally by the Fund.
4. EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AMENDMENT, TSSG MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO THE FUND OR ANY
OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR
USAGE OF TRADE) OR ANY SERVICES PROVIDED UNDER THIS AGREEMENT.
5. Infringement Indemnity TSSG shall defend, at its expense, any action
brought against the Fund to the extent that is based on a claim that
the SQL/API Product infringes a United States copyright or duly issued
patent, or misappropriates the trade secrets of a third party. TSSG
shall indemnify and hold harmless the Fund against damages and costs
(including penalties, interest and reasonable attorney's fees) finally
awarded against the Fund directly attributable to such claim provided
that the Fund gives TSSG prompt written notice of such claim,
reasonable assistance and sole authority to defend or settle such
claim. If the SQL/API Product becomes, or in TSSG's opinion is likely
to become, the subject of such a claim then TSSG may, at its option:
(a) procure for the Fund the right to use the SQL/API Product free of
any liability for infringement or (b) replace or modify the SQL/API
Product to make it noninfringing. If TSSG is unable or determines
that it is commercially impracticable to undertake clause (a) or (b)
of this Section 5, the Fund will cease to use the directly affected
portion of the SQL/API Product, and if such SQL/API Product is in the
Fund's control, the Fund shall return or destroy it, and (c) TSSG will
grant to the Fund a pro-rata credit for the annual maintenance fee
that the Fund paid computed by dividing such fee by the total number
of months in the then current term of the license for the SQL/API
Product and multiplying the result by the number of months left in the
unexpired license term for the SQL/API Product.
TSSG shall have no obligation under this Section 5 if the alleged
infringement or violation is based upon the use of the SQL/API Product
in combination with other equipment or other software not furnished by
TSSG or if such claim arises from TSSG's compliance with the Fund's
designs, specifications or instructions or from the Fund's
modification of the SQL/API Product.
THIS SECTION STATES THE ENTIRE LIABILITY OF TSSG CONCERNING PATENT,
COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY RIGHTS INFRINGEMENT.
2
<PAGE> 3
6. Notwithstanding anything in this Amendment to the contrary, the Fund's
license to use the SQL/API Product will automatically terminate upon
termination of the Remote Agreement. This Amendment will terminate
automatically in the event of a breach of the sublicense.
7. TSSG shall take reasonable measures to enforce appropriate compliance
with the foregoing restrictions up to and including the institution
and diligent prosecution of proper legal proceedings.
8. The Fund will agree to compensate TSSG for all fees as referenced on
the attached Schedule #1 to this Amendment, and such other schedules
as may be agreed upon between the parties from time to time.
The Agreement as modified 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 promise not expressly contained
herein with respect to the subject matter hereof.
<PAGE> 4
The parties to this Amendment have caused it to be executed by their
duly authorized officers as of the date and year referenced above.
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC. AIM INVESTMENT SECURITIES FUNDS,
on behalf of the Class A and B Shares of on behalf of its AIM Limited Maturity
the Retail Classes of its AIM Charter Fund Treasury Shares
and AIM Weingarten Fund, and on behalf of the
Class A Shares of the Retail Classes
of AIM Constellation Fund and AIM By: /s/ ROBERT H. GRAHAM
Aggressive Growth Fund Portfolios -----------------------------------------------
Title: President
By: /s/ ROBERT H. GRAHAM ---------------------------------------------
-----------------------------------------------
Title: President AIM TAX-EXEMPT FUNDS, INC.,
--------------------------------------------- on behalf of its AIM Tax-Exempt Cash Fund and AIM
Tax-Exempt Bond Fund of Connecticut Portfolios and
the AIM Tax-Free Intermediate Shares of its
AIM FUNDS GROUP, Intermediate Portfolio
on behalf of the Class A and Class B
Shares of its AIM Balanced Fund, AIM
Intermediate Government Fund, AIM Growth By: /s/ ROBERT H. GRAHAM
Fund, AIM High Yield Fund, AIM Income -----------------------------------------------
Fund, AIM Municipal Bond Fund, AIM Global
Utilities Fund and AIM Value Fund Portfolios Title: President
and on behalf of the Class A, Class B and Class C ---------------------------------------------
Shares of its AIM Money Market Fund Portfolio
By: /s/ ROBERT H. GRAHAM THE SHAREHOLDER SERVICES
----------------------------------------------- GROUP, INC.
Title: President
--------------------------------------------- By: /s/ JACK P. KUTNER
------------------------------------------------
AIM INTERNATIONAL FUNDS, INC., Title: EVP - COO
of its AIM International Equity Fund, AIM Global ---------------------------------------------
Aggressive Growth Fund, AIM Global Growth Fund and
AIM Global Income Fund Portfolios
By: /s/ ROBERT H. GRAHAM
-----------------------------------------------
Title: President
---------------------------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE #1 TO AMENDMENT NUMBER 1
SQL/API FEES
Listed below are TSSG's License Fees for the SQL/API Product
o One Time License Fee $30,000
o Annual Maintenance Fee(1) billed $15,000
quarterly in advance beginning the
first month of the Agreement
o On-Going Development Cost(2) $ 125 per hour
o Out of Pocket Expenses Per the existing
Remote Agreement
dated 12/23/94.
The Fund and TSSG intend to implement initially Release 5.0 of the SQL/API
Product on 150 Workstations. For additional workstations beyond the 150
licensed, the Fund shall pay TSSG the then-current license, usage and support
fees for each additional Workstation
__________________________________
(1) The increase in the maintenance fee after the first year will be
equal to the lesser of (i) the previous year's 12 month average increase in the
Consumer Price Index (CPI) or (ii) seven percent (7%) of the maintenance fee
charged by TSSG for the preceding twelve month period.
(2) Development work includes product installation, customization and
enhancements requested by the Fund.
<PAGE> 1
EXHIBIT 9(a)(4)
ADDENDUM NUMBER 2 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
This Amendment Number 2 effective October 12, 1995 is made to the
Remote Access and Related Services Agreement dated December 23, 1994 (the
"Remote Agreement") by and between each registered investment company listed on
the signature pages hereof, either for itself or, with respect to each such
company that is a series investment company, on behalf of each of the series or
class named on the signature pages hereof (the "Fund") and THE SHAREHOLDER
SERVICES GROUP, INC. ("TSSG"), a Massachusetts corporation with principal
offices at One Exchange Place, Boston, Massachusetts 02109.
WHEREAS, the Fund desires to incorporate any changes or deletions to
those registered investment companies listed on the signature page of the
Remote Agreement as set forth on the signature page hereof;
WHEREAS, the Fund desires to use an additional product to the TSSG
System known as the Price Rate Capture System (the "PRAT Application"); and
WHEREAS, TSSG desires to provide the PRAT Application to the Fund
solely in conjunction with the Fund's use of the TSSG System;
In consideration of their mutual promises contained herein, the Fund
and TSSG agree to modify the Remote Access and Related Services Agreement (the
"Remote Agreement") as follows:
1. Modify Schedule D to include the attached Exhibit 3 to Schedule D
The Agreement as modified by this Addendum ("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 promise not expressly
contained herein with respect to the subject matter hereof.
The parties to this Addendum have caused it to be executed by their
duly authorized officers as of the date and year referenced above.
<TABLE>
<CAPTION>
<S> <C>
AIM EQUITY FUNDS, INC. AIM FUNDS GROUP,
on behalf of the Class A and B Shares of the Retail on behalf of the Class A and Class B Shares of its
Classes of its AIM Charter Fund and AIM AIM Balanced Fund, AIM Intermediate Government
Weingarten Fund, and on behalf of the Class A Fund, AIM Growth Fund, AIM High Yield Fund,
Shares of the Retail Classes of AIM Constellation AIM Income Fund, AIM Municipal Bond Fund,
Fund and AIM Aggressive Growth Fund Portfolios AIM Global Utilities Fund and AIM Value Fund
Portfolios and on behalf of the Class A, Class B and
BY:/s/ Robert H. Graham Class C Shares of its AIM Money Market Fund Portfolio
--------------------------
Title: President By:/s/ Robert H. Graham
----------------------- --------------------------
Title: President
----------------------
AIM INTERNATIONAL FUNDS, INC.
on behalf of the Class A and Class B Shares of its
AIM International Equity Fund, AIM Global
Aggressive Growth Fund, AIM Global Growth Fund
and AIM Global Income Fund Portfolios
By:/s/ Robert H. Graham
--------------------------
Title: President
-----------------------
</TABLE>
<PAGE> 2
AIM INVESTMENT SECURITIES FUNDS,
on behalf of its AIM Limited Maturity Treasury
Shares
By:/s/ Robert H. GRAHAM
--------------------------
Title: President
-----------------------
AIM TAX-EXEMPT FUNDS, INC.,
on behalf of its AIM Tax-Exempt Cash Fund and
AIM Tax-Exempt Bond Fund of Connecticut
Portfolios and the AIM Tax-Free Intermediate Shares
of its Intermediate Portfolio
By:/s/ Robert H. GRAHAM
--------------------------
Title: President
-----------------------
THE SHAREHOLDER SERVICES GROUP,
INC.
By:/s/ JACK PUTNER
--------------------------
Title: COO - EVP
-----------------------
<PAGE> 3
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse TSSG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and entertainment, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversations between TSSG
systems.
o Such other miscellaneous expenses reasonably incurred by TSSG in
performing its duties and responsibilities under this Agreement.
Such expenses incurred with consent of the Fund, not to be
unreasonably withheld.
o The costs associated with the Year-End Support Services set
forth on the attached Exhibit 1 of this Schedule D.
o The costs associated with the Broker Dealer Support Services set
forth on the attached Exhibit 2 of this Schedule D.
o The costs associated with the Price Rate Transmission Services
set forth on the attached Exhibit 3 of this Schedule D.
<PAGE> 4
EXHIBIT 3 TO SCHEDULE D
Price Rate Capture System Services (PRAT)
- - -----------------------------------------
The PRAT Application will accept prices and dividend rates from the Fund
Accounting Department of A I M Advisors, Inc. electronically and post them to
the TSSG Pricing System. The PRAT Application will run interconnected via
Local Area Network hardware and software.
The fees for the PRAT Service shall be as follows:
o One Time Set Up Fee $5,000.
o Annual Fee* $7,500.
*The annual fee provides system and personnel resources required to support a
maximum average of 50 transmissions per month. A charge of $30.00 per
transmission will be assessed for all transmissions incurred in excess of the
average 2 per day per month.
<PAGE> 1
EXHIBIT 9(a)(5)
AMENDMENT NUMBER 3 TO THE REMOTE
ACCESS AND RELATED SERVICES AGREEMENT
THIS AMENDMENT, dated as of February 1, 1997 is made to the Remote
Access and Related Services Agreement dated December 23, 1994, as amended (the
"Agreement") between each registered investment company listed on the attached
Exhibit 1 hereof, (the "Fund") and The Shareholder Services Group, Inc., now
known as First Data Investor Services Group, Inc. ("FDISG").
WITNESSETH
WHEREAS, the Fund and FDISG desire to further amend the Agreement to
reflect certain changes thereto.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree that as of the date first referenced above, the
Agreement shall be amended as follows:
1. All references to "THE SHAREHOLDER SERVICES GROUP, INC." are hereby
deleted and replaced with "FIRST DATA INVESTOR SERVICES GROUP, INC." and all
references to "TSSG" are hereby deleted and replaced with "FDISG".
2. Delete the second sentence from Section 3(c) and replace with the
following:
"The Fund will pay to FDISG the amount so billed by Federal Funds Wire
within fifteen (15) business days after the Fund's receipt of the
invoice."
3. Section 4(b) of the Agreement is hereby deleted in its entirety and
replaced with the following new Section 4(b):
"FDISG agrees to provide to the Fund at its facilities located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046, 12 Greenway Plaza,
Houston, Texas 77046, 301 Congress Street, Suite 1700, Austin, Texas
78701 and 12503 East Euclid Drive, Suite 250, Englewood, CO 80111 or
at such other locations as may be mutually agreed upon in writing by
FDISG and the Fund (the "Fund Facility") remote access to the use of
information processing capabilities of the FDISG System as it may be
modified from time to time by FDISG."
4. Section 12 of the Agreement is hereby amended by adding the following
new Sections 12(c), through 12(i):
"(c) FDISG shall retain title to and ownership of the FDISG System,
including any and all data bases, computer programs, screen
formats, report formats, interactive design techniques,
derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents,
copyrights, trade secrets, and
<PAGE> 2
other related legal rights utilized in connection with the
services provided by FDISG to the Fund hereunder other than
shareholder account and transaction information which shall
remain the exclusive property of the Fund.
(d) FDISG hereby grants to the Fund and the Fund accepts a limited
license to the FDISG System for the sole and limited purpose
of having FDISG provide the services contemplated hereunder
and nothing contained in this Agreement shall be construed or
interpreted otherwise and subject to Section 15 such license
shall immediately terminate with the termination of this
Agreement.
(e) The transmission of account inquiry and transaction
information, including but not limited to maintenances,
exchanges, purchases and redemptions, shall be limited to
direct entry to the FDISG System by means of on-line mainframe
terminal entry or PC emulation of such mainframe terminal
entry and any other non-conforming method of transmission of
information to the FDISG System is strictly prohibited without
the prior written consent of FDISG.
(f) FDISG warrants that the FDISG System shall include, at no
additional cost to the Fund, design and performance
capabilities so that prior to, during, and after the calendar
year 2000, the FDISG System will not malfunction, produce
invalid or incorrect results, or abnormally cease to function
due to the year 2000 date change. In connection with the
foregoing, FDISG agrees to provide the Fund with periodic
quarterly updates with respect to FDISG compliance with this
provision.
(g) Other than CPU Authorization Passwords, FDISG represents and
warrants to the Fund the software products provided by FDISG
hereunder (the "Products") do not contain any "back door" or
concealed access devices, any block or protection feature
which prevents the Fund from making additional copies of such
Products as permitted by this Agreement or any "self-help"
code, "Unauthorized Code", "software locks" or any other
similar devices which, upon the occurrence of a certain date
or event, the passage of a certain amount of time, or taking
of any action (or failure to take action) by or on behalf of
FDISG, will cause such Products or any software or system with
such Products are used to be destroyed, erased, damaged, or
otherwise made inoperable. "Unauthorized Code" shall mean any
virus, Trojan horse, worm, or other software routines designed
to permit unauthorized access: to disable, or otherwise harm
software, hardware, or data; or to perform any other such
actions.
(h) Provided the Fund gives FDISG reasonable written notice,
reasonable assistance, including assistance from the Fund's
employees, agents, affiliates and to the extent possible
independent contractors (collectively, "FUND'S AGENTS"), and
sole authority to defend or settle the action, then FDISG
shall do the following ("INFRINGEMENT INDEMNIFICATION"): (a)
defend or settle, at its expense, any action brought against
the Fund or the Fund's Agents to the extent the action is
based on a claim that the Fund's use of the FDISG System
infringes a duly issued United
<PAGE> 3
States' patent or copyright or violates a third party's
proprietary trade secrets or other similar intellectual
property rights ("INFRINGEMENT"); and (b) pay damages and
costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no
Infringement Indemnification obligation if the alleged
Infringement is based upon the Fund's use of the FDISG System
with equipment or software not furnished or approved by FDISG
or if such claim arises from FDISG's compliance with the Fund's
designs, or from the Fund's modifications of the Software.
The Infringement Indemnification states FDISG's entire
liability for Infringement and shall be the Fund's sole and
exclusive remedy for such claims.
(i) Within sixty (60) days after the execution of this Amendment,
FDISG and the Fund shall enter into an escrow agreement
relating to the source code for (i) the FDISG proprietary
software used in connection with the FDISG System (as defined
in Section 1 of the Agreement: (ii) the "Software" (as that
term is defined in Schedule G), including the Third Party
Software set forth in Sections 2.1.1 and 2.1.2 of Exhibit 1 of
Schedule G; and (iii) the "FDISG Software" as that term is
defined in Schedule H (collectively, the "Source Code")
substantially in the form attached as Exhibit 2 of this
Amendment Number 3 ("Exhibit 2"). Promptly after signing the
escrow agreement, FDISG shall forward the agreement to the
escrow agent with a copy of the Source Code to be deposited
into escrow. FDISG agrees to update the Source Code held by
the escrow agent on a quarterly basis. The Fund shall be
responsible and pay for all fees of the escrow agent. The
Source Code may be released to the Fund only if (i) FDISG
ceases to do business, makes an assignment for the benefit of
creditors, becomes insolvent (as revealed by its books and
records or otherwise), is generally unable to pay its debts as
such debts become due, or commences, or has commenced against
it a case under any chapter of state or federal bankruptcy
laws; and FDISG fails to cure any such event within sixty (60)
days after receiving notice from the Fund; and (ii) the Fund
has paid all amounts due to FDISG under this Agreement. Upon
receipt of the Source Code from the escrow agent, the Fund
shall a have license to use the Software solely as set forth
herein for the remaining current term of the Agreement subject
to Section 15, which use shall be expanded to include the
right to modify the software solely in connection with support,
maintenance and operation of the software and not for any
other purpose or person."
5. Sections 14(a) and (b) of the Agreement are hereby deleted from the
Agreement and replaced with the following new Sections 14(a) and (b):
(a) This Agreement which became effective as of December 23, 1994
is hereby extended effective February 1, 1997 and shall
continue through January 31, 2000 (the "Initial Term"). Upon
the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or FDISG provides
written notice to the other of its intent not to
<PAGE> 4
renew. Such notice must be received not less than one-hundred
and eighty (180) days prior to the expiration of the Initial
Term or the then current Renewal Term.
(b) Notwithstanding the foregoing Section 14(a), in the event the
Fund provides notice of its intent to terminate as set forth in
Section 14(a), the Fund may extend the term of the Agreement
for up to an additional one-hundred and eighty (180) days (the
"Extension Period") by providing FDISG with written notice of
its intent to do so. Such notice must be received no later
than one-hundred and eighty (180) days prior to the expiration
of the Initial Term. During the Extension Period, the Fund may
terminate this Agreement at any time on thirty (30) days
written notice.
6. Section 15 is hereby amended by adding the following sentence to the
end of the paragraph:
"FDISG agrees to provide reasonable, supervised system access until
the Fund's conversion to another provider is complete".
7. Section 23(a) is hereby amended by deleting the information regarding
notices and inserting the following
To: The AIM Family of Funds
c/o A I M Fund Services, Inc.
Eleven Greenway Plaza, Suite 100
Houston, Texas 77046
Attention: John Caldwell, President
with copy to:
Fund Legal Counsel at same address
Attention: Carol F. Relihan, Senior Vice President &
General Counsel
To: First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 02109
Attention: President
with copy to : General Counsel (same address)
8. Section 23 is hereby amended by adding the following new sub-section
(k):
"(k) Notwithstanding the indemnity provided by the Fund in Section
8(g), FDISG agrees to use commercially reasonable efforts to
maintain a Disaster Recovery Plan, at no cost to the Fund,
designed to minimize the impact of any unforeseen business
interruption or outage that renders the FDISG System or FDISG
Facility inoperable, a summary of which is attached hereto as
Schedule I."
<PAGE> 5
9. Schedule C is hereby deleted in its entirety and replaced with the
attached revised Schedule C.
10. Exhibit 1 and Exhibit 2 of Schedule D are hereby deleted in their
entirety.
11. Schedule F is hereby deleted in its entirety and replaced with the
attached revised Schedule F.
12. Addendum Number 2 to the Agreement is hereby deleted in its entirety
and the new revised Schedule D - Out of Pocket Expenses as referenced in
Section 3(b) is hereby added to the Agreement.
13. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary IMPRESS Plus software and system in
accordance with the terms of and as more fully described in IMPRESS Plus
Software and Support Terms annexed hereto as Schedule G and incorporated
herein.
14. In addition to the foregoing, FDISG shall provide the Fund with a
software license to FDISG's proprietary Accounting Control Environment +
("ACE +") software in accordance with the terms of and as more fully described
in the ACE + Software and Support Terms annexed hereto as Schedule H and
incorporated herein.
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes all
prior and contemporaneous agreements between the parties in connection with the
subject matter hereof. No officer, employee, servant or other agent of either
party is authorized to make any representation, warranty, or other promises not
expressly contained herein with respect to the subject matter hereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective Portfolios and Classes set forth in
Exhibit 1 attached hereto as may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
-------------------------------------
Title: President
----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ GERALD G. KOKOS
-------------------------------------
Title: Executive Vice President
----------------------------------
<PAGE> 7
EXHIBIT 1
LIST OF FUNDS
<TABLE>
<S> <C>
AIM EQUITY FUNDS, INC.
Portfolios: Classes:
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
AIM FUNDS GROUP
Portfolios: Classes:
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B, and
AIM Cash Reserve Shares
AIM INTERNATIONAL FUNDS, INC.
Portfolios: Classes:
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
AIM INVESTMENT SECURITIES FUNDS
Portfolios: Classes:
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
AIM TAX-EXEMPT FUNDS, INC.
Portfolios: Classes:
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 8
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number __________
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this ______ day of _____ 1997, by and among
Data Securities International, Inc. ("DSI"), a Delaware corporation, First Data
Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 9
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 10
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 11
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 12
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 13
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 14
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 15
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 16
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By: FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name:
------------------------------- By:
Title: ---------------------------------
------------------------------ Name:
-------------------------------
Title:
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
</TABLE>
<PAGE> 17
SCHEDULE A
LIST OF FUNDS
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A and B Shares
AIM Capital Development Fund Class A and B Shares
AIM Charter Fund Class A and B Shares
AIM Weingarten Fund Class A and B Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A and Class B Shares
AIM Global Utilities Fund Class A and Class B Shares
AIM Growth Fund Class A and Class B Shares
AIM High Yield Fund Class A and Class B Shares
AIM Income Fund Class A and Class B Shares
AIM Intermediate Government Fund Class A and Class B Shares
AIM Municipal Bond Fund Class A and Class B Shares
AIM Value Fund Class A and Class B Shares
AIM Money Market Fund Class A, Class B and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A and Class B Shares
AIM Global Aggressive Growth Fund Class A and Class B Shares
AIM Global Growth Fund Class A and Class B Shares
AIM Global Income Fund Class A and Class B Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund n/a
AIM Tax-Exempt Bond Fund of Connecticut n/a
Intermediate Portfolio AIM Tax-Free Intermediate Shares
</TABLE>
<PAGE> 18
EXHIBIT A
DESIGNATED CONTACT
Account Number: __________
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
[Company Name/Address] ------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
------------------------------------------------
- ----------------------------------------
Invoice Contact:
- ---------------------------------------- --------------------------------
Designated Contact:
---------------------
Telephone:
------------------------------
Facsimile:
------------------------------
State of Incorporation:
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO:
-----------------------------------------------
First Data Investor Services Group, Inc.
4400 Computer Drive -----------------------------------------------
Westborough, MA 01581
-----------------------------------------------
-----------------------------------------------
Designated Contact: Invoice Contact:
--------------------- -------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 19
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number:
--------------------------------------------------------
Depositor Company Name:
--------------------------------------------------------
DEPOSIT TYPE:
Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS:
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS:
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Version:
----------------- ------------------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By: By:
--------------------------------------- ---------------------------------------
Print Name: Print Name:
------------------------------- -------------------------------
Date: Date of Acceptance:
------------------------------------- -----------------------
ISE: EXHIBIT B#:
--------- ---------------
</TABLE>
<PAGE> 20
SCHEDULE C
FEE SCHEDULE
I. SHAREHOLDER ACCOUNT FEES. The Fund shall pay the following fees:
("Shareholder Account Fees"):
For the period beginning on the date of this Agreement, and continuing through
January 31, 2000, the Fund shall pay FDISG an annualized fee for shareholder
accounts open during any monthly period ("Open Account Fee") as follows:
<TABLE>
<CAPTION>
Account Volume Fee
<S> <C>
1-1.5 million $3.60/shareholder account
Exceeding 1.5 million $2.25/shareholder account
</TABLE>
The Fund also shall pay FDISG an annualized fee of $1.80 per shareholder
account that is closed during any monthly period ("Closed Account Fee") (The
Open Account Fees and Closed Account Fees hereafter collectively referred to as
"Shareholder Account Fees"). The Shareholder Account Fees shall be billed by
FDISG monthly in arrears on a prorated basis of 1/12 of the annualized fee for
all such accounts.
FDISG will provide a credit to the Shareholder Account Fees of one million
dollars in the years 1998 and 1999. The credit shall be applied as a reduction
of $83,333.33 on each monthly fee bill in 1998 and 1999.
In addition, on January 1 of the years 1998, 1999, and 2000 the Shareholder
Account fees may be increased by FDISG in an amount equal to the lesser of (i)
the cumulative percentage increase in the Consumer Price Index for all Urban
Consumers (CPI-U) U.S. City Average, All Items (unadjusted - (1982-84 + 100),
published by the U.S. Department of Labor, or (ii) seven percent (7%) of the
Shareholder Account Fees charged by FDISG to the Fund for the preceding twelve
(12) month period.
In return for the Shareholder Account Fees, FDISG agrees to provide the
following to the Fund:
o Remote Access to FDISG's FSR System
o License for 512 IMPRESS Plus software installations valued at 2.5
million dollars. Includes six weeks of technical and user training
(train-the-trainer).
o License for up to 10 copies of FDISG's ACE+ (Automate Control
Environment) software as further defined in Schedule H
o Dedicated Programming Support equivalent to I Systems Manager, 4
Programmers, and 2 Business Systems Analysts
o Implementation of a Separate FSR processing cycle by September 15,
1997, as more fully described in the attached Exhibit 3 of this
Schedule C.
o Implementation of the core TA system functionality identified in
Exhibit 1 of this Schedule C.
<PAGE> 21
o Implementation of IWT functionality as identified in Exhibit 2 of this
Schedule C
o Continued use of FDISG's Price/Rate Transmission (PRAT) application.
The PRAT Application will accept prices and dividend rates from the
Fund Accounting Department of the Fund electronically and post them to
the FDISG Pricing System. The PRAT application will run interconnected
via Local Area Network hardware and software.
II. DEDICATED PROGRAMMING SUPPORT
FDISG and the Fund will jointly determine the level of dedicated system
resources required to meet the Fund's enhancement priorities. FDISG agrees to
use reasonable efforts to make dedicated programming support available for all
projects required by the Fund. The amount of the resources required and the
projects to be worked on shall be determined jointly based upon joint periodic
review of project requirements; however, the Fund will decide the priorities
which will be assigned to each project and will determine what projects the
dedicated resources are to work on. All enhancements, improvements,
modifications or new features added to the FDISG System shall be, and shall
remain, the confidential, exclusive property of, and proprietary to, FDISG. The
parties agree to use best efforts to ensure that all enhancements to FDISG's
System, whether made by the Dedicated Team or otherwise, shall be made in a
manner that will not adversely effect the operational efficiency or
functionality of the FDISG System. Request for software changes may be
initiated by those representatives of the Fund identified in Exhibit 4 of this
Schedule C. The Fund will use its best efforts to notify FDISG in writing of
requests for software changes within 72 hours of an initial verbal request.
FDISG reserves the right to stop work on a request for which written
specifications have not been received.
a. SUPPORT PROVIDED TO THE FUND PERFORMED IN GROUPS OTHER
THAN THE DEDICATED PROGRAMMING TEAM
1. Coding to correct deficiencies in the system, unless such
deficiencies are included in item (II)(b)(9) below in which
event the Fund will be charged for such services. A system
deficiency is defined as a system process which does not
operate according to the design of the computer application or
system specifications. To correct system deficiencies, FDISG
will, at its own expense, expend whatever resources are
necessary to analyze the deficiency and apply an appropriate
remedy, in the form of corrected application code as
expeditiously as possible. An alternate process, in the form
of a functional work around, may be a suitable substitute for
the actual system fix, if the level of effort to develop the
system fix is deemed to be impractical or the elapsed time to
develop and apply the fix extends beyond the reasonable time
needed. For deficiencies identified by the Fund, the use of a
functional work around as an alternate process shall be
mutually agreed upon by the parties.
FDISG will evaluate all reported referrals, to validate
deficiency status or reclassify as a system enhancement, based
on the above definition.
2. Simple Maintenance determined to be core processing.
<PAGE> 22
3. FDISG generated (i.e., internal) requests to extend system
functionality and ensure industry competitiveness.
4. Enhancements required to comply with regulatory changes;
provided, however, FDISG will make such changes to the extent
that they are technically and commercially practical and are
within the scope of the software functions, capabilities and
database. FDISG agrees to use good faith in determining
whether such changes are technically and commercially
reasonable and agrees to negotiate with the Fund in good faith
to resolve any such issues.
b. EXAMPLES OF ACTIVITY TO BE PROVIDED TO THE FUND WHICH WILL
BE PERFORMED BY THE DEDICATED PROGRAMMING TEAM:
1. Customized form output (i.e., statements, confirmation
statements, commission statements).
2. Customized reports.
3. Addition of new features (enhancements) requested by the Fund.
4. Addition of existing features not used by the Fund.
5. Addition of new funds to the fund group.
6. Customized year-end processing.
7. Conversions from other systems to FSR subsequent to initial
funds being live.
8. Clean-up/Recovery project resulting from Fund error or causes
beyond the reasonable control of either party.
9. System "fixes" - coding to correct errors attributable to
code developed and currently maintained by the dedicated
teams.
10. Customization of existing functions specific to the Fund
11. Program documentation as requested by the Fund.
Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software developed by its dedicated programming staff. 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, FDISG or other FDISG clients agree
to share in the expense of the enhancements.
b) At any time during the 9 months following implementation,
FDISG or other FDISG clients agree to share the expense for
the enhancements.
Access and Capability. The Funds' dedicated programmers will have
access and capability to update any part of the System. However,
depending on the skill set of the programmers, as well as the scope of
the requested enhancement, it may be in the best interest of both the
Fund and FDISG to utilize non-dedicated programmers to address
<PAGE> 23
certain enhancements. In addition, because many programs are shared by
multiple clients, some enhancements may require approval from those
clients. These enhancements should be handled on an item by item
basis.
III. ADDITIONAL FEES
a. If the Fund chooses to use resources in addition to the
Dedicated Programming Team to accomplish work as outlined in
Section II.b, the following rates will apply:
<TABLE>
<CAPTION>
Annual Hourly
------ ------
<S> <C> <C>
Programmer $100,000 $135/hr
Business Systems Analyst $ 90,000 $100/hr
Acceptance Tester $ 85,000 $ 90/hr
</TABLE>
These rates apply to development and customization on all
software covered under this agreement (i.e. core TA system,
IMPRESS Plus, ACE+).
b. IMPRESS Plus Maintenance and Support Fees - The Fund will be
billed a monthly fee of $64,000 (fee based on $1500 per
workstation per year for 512 workstation license). Billing to
commence on the earlier of a) first production usage of
IMPRESS Plus software or b) August 1, 1997. Maintenance and
Support Fees include:
o All third party software maintenance charges from
software licensed in Exhibit 1 of Schedule G
o Full IMPRESS Plus applications support (bug fixes,
application assistance, etc.)
o Remote Dial-in IMPRESS Plus application support (if
needed)
o Subsequent interim and major releases for all
licensed IMPRESS Plus products
o 7x24 Help Desk Support for IMPRESS Plus applications
o Full support through First Data for third party
applications licensed in Exhibit 1 of Schedule G
o Participation in IMPRESS Plus User Group
c. IMPRESS Plus Installation Fees - Billable to the Fund at
$135/hr. (Estimate for 512 IMPRESS Plus workstations is 1100
hours). Installation includes:
o IMPRESS Plus application installation
o IMPRESS Plus third party software installation
o Network Design Assistance
o Hardware Configuration Assistance
o Workflow analysis
<PAGE> 24
o Project Management
o Post Installation Support
d. On each anniversary date of this Agreement, FDISG may adjust
the hourly and annual rates to reflect salary increases
and/or to maintain competitive rates in attracting qualified
personnel. Such annual increase will not exceed seven percent
(7%).
e. IMPRESS Plus Maintenance and Support and EMPRESS Plus
Installation Fees do not include the following:
o Hardware
o Network and Server Software not listed in Exhibit 1
of Schedule G
o Customization or application integration
o Support for IMPRESS Plus applications customized or
built by the Fund (see Section 3 of Exhibit 3 of
Schedule G)
o Installation, Integration and On-going Support of
hardware, network, and software components not
included in Schedule G
o Travel Expenses for install and support staff for
on-site visits (billed separately per Schedule D)
o Application Source Code
f. IMPRESS Plus Maintenance and Support and IMPRESS Plus
Installation Fees for Separate Test or Training System.
Maintenance and Support Fees - The Fund will be billed a
monthly fee of $2,666.66 (based on $1000 per workstation per
year with a minimum 32 workstation license). Billing to
commence on first production usage of IMPRESS Plus software in
the Training or Test environment. Maintenance and Support
includes items listed in Section III.b above.
Installation Fees - Billable to the Fund at $135/hr. (Estimate
for 32 IMPRESS Plus workstations is 200 hours). Installation
includes items listed in Section III.c above.
<PAGE> 25
g. Fees for IMPRESS Plus workstations in excess of 512:
<TABLE>
<CAPTION>
o Number of workstations ordered One-time License Fee
<S> <C>
32 $1300/workstation
64 $1000/workstation
128 waived
256 waived
</TABLE>
o Maintenance and Support - $1500 per workstation per
year; billable on first production usage of IMPRESS
Plus software; includes items listed in Section III.b
above
o Installation Fees - Billable to the Fund at $135/hr;
includes items listed in Section III.c above
The Fund agrees to pay a minimum of 18 months Maintenance and
Support for each workstation in excess of 512.
<PAGE> 26
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOI SYSTEMMATIC Specs
1 26610 DEFAULT/RECALCULATION PROBLEM Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
*Recalc does not include all
purchases applied to the LOI.*
Dealer comm credit not posted in
recalc.* No adjustment code to
adjust underwriter. * Trades
outside LOI period included in
recalc.* No ability to turn off
systematic recalc.
====================================================================================================================================
====================================================================================================================================
PRODUCE CHECKS ON NT2 ACCOUNTS Specs
2 19164 WITH DIRECT REDEMPTIONS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Checks should be produced for
direct reds on NT2 accounts.
Transactions post to history, yet
no checks are produced. Update
DRDM0750 to allow.
====================================================================================================================================
====================================================================================================================================
3 25276 WIRE ORDER PROCESSING PROBLEM Specs
Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Wire order cancel/replacements
(OPR/OPC) do not update master
controls if not double Qc'd. If not
double Qc'd both trades appear
as new purchase orders.
====================================================================================================================================
====================================================================================================================================
Specs
4 24262 CERTIFICATE REPORT MISSING DATA Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
PFSR135D-R12 does not include
the work of several days in 1996.
Unable to reconcile certificate
issues without adhocs to identify
missing data.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 27
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSCC REPORT PNSC802D - Specs
INCORRECT COMMISSIONS ON Received
5 26768 SPLIT REPS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
This report overestimates the
commission paid to split reps.
NSCC regulation requires
settlement by this report,
resulting in overpayments.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC REJECT REPORT PNSCSPSD- Specs
R01 - MULTI PAGE REJECT RECEIVED
6 26769 DELETIONS AND TRUNCATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
NSCC rejects for a dealer that
run for more than one page are
dropping accounts, resulting in
inconsistancies from one page to
the next. Also truncation pro-
blems with Settlement Value,
Commission Amount and Fund Owes
Dealer amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ONLINE EDIT PREVENTING USE OF Specs
7 26772 CDSC EXEMPT OPTION 3. Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Exempt option 3 grosses up
CDSC on SWiPs, ensuring
consistent dollar amount
swips. For funds allowing
CDSC-free SWIPs, edit pre-
venting a shareholder
redeeming an amount
greater than 12% annually
from having a SWIP with a set
dollar amount.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 28
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LOIMNT DELETING Specs
BROKER CLIENT Received
8 23849 NUMBER
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Systematic completion
of an LOI removes the
Broker Client Number
form the account in
error. Absence of the
BRCN causes problems
for the dealer.
Maintenance journals
are reviewed to
identify these accounts
and re-add the BRCN.
====================================================================================================================================
====================================================================================================================================
NET INDICATOR NOT Specs
CARRYING TO QC SCREEN Received
9 26155 AND NO MISMATCH WARNING
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When entering a wire
order redemption as a
"net" amount trade, the
net indicator is not
carried forward in the
QC process, and does not
provide a mismatch
warning. The trade then
processes as "gross",
the default.
====================================================================================================================================
====================================================================================================================================
ASSIGNMENT OF CLOSED Specs
11 26770 ACCOUNTS ON QA RECORD Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
If a QA record is
manually created and
the master account is
not designated, FSR
assigns the first
account entered. If
this account is
closed, a consolidated
statement will not
print. Results in
additional phone calls
andduplicate statement
requests.
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REASSIGNMENT OF MASTER ACCOUNT Specs
12 26771 NUMBER Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
When a master account closes
AIM would like the master
account status to be reassigned
systematically to an open account
within the QA cluster. Currently
this is a time consuming manual
process.
====================================================================================================================================
====================================================================================================================================
Specs
13 26611 DIVIDEND CONTROL REPORT PROBLEMS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
The Dividend and Capital Gain
reports do not match the
summary reports.
====================================================================================================================================
====================================================================================================================================
DUPLICATE STATEMENTS BY DBR NOT Specs
14 26612 AVAILABLE Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
AFS would like the ability to
request duplicate statements by
dealer, dealer/branch,
dealer/branch/rep. Current
functionality is by fund/account.
====================================================================================================================================
====================================================================================================================================
PAC'S NOT RUNNING ON CAPITAL Specs
16 26154 DEVELOPMENT ACCOUNTS Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts opened via merger
subscription with converted PAC
information, when the PAC is
turned on, do not run. Deletion
and reestablishment of the PAC
data does not resolve the issue.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
Exhibit 1 of Schedule C
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRTY REFERRAL DESCRIPTION APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC'97
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUNDSERV REDEMPTION SHOWS
INCORRECT SHARE AMOUNT ON Specs
17 25763 HISTORY Received
- ------------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- ------------------------------------------------------------------------------------------------------------------------------------
Several examples of FundSERV
reds where the less than the
full amount of shares appear
redeemed in the line of
history, but the account is
left with a zero balance. The
correct amount is paid through
the NSCC. Control balancing
problems result.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
EXHIBIT 2 OF SCHEDULE C
IWT FUNCTIONALITY
<TABLE>
<CAPTION>
- ---------------------------- ----------------------------
NEW ACCOUNT FINANCIALS
- ---------------------------- ----------------------------
<S> <C>
CASHIERING REPORT
- ---------------------------- ----------------------------
ACCOUNT OPTIONS EXCEPTION WAIVER
- ---------------------------- ----------------------------
AUTO EXCHANGE ENHANCED QC
- ---------------------------- ----------------------------
BANK ADDRESS
- ---------------------------- ----------------------------
AIP FINANCIAL QC
- ---------------------------- ----------------------------
BANK WIRE IMBALANCE REPORT
- ---------------------------- ----------------------------
BENEFICIARY INTERNAL ASSET MOVE
- ---------------------------- ----------------------------
CHECKWRITING EXCHANGE
- ---------------------------- ----------------------------
DIVIDENDS/CAPGAIN TRANSFER
- ---------------------------- ----------------------------
SWP PURCHASES
- ---------------------------- ----------------------------
TELEPHONE RED REDEMPTIONS
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
ACCOUNT SEARCH
- ---------------------------- ----------------------------
ACCOUNT SETUP
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
DEALER
- ---------------------------- ----------------------------
DEALER OFFICE REP LIST
- ---------------------------- ----------------------------
DEALER ALPHA SEARCH
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
FINANCIAL INQUIRY
- ---------------------------- ----------------------------
- ---------------------------- ----------------------------
GROUP MASTER ADD
- ---------------------------- ----------------------------
LOI/ROA
- ---------------------------- ----------------------------
ACCOUNT LINK/UNLINK
- ---------------------------- ----------------------------
IWT ACCOUNT LIST
- ---------------------------- ----------------------------
PROCESSED ITEM LIST
- ---------------------------- ----------------------------
</TABLE>
<PAGE> 32
EXHIBIT 3 OF SCHEDULE C
AIM SEPARATE CYCLE OVERVIEW
This project removes AIM from all FSR regions, files, jobstreams, control
cards, etc. and establishes them with their own. It will allow AIM to have more
control over their processing and removes any unexpected complications caused
by dependency on the activities of other management companies.
VOLUME
o 1700+ Jobstreams (JCL, Procs, and Control Cards) to evaluate
o Approximately 70% of these will qualify for processing
(create new AIM and modify FSR)
o * Files to convert
o * GDGs
o * additional Tapes/Cartridges
o * additional DASD required
o * additional Tape Mounts
* These figures are currently being researched.
AFFECTED AREAS/DEPARTMENTS
o AIM Client Services - John Corey
o Atest - Kathy McNeil, Steve Carlson
o BOSS Application - Tom Farnsworth (B)
o Capacity Planning - Ron Larue
o Corporate Actions - Joe Viens
o DASD - John Dryer, Janet Rose (B)
o Database Administration (DBA) for On-line - Steve Powers (B)
o DCX - Linda Messore, Ann Stadtherr
o ESG - Connie Ciulla, Arthur Roy
o Express Delivery - Don Morgan
o FSR - Tom Woislow, Bill VonHandorf, Bill Quigley, Bob Reilly,
Ray Bennison
o NSCC - Carl Damelio
o Print Mail - Helene Grunes (B)
o Tape Operations - Don Chappell
o SCE - Ed Oelerich, Ellen Rhode
o Tax/CBA - Ed Boyle
o Transmissions - Frank Pitzi
Because of the large volume of work to be done and the number of departments
involved we are developing a "phased in" development and implementation
approach. This will cause the least impact to both our client and our own
internal departments. It will require tight project management and dedicated
point people both from AIM and our own departments. Each phase will migrate up
through test, acceptance and production.
<PAGE> 33
PHASE 1 - START-UP FILES
The foundation of this approach is to create six basic files with an AIM
high-level qualifier on a daily basis from the FSR system which can be used by
jobs which read them but not update them (see Phase 2). They would be deleted
at the beginning of the next day's cycle and recreated by the FSR cycle. These
files are:
P03AIM.PRIV.MASTER.DATE
P03AIM.PRIV.BATCH.DATE
P03AIM.PRIV.MASTER.FUND
P03AIM.PRIV.BATCH.FUND
P03AIM.PRIV.TRANS.ACCEPT1
P03AIM.PRIV.TRANS.DIVIDEND
The first four files would be copied from FSR files to AIM files in a new
temporary AIM job which would run daily.
The last two files, trans.accept1 and trans.dividend, currently exist with
different names in FSR. Job PFSR13DD (FSR/FED WIRE) now creates
P03FSR.TEMP.XMITOUT.ACCEPT1.AIM which contains all accept records for AIM. Job
PFSR13ED (FSR/FED WIRE) now creates P03FSR.TEMP.XMITOUT.DIV.AIM which contains
all dividend records for AIM. These files are input to AIM transmission jobs
(PFSRXCGD and PFSRXCLD) and the FSR/POST BACKUPS job (PFSR71HD).
We would rename P03FSR.PRIV.TRANS.ACCEPT1 and P03FSR.PRIV.TRANS.DIVIDEND to
P03AIM.PRIV.TRANS.ACCEPT1 and P03AIM.PRIV.TRANS.DIVIDEND in jobs PFSR13DD and
PFSR13ED. We would rename the transmission jobs to PAIMxxxx modify them
replacing FSR references with AIM, set up the appropriate schedule and move
them up the regions. We would place an override in PFSR71HD which would now
reference the PO3AIM file for backup. Once tested and QA'd by us and AIM we
would replace the FSR transmission jobs with the new AIM jobs.
RESULT OF PHASE 1
We now have three production jobs running in the AIM region and we have set up
the 6 basic AIM files which will be the basis for Phase 2.
<PAGE> 34
PHASE 2 - REPORTS, TRANSMISSIONS, AND AIM-ONLY JOBS
This phase involves converting jobs which do not update any of the master files.
They may read them and create temporary files but updating will wait for phase
3. Phase 2 jobstreams will include mainly report and transmission jobs as well
as any AIM-only jobs. We will be adding new schedule entries (CA-7) for AIM and
modifying existing FSR schedules where needed paying special attention to
triggers, requirements and dependencies. We will add new Express Delivery
entries for AIM reports and delete the AIM entries from the FSR system.
The actual migration of reports and transmission files from the FSR cycle to
the AIM cycle will be on a specific schedule. As we introduce reports to the
AIM cycle they will be available in SAR from both FSR and AIM cycles for a week
to allow AIM to review them. They will then be turned off in SAR for FSR. We
will provide AIM with a report schedule each week to aid this process.
Transmission files will be tested using record counts and selective file
compares. AIM-only jobs will also parallel for a week where feasible.
An example of a Phase 2 job is PFSR143D (FSR/AUTOEX). This job reads the batch
fund file, the batch date file and the trans.accept1 file to produce reports.
All these files are available in the AIM region.
Phase 2 work to be done described in a programmer's template includes (but is
not limited to):
Copy and rename the JCL jobs.
Modify procs and/or control cards if necessary for the test/acpt/prod
regions.
Verify that JCL, procs and control cards follow our current standards.
Create high-level overrides for FSR read-only files.
Change Express Delivery for AIM output and set up the FSR RID entry to
be deleted in n days.
Schedule the new AIM jobs with the same requirements and dependencies
as the FSR jobs but using the appropriate high level qualifier. This
requires tight control on the status of all jobs.
Change the schedules of any jobs which are dependent upon the FSR job
to be dependent upon the new AIM job. Note: this will not be the case
with all AIM jobs.
Move it up the regions testing at appropriate points.
Review the output (First Data and AIM).
After a week inhibit AIM output from FSR jobs from going to SAR. Only
AIM output from AIM jobs will be available in SAR.
The key to the success of this phase is an aggressive implementation schedule
and active participation by AIM representatives in checking and validating the
output.
RESULT OF PHASE 2
We now have report-only jobs (not associated with the actual updating of
files), most of the transmission jobs and all AIM-only jobs which are not
associated with updating files in AIM production. All converted reports and
files have been signed off by AIM. These AIM activities are also being
processed in FSR. We have gone as far as possible without updating files.
<PAGE> 35
PHASE 3 - ANCILLARY FILES AND SYSTEMS
This phase includes updating ancillary files and their associated jobstreams.
Examples of this type may include Bluesky, history, cert or check files, etc.
These files are not mainstream and tend to be localized in how they are
updated. In order to qualify for Phase 3 the Management Company must be the
high order sort key field.
There are two approaches we will use depending upon the main file's on-line
considerations. The first approach involves converting the main file once along
with all associated jobs and the other involves splitting out AIM from FSR at
the start of the cycle, updating it in AIM jobs and merging it back in FSR at
the end. Either approach will involve multiple jobs per master file.
For example, The Bluesky File is only used by 3 jobs: PFSRS07D which creates
the batch file, PFSR190D which updates the file and does an AIM-only extract,
and PFSR194D which does reports. In this case, we would split the FSR Bluesky
File into AIM-only and all other. The FSR Bluesky subsystem would then be
cloned for AIM and the result would be two separate Bluesky subsystems. Online
would access the appropriate Bluesky file.
Other subsystems may be too routed in our core to fully separate out and would
be better served breaking out AIM at the beginning of its cycle, updating in
AIM-only jobs and remerging it at the end of the cycle. Any special jobs used
for splitting out files or merging them after update will have to be backed out
in Phase 4.
All activities described in Phase 2 apply here as well.
RESULT OF PHASE 3
We have now isolated and converted any subsystems not bound to core processing.
Most AIM reports and transmissions are being produced in the AIM region. We are
updating some master files and have done everything possible surrounding the
core without touching it. We are ready for Phase 4.
<PAGE> 36
PHASE 4 - THE CORE
This phase deals with updates to our core master files, our functional
processes, converting large volume files (ShareA and its splits, history, lots,
global, etc.) and includes all jobstreams that have not yet been converted.
Additionally, it includes backing out any special split or merge jobs as well
as special overrides introduced in earlier phases. This will be the largest
phase. On-line will now access all AIM-only files.
Many of the activities done in the previous phases will be performed here as
well. Because so many programs interact with the core modules there is no easy
way to break this activity up. As always we will need our AIM partners to help
in the QA activities for this hefty stage.
It is possible to combine Phases 3 and 4 if it were felt to be desirable.
However, it is our intention to have all peripheral completed before attacking
the core so there will be no unnecessary distractions. Additionally, for
development contention reasons, we would like to turn these modules over as
expeditiously as possible.
All AIM-related activities, programs, control cards, overrides, splits, merges,
etc. will be removed from all FSR jobs.
RESULT OF PHASE 4
All AIM processing is now contained in its own region and runs under its own
schedule. On-line accesses AIM-only files. FSR no longer has any AIM
processing relationship with the exception of any files which are to be merged
from both regions for transmission or system reasons.
<PAGE> 37
EXHIBIT 4 of SCHEDULE C
AUTHORIZED PERSONS REQUESTING SYSTEM MODIFICATIONS
---------------------------------------------------
John Caldwell
President, A I M Fund Services, Inc.
---------------------------------------------------
Joseph Charpentier
Assistant Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Tony D. Green
Senior Vice President, A I M Fund Services, Inc.
---------------------------------------------------
Jean Miller, Director of Applications
Information Technology Services
A I M Advisors, Inc.
<PAGE> 38
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket expenses,
including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Telephone and telecommunication costs, including all lease,
maintenance and line costs
o NSCC transaction charges at $.15/per financial transaction,
$.10/per same day trade confirmations
o Shipping, Certified and Overnight mail and insurance
o Year-End form production and mailings
o Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals
and lines
o Duplicating services, as pre-approved by the Fund
o Courier services
o Due Diligence Mailings
o Rendering fees as billed
o Overtime, as pre-approved by the Fund
o Temporary staff, as pre-approved by the Fund
o Travel and related expenses, as pre-approved by the Fund
o System training, as pre-approved by the Fund
o Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
o Third party audit review
o All conversion costs: including System start up costs, but
excluding costs associated with conversions between FDISG
systems
o Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement
<PAGE> 39
SCHEDULE F
PERFORMANCE STANDARDS
I STANDARDS FOR RESOLUTION OF SYSTEM DEFICIENCIES
"SYSTEM DEFICIENCY" - A system process which does not operate according to the
design of the computer application or system specifications, and is not a
result of any act or failure to act by the Fund.
1. FIRE CALL - A System Deficiency with at least one of the following
characteristics:
1. Potential or real financial exposure in excess of $100,000, or
2. Causes the Fund to be out of compliance with a major
regulatory requirement, or
3. Causes incorrect transaction processing and/or shareholder
confirmations with no reasonable manual workaround available
either at the Fund or in FDISG's systems
FDISG Response: Analysis and resolution within 36 hours or 2 nightly
processing cycles
2. CRITICAL DEFICIENCY - A System Deficiency with at least one of the
following characteristics:
o Potential or real financial exposure estimated from
$25,000-$100,000 or,
o Manual workaround requires substantial manual effort and
carries a high potential for error
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within 5 business days of
initial notification; Problem resolution within an average of 30
business days of initial notification
3. NON-CRITICAL DEFICIENCY - All other System Deficiencies
FDISG Response: Impact Analysis within 3 business days of initial
notification; Determination of problem cause within an average of 15
business days of initial notification; Problem resolution and target
dates to be determined on an item-by-item basis jointly by the Fund
and FDISG.
<PAGE> 40
II STANDARDS FOR ON-LINE SYSTEMS AVAILABILITY AND RESPONSE TIME
These standards shall apply on business days of the Funds.
o On-line systems availability between 7:00 a.m. and 7:00 p.m
Central Time ("CT") - 99% of hours available measured monthly.
o Average response time (7:00 a.m. to 7:00 p.m. CT) of 3 seconds
or less, measured end-to-end, in response to the system
employed by A I M Fund Services, Inc. as of September 1, 1994
- 99% measured monthly.
III STANDARDS FOR DELIVERY OF SYSTEM REPORTS
o CRITICAL REPORTS - The following report bundles in queue and
ready to begin transmission no later than 7:00 a.m. CT each
business day - a cumulative of two late bundles permitted per
month:
EFSR047H
EFSR601H
Changes to critical report bundles must be jointly approved by
an FDISG Client Service Officer and an authorized requestor of
the Fund as listed in Exhibit 4 of Schedule C.
o All other nightly report bundles in queue and ready to begin
transmission no later than 7:00 a.m. CT each business day -
95% measured monthly.
<PAGE> 41
IV STANDARDS FOR DELIVERY OF FILE TRANSMISSIONS
o CRITICAL FILES - The following jobs in queue and ready to
begin transmission no later than 4:30 CT each business day of
the Fund - a cumulative of two late files permitted per month:
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCAD Daily Cap Stock File
PFSRXCYD Daily DISC Cap Stock File
PFSRXCTD Daily DISC ACH File
PFSRXCVD Daily DISC NSCC Green Sheets File
</TABLE>
o The following jobs in queue and ready to begin transmission no
later than 4:30 CT each business day of the Fund - 95%
measured monthly
<TABLE>
<CAPTION>
JOB NAME FREQUENCY APPLICATION
-------- --------- -----------
<S> <C> <C>
PFSRXCGD Daily Acceptance File
PFSRXCKD Daily Dealer File
PFSRXCHD Daily Order File
PFSRXCID Daily ShareA Master File
PFSRXCJD Daily Fund File
PFSRXCMD Daily Lot History File
PFSRXCND Daily Lot Maintenance File
PFSRXCLD Periodic. Dividend Activity
</TABLE>
The standards will not apply on business days with the
following activity: Processing of Year-end Dividend and
Capital Gain Activity, Annual Trustee Fee Payment; Year-end
File Initialization.
V STANDARDS FOR THE FUND
All inbound transmissions (i.e. SIAC, various third parties) and fund prices in
receipt by FDISG by 8:00 p.m. CT
VI RIGHT TO AUDIT
The Fund shall have the option, on an annual basis, to audit the reports used
to measure the standards listed in this Schedule F. Notice of an audit will be
given 14 days in advance, and the audit will not last more than one day.
<PAGE> 42
VII PENALTIES/INCENTIVES
FDISG agrees to achieve the performance levels specified in Schedule F,
Sections II, III, and IV, and semiannually (as of each June 30th and December
31st) to adjust the monthly Account Fee Invoice to reflect any
penalties/incentives as outlined below. Penalties for a given business day will
be applied only if the Standards of the Fund in Section V are achieved.
ON-LINE SYSTEMS AVAILABILITY - MONTHLY
For each one-tenth of 1% under 99%, the monthly Account Fees will be reduced by
the same percentage. The monthly maximum percentage penalty reduction will be
3% of the monthly bill. For each one-tenth of 1% in excess of 99% up to a
maximum of 1%, the monthly Account Fees will be increased by the same
percentage.
ON-LINE SYSTEMS AVAILABILITY - DAILY
If systems availability on any given business day is less than 80%, the monthly
account Fees will be reduced by the percentage of systems availability below
80% for that day times 1/30 of the monthly Account Fees.
REPORT AVAILABILITY - CRITICAL REPORTS
Monthly Account Fees will be reduced by $250.00 for each late instance greater
than the allowable error rate, up to a maximum of $500.00 per day. For each
month within the allowable error rate, monthly Account Fees shall be increased
by $1,000.
FILE TRANSMISSIONS - CRITICAL FILES
Monthly Account Fees will be reduced by $500.00 for each late instance greater
than the allowable error rate with a maximum penalty of $10,000 per month. For
each month within the allowable error rate, monthly Account Fees shall be
increased by $1,000.
The Performance Standards and related penalties set forth in this Schedule F
shall not apply in the event of any occurrence defined in Section 8(g) of the
Agreement.
<PAGE> 43
SCHEDULE G
IMPRESS PLUS SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule G (the "Software"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibits 1 of Schedule G ("EXHIBIT 1")
and Exhibit 1.1 of Schedule G ("EXHIBIT 1.1") (collectively, the "SOFTWARE
EXHIBITS"). Subject to the terms and conditions set forth in this Schedule G,
FDISG grants to the Fund and the Fund accepts from FDISG the non-exclusive,
non-transferable license to use the Software during the term of the Agreement
("LICENSE"). Some software components ("THIRD PARTY SOFTWARE") required to be
used with the Software were developed by a third party ("THIRD PARTY VENDOR").
Third Party Software is licensed to the Fund only pursuant to: (a) shrink
wrapped or other agreements between the Third Party Vendor and the Fund and (b)
the specifically indicated terms and conditions in this Schedule G. The
Software Exhibits shall indicate which Third Party Software the Fund is
required to obtain and license from FDISG and which Third Party Software the
Fund shall be solely responsible to obtain and license. As part of the
Software, FDISG shall provide the Fund with the interfaces set forth in Exhibit
1, between the Software and Third Party Software ("INTERFACES"). FDISG shall
provide the software support services ("SOFTWARE SUPPORT") so designated in
Exhibit 3 of Schedule G ("EXHIBIT 3"). Software Support shall include a
License to error corrections, minor enhancements and interim upgrades to the
Software which are made generally available to FDISG client's of the Software
under Software Support, but shall not include a License to substantial added
functionality, new interfaces, new architecture, new platforms or other major
software development efforts, as determined solely by FDISG.
1.2 Ownership. FDISG or its licensors shall retain tide to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION"). FDISG
reserves all rights in the Proprietary Information not expressly granted to the
Fund in this Schedule G. Upon FDISG's reasonable request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") set forth in Exhibit 2.1 of Schedule G with respect to production
equipment and Exhibit 2.2 of Schedule G with respect to Test/Training equipment
(collectively, ("EXHIBIT 2"). Additional terms and conditions concerning the
Equipment are set forth in Exhibit 2. The Equipment identified in Exhibit 2
represents the minimum equipment configuration required to properly operate the
Software. FDISG disclaims responsibility for the performance of the Software in
the event that the Fund utilizes equipment different than that which is set
forth in Exhibit 2. FDISG and the Fund shall (a) within a reasonable time after
the Effective Date, agree upon the tasks required to implement the Software,
Third Party Software and Equipment ("SYSTEM") and the party responsible and
time frames for each task ("SCOPE OF WORK"); (b) perform their respective
assigned tasks according to the Scope of Work; and (c) if not the party
assigned to a task, cooperate with the responsible party. To the extent the
Scope of Work is incomplete, FDISG shall follow its reasonable and customary
practices. Upon prior notice by FDISG to the Fund, the Fund shall give
reasonable access to the System to FDISG, FDISG's employees. affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) and solely in connection with the Fund's use of the FDISG System and
only at the locations identified in the Agreement. If the Equipment is
inoperative due to malfunction, the license grant shall, upon written notice to
FDISG, be temporarily extended to authorize the Fund to use the Software on any
other equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph. Except as otherwise specifically stated
herein, the Fund shall not modify, re-engineer, decompile or reverse engineer
the Software or otherwise attempt to obtain any source code without FDISG's
prior written consent.
<PAGE> 44
1.5 Software Installation and Acceptance. FDISG shall advise the Fund that
the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
sixty (60) days after Software Installation Date or sixty (60) days after the
Fund's first use of any Software component to process live production data
("SOFTWARE ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
1.7 No-Export. The Software shall not be shipped or used by the Fund
outside the United States. The Fund shall comply with all applicable export and
re-export restrictions and regulations of the U.S. Department of Commerce or
other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule G which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software Warranties and Remedies. For the term of the Agreement, FDISG
warrants ("PERFORMANCE WARRANTY") that the Software shall perform on the
Equipment substantially in accordance with the Documentation and shall enable
the Funds to meet the requirements set forth in Section 240.17a-4 of the
Securities Exchange Act of 1934, except for Directly Obtained Third Party
Software as set forth in Section 2.2 below. The timely correction of errors
and deficiencies in the Software pursuant to Software Support shall be Fund's
sole and exclusive remedy for the Performance Warranty. FDISG warrants ("RIGHTS
WARRANTY") it has the right to license the Software in accordance with the
Agreement. Provided the Fund gives FDISG timely written notice, reasonable
assistance, including assistance from the Fund's employees, agents, independent
contractors and affiliates (collectively, "FUND'S AGENTS"), and sole authority
to defend or settle the action, then FDISG shall do the following
("INFRINGEMENT INDEMNIFICATION"): (a) defend or settle, at its expense, any
action brought against the Fund or the Fund's Agents to the extent the action is
based on a claim that the Software infringes a duly issued United States'
patent or copyright or violates a third party's proprietary trade secrets or
other similar intellectual property rights ("INFRINGEMENT"); and (b) pay
damages and costs finally awarded against the Fund or the Fund's Agents
directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Directly Obtained Third Party Software Warranties. All warranties for
the Directly Obtained Third Party Software identified Section 2.2 of Exhibit 1,
if any, are specifically set forth in the applicable agreements supplied by the
Third Party Vendors of such products.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and as
limited by applicable law, the Fund shall indemnify, defend and hold FDISG and
FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
<PAGE> 45
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("CONFIDENTIAL INFORMATION"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential Information, the other party may obtain injunctive relief, in
addition to its other remedies, inadequate monetary damages and irreparable
harm being acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System.
<PAGE> 46
EXHIBIT 1 OF SCHEDULE G
SOFTWARE
1. FDISG Software.
1.1 FDISG Software includes the following IMPRESS Plus products which are
further described in Exhibit 1.1 ("Specifications"):
IMPRESS Plus Workflow/Image Release 5.3
IMPRESS Plus Intelligent Workstations (IWT) Release 5.3 for FSR
IMPRESS Plus Customer Service System Release 5.3
1.2 Interfaces. Except as agreed in writing, FDISG shall not be required
to modify the Software or the Interfaces to accommodate changes made by the
Fund's vendor to its portion of the interface. If the Fund's vendor needs
information about the Software, then the vendor must first execute a
nondisclosure agreement in form and content reasonably acceptable to FDISG.
FDISG shall not be liable for any delay or degradation to the Software or
Equipment attributable to the Fund's use of Interfaces.
1.3 Customization. The listed products are licensed for IMPRESS Plus use
and customization only. Use of these tools to develop or customize non-IMPRESS
Plus applications is not permitted without the express written authorization of
FDISG.
2. Third Party Software.
2.1 FDISG Provided Third Party Software. The following Third Party
Software is licensed to the Fund directly by FDISG subject to the terms of the
Agreement:
2.1.1 BancTec Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory BancTec ("BancTec")
terms and conditions set forth in Attachment 1 of this Exhibit 1 of Schedule G
("Attachment 1"), attached and incorporated by reference. To the extent that
the terms of Attachment 1 conflict with or differ from the other terms and
conditions in the Agreement, the terms of Attachment 1 shall prevail with
respect to the following BancTec Software ("BancTec Software"):
Informix Multi-User with 512 maximum users
XDP Storage Manager Multi-User with 512 maximum users
FloWare Multi-User with 512 maximum users
Application Designer Single-User with 512 maximum users
2.1.2 Pegasystems Software. The following Third Party Software is licensed
directly to the Fund by FDISG subject to the mandatory Pegasystems
("Pegasystems") terms and conditions set forth in Attachment 2 of this Exhibit
1 of Schedule G ("Attachment 2"), attached and incorporated by reference. To
the extent that the terms of Attachment 2 conflict with or differ from the
other terms and conditions in the Agreement, the terms of Attachment 2 shall
prevail with respect to the following Pegasystems Software ("Pegasystems
Software"):
Product Name Version Function
PegaSHARES RES 6.2 Workflow Engine
PegaENVIRONMENT ENV 4.2 Operating Shell
PegaPRISM Prism 5.1 Image Viewer
PegaStorage Manager Stor 2.1 Image Librarian
PegaREACH Real.0 Desktop Graphical Interface
2.2 Directly Obtained Third Party Software. The following Third Party,
Software is separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of any "shrink-wrapped" or
<PAGE> 47
other agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required: Optional:
<S> <C>
- - Microsoft DOS 6.2 or higher - ALCOM LanFax Redirector V2.15gl or greater
- - Microsoft Windows 95 or NT 4.0 (required if using fax)
- - Microsoft Office 95 or better - HiJaak PRO 2.0 or greater for Windows
- - Microsoft NT Server 3.5 (required if using fax)
- - Microsoft NTSQL Database 4.x and client - Word for Windows 6.Oc or greater (required if
Licenses using fax)
- - Microsoft TCP/IP Stack - Quarterdeck QEMM 7.X or greater (required if
- - Novell NetWare 3.11 or greater using fax)
- - SNA Server 3.0 or higher - CGS Computer Associates, Inc. Scanlib software
- - UNIX for selected Image Server platform (required for Ricoh scanners)
- - UNIX ESQL/C Compiler for selected - Powersoft PowerViewer (required for adhoc
UNIX platform reports)
- - MDI Gateway for DB2 by - 3270 Windows emulation package
MicroDecisionware Inc., A Sybase client (usually Rumba for Windows by WaUData)
- - Sybase Open Client NetLibrary for the
selected TCP/IP stack
</TABLE>
<PAGE> 48
ATTACHMENT 1 OF EXHIBIT 1 OF SCHEDULE G
TERMS AND CONDITIONS
BANCTEC
1. Each BancTec Software Package listed in Exhibit 1 of Schedule G
("Program") which is identified as "Multi-User Program" is licensed for
installation on a single network server computer which is supplied by BancTec,
FDISG, or a third party, and which is electronically linked with one or more
workstations having access to the Program. If Section 2.1.1 of Exhibit 1 of
Schedule G ("Exhibit 1") designates a maximum number of users authorized to
simultaneously access the Multi-User Program, no access will be permitted in
excess of such maximum number. In all other cases, Multi-User Program is
authorized to be accessed by all workstations which are configured to
communicate with that network server computer.
2. Each Program listed in Exhibit 1 identified as "Single-User Software"
is licensed for installation and use on a single computer.
3. Each Program listed in Exhibit 1 identified as an "Unlimited User
Program" is licensed for use by Client after ordering a copy of the Program.
Once ordered, the Fund may make unlimited copies of such Programs at no
additional charge.
4. Each Program listed in Exhibit 1 identified as a "Device Program" is
licensed for use solely to facilitate the operation of the corresponding
equipment device. If a Device Program is used for more than one device, the
license must be upgraded in accordance with Exhibit 1.
5. Each Program listed in Exhibit 1 identified as a "Development-User
Program" is licensed for installation and use on a single computer for
development and testing purposes. The license for Development-User Programs
also includes a license for production use on a single computer.
6. Each Program listed in Exhibit 1 identified as a "Production-User
Program" consists of necessary runtime modules and associated link libraries
for inclusion with custom software applications. Production-User Programs are
not licensed for use in the development of custom software applications and may
be either Multi-User or Single-User Programs.
7. Only a nontransferable, nonexclusive, perpetual license to use the
Programs and related BancTec documentation for its own internal use (including,
without limitation, providing processing services to third parties in a service
bureau or facilities management environment) is granted to the Fund.
8. BancTec or its vendors retain all title to the Programs, and all
copies thereof, and no title to the Programs, or any intellectual property in
the Programs, is being transferred; provided, however, nothing contained herein
shall give BancTec or its vendors any right, title or interest in the Software.
9. The Programs shall not be copied, except as specifically authorized
under an Exhibit to this Agreement and except for backup or archival purposes.
All such copies shall contain all copyright and other proprietary notices or
legends of BancTec or its vendors contained in the Programs delivered under
this Agreement.
10. The Programs shall not be modified, reverse assembled or decompiled by
the Fund. No attempt shall be made by the Fund to derive source code from the
Programs.
11. The Programs will not be shipped or used by FDISG or the Fund to
Africa or the Middle East. All applicable export and re-export restrictions and
regulations of the U.S. Department of Commerce or other U.S. agency or
<PAGE> 49
authority shall be complied with. The Programs shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
12. Each Program is copyrighted and contains proprietary and confidential
trade secret information of BancTec and its vendors. Each sublicensee of the
Programs shall protect the confidentiality of the Programs with at least the
same standard of care used to protect the Fund's own similar confidential
information.
13. BancTec and its vendors are each a direct and intended beneficiary of
the sublicenses granted for the Programs and may enforce such sublicenses
directly against sublicenses of the Programs.
14. Neither BancTec nor its vendors shall be liable to the Fund for any
general, special, direct, indirect, consequential, incidental, or other damages
arising out of the sublicense of the Programs.
15. The license granted to the Fund of the Programs may be terminated,
either immediately or after a notice period not exceeding thirty (30) days,
upon violation by the Fund of any of the terms or conditions of the Agreement,
including but not limited to Attachment 1.
16. Upon termination of the license grant to the Fund to use the Program
or the Agreement, the Fund shall return all copies of the Programs to FDISG.
<PAGE> 50
ATTACHMENT 2 OF EXHIBIT 1 OF SCHEDULE G
PEGASYSTEMS TERMS AND CONDITIONS
In addition to the terms of the Agreement, the following terms shall apply with
respect to the Pegasystems Software:
1. The Fund is prohibited from assigning, timesharing, renting, or
hypothecating any of the Pegasystems Software, without prior written approval
of Pegasystems.
2. The Fund is prohibited from passing or transferring any right, title,
or interest to the Pegasystems Software to any third party.
3. The Fund is prohibit from publicizing or disseminating any results of
any benchmark or other testing of the Pegasystems Software.
4. To the fullest extent permitted by applicable law, (i) Pegasystems
shall have no liability to the Fund for damages and claims, whether direct,
indirect, incidental, consequential, or punitive, and all attorneys' fees and
costs, arising from the Fund's use of the Pegasystems Software, and (ii) the
Fund shall have no rights to assert claims for damages against Pegasystems,
including claims against Pegasystems as a third party beneficiary of this
agreement.
5. Pegasystems, Inc. is a third party beneficiary of this agreement to
the extent permitted by applicable law.
<PAGE> 51
IMPRESSive Technology, IMPRESSive Results
EXHIBIT 1.1 OF SCHEDULE G
SPECIFICATIONS
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. PRODUCT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . Page 1
II. PRODUCT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . Page 3
III. TECHNICAL OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . Page 5
IV. HIGH LEVEL OVERVIEW OF IMPRESS Plus FUNCTIONALITY . . . . . . . Page 6
A. Workflow Management
B. Image Processing
C. Intelligent Workstation Processing
D. Customer Service System
</TABLE>
This item is the property of First Data Investor Services Group (First Data) of
Boston, Massachusetts, and contains confidential and trade secret information.
This item may not be transferred from the custody or control of First Data
except as authorized by, and then only by way of loan for limited purposes. It
must be returned to First Data upon request and, in all events, upon completion
of the purpose of the loan. Neither this item nor the information it contains
may be used or disclosed to persons not having a need for such use or
disclosure consistent with the purpose of the loan, without the prior written
consent of First Data.
Copyright First Data Investor Services Group
1994, 1995, 1996
ALL RIGHTS RESERVED
This media contains unpublished, confidential, and proprietary information of
First Data Investor Services Group. No disclosure or use of any portion of
these materials may be made without the express written consent of First Data
Investor Services Group.
<PAGE> 52
IMPRESSive Technology, IMPRESSive Results
I. PRODUCT OVERVIEW
IMPRESS Plus is First Data's workstation product. Designed to be a
cost-effective customer service and workflow management solution, it
takes an integrated approach to transfer agent service and processing
applications. IMPRESS Plus uses an open, three-tiered, client/server
architecture that provides both the flexibility and scalability to
address client's customization and growth needs.
IMPRESS Plus's valuable benefits include:
o Extensive management tools and employee empowerment via
intelligent workstation technologies.
o A lower cost of processing delivery through workflow routing
and document imaging.
o Efficient customer service through reduced research time,
automated inquiry tracking and correspondence tracking.
o State-of-the-art three-tiered client/server architecture
backed by relational databases and open systems.
o Client configurable screens, dialogue scripts, and workflow
rules for those components which use the Pegaysystems
technology.
o Automated correspondence generation.
IMPRESS Plus consists of these major components:
1.) A SOPHISTICATED MANAGEMENT WORKFLOW TOOL that contributes to
streamlining the flow of information on an enterprise-wide
basis. Automated workflow processes are systematically created
and the user's process is automatically documented at the same
time. Product users can continuously examine and redesign
their current processes, managing them interactively, focusing
on improving organizational productivity and quality.
2.) AN IMAGE PROCESSING SYSTEM that has the ability to scan
incoming documents, store them digitally and automatically
route them to the appropriate processing department thereby
eliminating paper from the workflow. This system also allows
for long term storage of documents and document retrieval.
Users can modify workflow and business rules on site.
3.) AN INTELLIGENT WORKSTATION APPLICATION (IWT) that improves
data entry speed and service quality by using graphical user
interface tools that seamlessly connect the user's desktop to
First Data's transfer agent processing systems, office
automation tools, correspondence/service tracking and
policy/procedure access systems.
4.) A CUSTOMER SERVICE SYSTEM that automates and enhances the
correspondence and customer servicing areas in mutual fund
operations. Customer Service staff can log all activity, such
as phone calls, letters, transactions, etc., while interacting
with customers. The system enables the service representative
to perform transactions over the phone, create "electronic
forms" consisting of instructions for other processors, and
dynamically sends work items to other staff electronically.
The Customer Service System is designed to enhance the quality
and efficiency of the service provided to customers through
the use of state-of-the-art client/server technology.
<PAGE> 53
IMPRESSive Technology, IMPRESSive Results
II. PRODUCT BENEFITS
o Allows clients to process transactions and customer
correspondence quickly and efficiently.
o Allows clients to be at the leading edge of technology to
maintain competitiveness and to effectively deliver quality
service.
o IMPRESS Plus enables the organization to:
- enhance service responsiveness and quality
- streamline workflow and improve document control by
eliminating paper
- increase employee productivity and participation
- have access to real-time production statistics
- enhance organization cohesion and effectiveness
- reduce manual tasks
- increase accuracy by using intelligent rules-based
applications
- reduce processing costs
- Tie Customer Service Reps to sales
o The IMPRESS Plus workflow tools allow business/operational
workflows to be set up. Automated workflow processes are
created and the user's process is automatically documented at
the same time. Product users can continuously examine and
redesign their business processes and manage them
interactively, focusing on improving organizational
productivity and quality.
o IMPRESS Plus is a scaleable and flexible solution that allows
the user to choose an enterprise-wide or a departmental
solution. It allows the client to determine an implementation
strategy that meets their strategic plans and goals.
o The IMPRESS Plus product platform allows the user to build
upon and utilize future First Data services such as
information delivery of shareholder/investor data, sales and
marketing data and customer service processing.
o IMPRESS Plus is modular to support increasing volumes,
increasing numbers of users and future advances in component
technologies. This allows for functional as well as
enterprise-wide solution.
o The IMPRESS Plus product's UNIX and NT-based platform allows
for the flexibility and growth needed to market position and
grow in the '90s to meet the demands of the mutual fund
industry.
o IMPRESS Plus is developed to run in an open systems
environment, so that the application has the ability to
incorporate diverse hardware choices, such as servers,
scanners and printers.
Additional benefits that can be provided through customization of
certain products include:
o Ability for AIM Funds operations associates to customize
interfaces, rules, scripts, etc. based on predefined "levels"
of operators. Levels may range from entire organization right
down to the individual CSR.
o Creation of an Integrated Service Backbone within the AIM
organization designed to allow consistent processing of
service items, documents, correspondence, etc. regardless of
where they originated. (Internet, scan mail, fax, phone,
etc.)
o Optional ability to link VRU to the desktop via CTI and
related technologies for more efficiency and quality in
servicing.
<PAGE> 54
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
o Ability for AIM Funds operations associates to change workflow rules,
scripts, menus, screens, etc. associated with the front end servicing
applications as they see fit to effectively run their business efficiently
and with highest regard to quality.
o Ability for AIM Funds to introduce intelligent, 'point of contact'
scripting for service associates in the front end selling process.
Through the customized rules capability, AIM Funds can set up random
sales, campaigns, or promotions. In addition, IMPRESS Plus can be told
when to prompt CSR's that selected promotions apply to the customer at
hand based on data points in the customer's profile, recent activity, or
the like.
<PAGE> 55
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
III. TECHNICAL OVERVIEW
First Data's combined Customer Service, Workflow, Image and
Intelligent Workstation (IWT) technologies enable users to display the
digitized image of a shareholder form on the workstation along with
other service, data entry and office automation applications. This
allows a user to enter information directly from the image without
having to look away from the screen or handle paper. IMPRESS Plus
will have access to First Data's transfer agent processing system,
office automation tools, and correspondence tracking and
policy/procedure access systems. First Data has developed the
workflow and image capabilities of the system to meet the needs of the
financial industry.
The Customer Service and Intelligent Workstation applications improve
data entry speed and quality by using graphical user interface tools
and LAN/WAN topologies to seamlessly connect the users desktop to the
mainframe servers. These tools and technologies will significantly
off-load transactions and query processing from the mainframe by
putting these capabilities on the desktops and empowering the
end-user.
IMPRESS Plus is designed to run in an open systems environment. It has
the ability to incorporate various workstation platforms due to a
common set of access routines and open communication architecture.
IMPRESS Plus supports high-performance networking architectures
including Novell's SPX/IPX as well as the UNIX TCP/IP standard. SNA
connectivity is supported for LU6.2, 3270, and 5250 communications.
The application supports Microsoft Windows 3.11, Windows 95, and NT
client workstations, multiple UNIX server back-end platforms, and the
latest client/server database technologies offered by the INFORMIX and
Microsoft database systems.
IMPRESS Plus contains a state-of-the-art integration API (application
programming interface) that allows other applications, including
customer-specific applications, to be seamlessly integrated into
IMPRESS Plus.
The Customer Service and IWT applications have been designed with an
object-based architecture that allows one common application to
support First Data's multiple back-end transfer agent systems. They
are designed around First Data's newly defined and implemented
corporate data model. This model represents the future data source
for First Data's common transfer agent application. This object-based
architecture allows for a high level of client customization and
integration.
<PAGE> 56
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IV. HIGH LEVEL OVERVIEW OF IMPRESS PLUS FUNCTIONALITY
WORKFLOW MANAGEMENT FUNCTIONALITY OVERVIEW
WORKFLOW DYNAMIC WORKFLOW DESIGN AND MONITORING
MANAGEMENT
IMPRESS Plus provides a set of client/server based tools that
allow designers and authorized system users to build workflow
rules to be implemented on the work floor. These rules can be
built and implemented, then changed as required by trained
administrators.
GENERIC WORKFLOW AVAILABLE FOR ALL TRANSACTIONS
IMPRESS Plus offers a generic wordflow that can be used for
any transaction type that is designated in an operation.
Liquidations, correspondence, new accounts, etc. are just some
examples of transactions that can be processed through this
generic workflow. Should the workflow need to be customized or
altered, it can be.
WORK FLOW MONITORING
IMPRESS Plus provides the following work flow monitoring
activities in a real time mode:
o Allow users with the proper security access to
monitor the status of workflow activities or entire
work flow maps
o Monitor work-in-process items via a graphical display
which produces bar graphs in a variety of
presentation formats
o Monitor multiple statistics simultaneously on a
graphical display.
PRIORITIZATION OF WORK
IMPRESS Plus allows the setting of a default priority of items
during workflow design, and, in addition, dynamically during
work in process. During work in process, an item's priority
is based on its transaction type, its default or subsequently
manually altered priority setting, as well as its age in the
activity queue.
<PAGE> 57
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
WORKFLOW MANUAL ROUTING OF ITEMS
MANAGEMENT
(CONTINUED) IMPRESS Plus allows items to be manually routed to
workflow map destinations, or, in some cases, to
specific end users by those users with authorization
to do so.
AUTOMATIC ROUTING OF WORK
IMPRESS Plus routes work items to the next
destination on a pre-defined set of workflow rules.
These rules can be overridden by the user when
necessary.
ITEM COPY ROUTING
IMPRESS Plus allows users to make "copies" of items
within the workflow and route them to other workflow
activities. This is commonly used when an individual
processing the work determines that an item must be
forwarded to another processing department or review
the steps because it is actually two or more
transactions.
ENHANCED QUALITY CONTROL
IMPRESS Plus allows for random or pre-determined QC,
statistical QC, or other more intelligent or
selective QC means.
ENHANCED QUALITY ASSURANCE
IMPRESS Plus allows for random or pre-determined QA,
statistical QA, or other more intelligent or
selective QA means.
<PAGE> 58
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
IMAGE FUNCTIONALITY OVERVIEW
IMAGE DOCUMENT SCAN, STORE, ROUTE, AND RETRIEVE
PROCESSING
IMPRESS Plus captures, through scanning, electronic
images OF documents, stores these electronic images
on magnetic disk, and subsequently allows for
retrieval of the electronic images. IMPRESS Plus
allows images to be accessed for image quality review
and provides for the rescanning of images determined
to be of unacceptable quality. Following the
completion of scanning and any image quality review,
items are automatically routed to subsequent
activities, based on a predefined set of workflow
rules.
ELECTRONIC DOCUMENT IMAGE PRESENTATION AND
MANIPULATION
IMPRESS Plus allows images to be viewed on image-
enabled workstations. Multi-page documents can be
scrolled through, and selected portions of an image
can be magnified.
IMAGE CROSS-REFERENCE TO PHYSICAL DOCUMENT LOCATION
TRACKING
AND RETRIEVAL IMPRESS Plus is designed so that the image database
stores the location of the physical document for each
document image. This location - known as a storage
box - is entered into the system while scanning
documents.
INDEXING OF IMAGES
IMPRESS Plus automatically assigns a unique indexing
number to each document that is created through
scanning. The unique indexing number consists of a
system-generated number that can subsequently be used
to cross-reference an item to a mainframe transfer
agent system. In addition, IMPRESS Plus allows for
the alternate indexing of documents by other user-
entered fields such as fund/account.
SOURCE KEY GENERATION AND DISPLAY
Each transaction type processed within IMPRESS Plus
receives a unique identifier that can be used to link
an item to the First Data transfer agent system.
This key may also be used for document retrieval.
IMAGE SCANNING, INDEXING, AND STORAGE OF DOCUMENTS
TRACKING PROCESSED PRIOR TO IMAGE WORKFLOW
AND RETRIEVAL
(CONTINUED) Through the IMPRESS Plus merge facility, users can
scan documents processed prior to the installation of
IMPRESS Plus. The merge facility allows you to
associate documents with existing, already scanned
and indexed documents, making them available for
future inquiry using IMPRESS Plus.
IMAGE ARCHIVAL AND SUBSEQUENT RETRIEVAL FROM OPTICAL
STORAGE
IMPRESS Plus provides storage and backup functions
for data objects, is designed to handle media
management, and communicates with the database
management system. IMPRESS Plus supports archival of
items to magnetic or selected WORM (Write Once
<PAGE> 59
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
Read Many) optical media. Archival from magnetic to
optical media criteria are set during installation
time.
PRINTING OF IMAGES
IMPRESS Plus allows you to print copies of document
images at LAN-based printers equipped with the
appropriate print server components.
REAL-TIME ADMINISTRATION TOOLS
IMPRESS Plus offers an administration function that
allows authorized users to add and maintain user
profiles, funds, transaction types, locations, and
other client site-specific data. This tool also
allows authorized users to change courier status,
determine the status of work that may have been
affected by an environmental mishap, and perform
other administrative tasks.
DOCUMENT/ACTIVITY HISTORY AND AUTOMATIC UPDATE
IMPRESS Plus automatically records and stores
document/activity history statistics on audit trail
logs during workflow activities, and produces
standard reports for such items as:
o Workflow activity type
o Date/time/user of each activity
o Beginning/ending date/time of each activity
o Last update user/date/time
ADMINISTRATIVE IMPRESS Plus allows much of this activity history to
FUNCTIONS be viewed on-line in various portions of the
(CONTINUED) application.
PRODUCTIVITY REPORTING AND QUALITY/TIMELINESS
REPORTING
IMPRESS Plus logs document/activity history
statistics to produce standard productivity reports
that can be run at the client's request.
ADHOC REPORTING
IMPRESS Plus provides a suite of standard reports
that can be customized. A client can also create
their own additional reports.
QUALITY CONTROL PROCESSING
IMPRESS Plus currently allows for processing
activities to be reviewed for quality by routing them
to a Quality Control queue. Authorized users can
then QC work items. Future IMPRESS Plus releases
will include various rule-based options for selective
quality control. IMPRESS Plus prevents users from
quality control checking their own work.
ACCESS SECURITY
IMPRESS Plus image processing provides security
access in the form of user logons and user profiles.
Users must have a user ID to access the system and
are further constrained by their user profile. The
client assigns user IDs for staff to access the
system and specifies the parameters of each user
profile. These profiles limit users to performing
<PAGE> 60
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
only those specific activities for which they have
been given permission (e.g. processing, scan, etc.).
It is recommended that the logon IDs match the user's
logon ID from the First Data transfer agent system.
VALUE-ADDED SHAREHOLDER ACCOUNTING SYSTEM ACCESS
FUNCTIONALITY
IMPRESS Plus allows workstation access to First
Data's transfer agent recordkeeping system. 3270
terminal emulation is accomplished through a
Windows-based software application. Keyboard mapping
is limited to the technical capabilities of the
emulation software and/or hardware.
DYNAMIC DATA EXCHANGE (DDE) FUNCTIONALITY
IMPRESS Plus will allow for Dynamic Data Exchange at
selected points in application modules when necessary
to transfer data between processes. An example would
be the passing of a source key stored on a transfer
agent system history line to the imaging inquiry
screen for a customer service operator.
ON-LINE HELP FOR USERS
IMPRESS Plus offers a comprehensive on-line help
system that follows Microsoft Windows help system
conventions. It is designed to serve both new users
learning how to use the system and more experienced
users who may occasionally need assistance or
additional information.
SYSTEM ADMINISTRATION PROCEDURES
IMPRESS Plus System Administration is made easier for
designated IMPRESS Plus technical support staff due
to the IMPRESS Plus Systems Administration and
Procedures manual and related documentation.
<PAGE> 61
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
INTELLIGENT WORKSTATION PROCESSING
(IWT) FUNCTIONALITY OVERVIEW
INTELLIGENT IWT is designed with a graphic interface ("GUI")
WORKSTATION which will provide an intelligent real-time interface
PROCESSING to the First Data transfer agent system for the
(IWT) following transaction activity:
NEW ACCOUNT SETUP
The IWT new account setup application is designed to
provide a MS/Windows graphic interface ("GUI") to
allow an intelligent real-time interface to the First
Data transfer agent system. New account setup
functionality includes:
o new account setup entry
o dealer/rep list
o TIN list for shareholder list
o systematic city and state population based on
entry of a 5 digit zip code
o dividend/cap gain addresses
o beneficiary addresses
o statement addresses
o ABA lookup and validation
o fund list
o wire and ACH bank addresses
Financial Transactions
The IWT financial transaction entry application is
designed to provide a MS/Windows graphic interface
("GUI") to allow an intelligent real-time interface
to the First Data transfer agent system. Financial
transaction entry functionality includes:
o telephone redemptions
o telephone exchange
o exchange processing
o transfer processing
o redemption processing
o subscription processing
Group
o linking and linking of accts by ROA, confirm,
L01, plan
<PAGE> 62
IMPRESSIVE TECHNOLOGY, IMPRESSIVE RESULTS
CUSTOMER SERVICE & ENHANCED INQUIRY SYSTEMS
FUNCTIONALITY OVERVIEW
CUSTOMER The Customer Service System is a client/server based,
SERVICE graphical user interface (GUI) system designed to
SYSTEM provide an intelligent real-time application to
enable clients to improve the quality of the service
provided to both shareholders and broker dealers.
This system provides functionality in the following
areas:
CONTACT TRACKING AND MANAGEMENT
A key feature of the Customer Service System will be
the ability to track and report on all interaction
with an end customer, be it a shareholder or
broker/dealer. Designed for ease of use by a
customer service representative, this system will
allow for the logging of telephone calls and
correspondence, the creation and updating of service
items, the processing and resolution of customer
issues to insure customer satisfaction at the end of
any contact. In addition, via reason codes and aging
information, management is empowered with the use of
statistical and trending reports regarding contact
made with their customer base .
CORRESPONDENCE GENERATION AND TRACKING
The Customer Service System is closely integrated to
word processing to allow for the automatic generation
of outgoing correspondence related to service items.
A service representative can choose from customized
pre-defined letters to generate high quality customer
correspondence.
TELEPHONE TRADING
Authorized customer service system users will be able
to perform transactions while on the telephone with
customers by invoking simplified graphical data entry
screens. In addition, customer service
representatives can create electronic forms
consisting of processing instructions for other
departments and dynamically send route these work
items via the workflow manager.
CUSTOMER ENHANCED INQUIRY
SERVICE
SYSTEM The Enhanced Inquiry windows provide enriched and
(Continued) user-friendly replacements for legacy transfer agent
inquiry screens. Examples of the inquiry functions
are search for customer information by name, account
number and social security number, account
information, financial transaction history, service
history, and correspondence history.
<PAGE> 63
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
IMPRESS IMAGE PRODUCTION HARDWARE AND SYSTEMS SOFTWARE
- ---------------------------------------------------------------------------------------------------------
PRODUCT Description QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Servers Parallel Cable for printer 10
- ---------------------------------------------------------------------------------------------------------
HP IV+ / 5 Laser Printer with 6 MB Ram, Jet Direct for
Printers other printing can be installed 10
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable,
Scan Server Terminator. 5
- ---------------------------------------------------------------------------------------------------------
Ricoh IS-520 SCSI with Ink Jet Endorser. SCSI
Mid Speed Scanner Version 5
- ---------------------------------------------------------------------------------------------------------
Sun SPARCstation 5 Model 170, 17" Color Display,
48MB RAM, 2X2.1 GB Int disks, 4mm Tape, 3.5"
Floppy Drive, CD-ROM, Solaris 2.5.1, Solarais
Answerbooks, 1 @ X1053A, Solaris 2.5.1 SDK Kit,
Kodak Scan Server Solaris 2.5.1 Motif ToolKit, SUN Professional C 4.0 3
- ---------------------------------------------------------------------------------------------------------
High Speed Scanner Kodak 923D Scanners 3
- ---------------------------------------------------------------------------------------------------------
Sun ULTRAserver 6000, 12 250MHZ CPU's, 17" Color
Display, 1.2GB RAM, 2x9 GB Int disks, DG Clariion 42
Gb Raid 5 disk array, 4mm Tape, CD-ROM, Solaris
2.5.1. Answerbooks, 35/7OGb DLT Tape Changer, 1 @
1053A, 1 @ X1052A, 2 @ X1062, Fast
Image Server Ethernet/FDDI/ATM 1
- ---------------------------------------------------------------------------------------------------------
CYGNET 1802 with (3) Philips LD6100 Optical Drives,
Jukebox Optical SCSI Cable, RS-232 Null Modem Cable 1
- ---------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 x 768, Windows 3.1, Hiijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- ---------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 2 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (4)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- ---------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 2 or 3
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
**The fax server will require analog modem lines a max of 16 lines would
- ---------------------------------------------------------------------------------------------------------
be required for the hardware listed above.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (10 KVA) 1
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN) (1.4 KVA) 3
- ---------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX HW) (1 KVA) 2
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 64
EXHIBIT 2.1 OF SCHEDULE G
EQUIPMENT
<TABLE>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- ---------------------------------------------------------------------------------------------------------
Equipment to maintain a routed or switched network
environment with no more that 25-30 clients per
Network Hardware network segment.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32MB ram. Display
should optimally support Image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (1280X1024) 400
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Software required on all workstations
- ---------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- ---------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- ---------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
EXHIBIT 2.2 OF SCHEDULE G
EQUIPMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
IMPRESS Test/Training Hardware and Systems Software
- -------------------------------------------------------------------------------------------------------
PRODUCT DESCRIPTION QTY
<S> <C> <C> <C> <C>
486/66 DX, 200 MB HG, 16 MB RAM, Network Intface
Card, VGA Monitor, Windows 3.1, Novell LWP 5.0,
Print Server Parallel Cable for printer 1
- -------------------------------------------------------------------------------------------------------
HP IV+/5 Laser Printer with 6 MB Ram, Jet Direct for
Printer other printing can be installed 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 16 MB RAM, Network
Interface Card, Cornerstone DP 120 Mono, Image
Accel2 PCI, Adaptec 1542cp SCSI Card, SCSI Cable
Scan Server Terminator 1
- -------------------------------------------------------------------------------------------------------
Ricoh IS-420 SCSI with Ink Jet Endorser, SCSI
Low Speed Scanner Version 1
- -------------------------------------------------------------------------------------------------------
Sun ULTRAserver 1, 250MHZ CPU, 17" Color Display,
128MB RAM, 2X2.1 GB Int disks, SUN 4GB External
Disk Pack, (2) 4mm Tape Drives, CD-ROM, Solaris
Image Server 2.5.1, Answerbooks, 1 @ 1053A, 1 @ X1052A. 1
- -------------------------------------------------------------------------------------------------------
Phillips LD6100 Optical Drive Differential, SCSI Cable
Standalone Optical SCSI Differential Terminator. 1
- -------------------------------------------------------------------------------------------------------
P100 or greater, 540 MB HG, 32 MB RAM, Network
Interface Adapter, 15" SVGA Monitor, Resolution of at
least 1024 X 768, Windows 3.1, Hijack Pro for
Fax Controller PC Windows, Microsoft Word 6.X 1
- -------------------------------------------------------------------------------------------------------
Tower Style P90 or greater, 1 GB HG, 32 MB RAM,
Network interface adapter, 14" VGA Monitor, (1)
Gamalink CP4/LSI Fax Cards (4) Lines per card,
FAX Server** QEMM 8.X, Allcom LANFAX 2.15gl/2.2gl 1
- -------------------------------------------------------------------------------------------------------
Existing File Server with at least 500 MB of disk space
Novell File Servers available 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
** THE FAX SERVER WILL REQUIRE ANALOG MODEM LINES A MAX OF 4 LINES WOULD BE
REQUIRED FOR THE HARDWARE LISTED ABOVE.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (FAX) (1 KVA) 1
- -------------------------------------------------------------------------------------------------------
UPS OnLine UPS Equipment (SUN, Optical) (3 KVA) 1
- -------------------------------------------------------------------------------------------------------
28.8 K Modem, lines, and cables (SUN for remote
Remote Link suppor) 1
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Pentium 90 or greater with 24-32 MBram. Display
should optimally support image resolutions of
1600X1280 but other resolutions can be supported for
Workstations casual use. (128X1024) 10
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Software required on all workstations
- -------------------------------------------------------------------------------------------------------
Windows 95, Windows NT
- -------------------------------------------------------------------------------------------------------
Microsoft Word 6.X or Greater
- -------------------------------------------------------------------------------------------------------
Microsoft TCP/IP Stack
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
EXHIBIT 3 OF SCHEDULE G
MAINTENANCE AND SUPPORT TERMS
These terms are based on an IMPRESS User network environment of up to 512 Users
and the associated server(s), as described in Exhibits 1 and 2 of this Schedule
G.
1. Software Support.FDISG shall provide the following Software support
services ("Software Support"):
1.1. FDISG shall provide the Fund with full System Administration Guide(s)
for FDISG Software.
1.2. FDISG will have a Response Center (help desk) to provide 24 hours a
day, 7 days a week to designated client contacts.
1.3. FDISG shall use reasonable efforts to resolve all Software failures
through; (a) remote support to the Fund's information systems staff ("Fund's
Staff"); (b) coordination of Third Party Vendor support (on-site or remotely);
(c) coordination of other subcontractors' actions; or (d) direct on-site
support by FDISG personnel.
1.4. FDISG shall investigate errors in the Software reported by the Fund
which prevent substantial compliance with the then current Documentation and to
initiate the corrective action, if any, which FDISG considers reasonable and
appropriate, including but not limited to temporary fixes, patches and
corrective releases to FDISG's clients generally. Notwithstanding the
foregoing, if reported errors result from or arise out of. (i) malfunctions of
equipment other than the Equipment, (ii) improper Fund operator procedure or
misuse of the system by the Fund, (iii) modifications or changes made to the
system without FDISG's prior written approval, (iv) causes beyond the
reasonable control of either party, or (v) user developed features such as
those users may develop with form generators, ad hoc report writers and user
customized screens, then FDISG shall have no responsibility for investigating
the error or making the correction, except as the parties may otherwise agree
to in writing. The Fund shall pay FDISG's then current time and materials
charges plus reasonable travel and out-of-pocket expenses incurred in
investigating and attempting to correct any such errors.
1.5. FDISG shall from time to time provide bug fixes, error corrections,
maintenance, minor enhancements, upgrades and updates to the Software which are
generally made available by FDISG to its similar customers as part of Software
Support ("Updates"). The cost of the Updates is included in the fees and other
charges identified in Schedule C of the Agreement, if the updates are supplied
to the Fund using FDISG's standard update facility. FDISG installation
assistance for the new Updates may be required and, is billable to the Fund as
an Additional Service. During the term of the Agreement, FDISG will use
reasonable efforts to provide the Fund with not less than thirty (30) days
prior written notice of FDISG's intent issue a new update of Software. The
Fund shall implement an Update within ninety (90) days of receipt. Any support
by FDISG of any prior release of the Software after such ninety (90) day period
shall be at FDISG's sole discretion and as an Additional Service.
1.6. Software Support, the License, and the Software shall not include any
modification to the Software which contains any substantial added functionality
(including any significant new interface features), as determined solely by
FDISG or any new architecture or any significant modification of the Software
which contains any substantial added or different functionality, whether or not
such new functionality is coupled with any change in software architecture or
hardware platform ("New Products"). New Products shall be provided and
licensed to the Fund as an Additional Service.
1.7. FDISG may decline to support the Software if (i) the Software or
Equipment was added to or changed without FDISG's prior approval; (ii) the Fund
does not perform the Software Support; or (iii) FDISG determines that such
support would adversely affect the Scope of Work.
1.8 Software Support for the FDISG Software shall conform to the standards
set forth in Section I of Schedule F.
2. The Fund's Maintenance and Support Responsibilities. The Fund's facility
will have all of the required security, space, electrical power source,
communications lines, heating, ventilation and cooling, and other physical
<PAGE> 67
requirements reasonably necessary for the installation and proper operation of
the Equipment. The Fund's users will first direct all questions and problem to
the Fund's Staff for proper call tracking and problem resolution. The Fund's
Staff will coordinate all facility issues at the site and will serve as primary
contact for FDISG when planning installs, upgrades and other equipment changes.
The Fund's Staff shall:
2.1. Identify designated client contacts, one for Operations and one
technical systems administrator, to function as single points of contact for
discussion, review and resolution of problems with FDISG.
2.2. Perform initial problem determination and symptom documentation.
2.3. Be responsible for all system hardware and network hardware components
and shrink-wrap software from a maintenance, support and problem resolution
standpoint.
2.4. Provide (a) data back-up and recovery, (b) preventive maintenance,
and (c) perform server administration tasks as described in the Systems
Administration Guide(s) and Third Party Software documentation.
2.5. Maintain all network and trouble-log documentation required by FDISG
or by third-party vendors. FDISG shall be allowed to review such documentation
if necessary to resolve support issues.
2.6. Be available during normal business hours and reachable for support 24
hours a day, 7 days a week, as required. The Fund shall maintain the
appropriate staff level to adequately perform the maintenance support functions
specified. This staff should have experience in network administration,
troubleshooting, Microsoft Windows, workstation memory management, and UNIX and
NT systems administration.
2.7. Consult with FDISG before performing any work that may affect the
Software or performance of the System, including installation, upgrading, or
unplanned maintenance affecting Equipment
2.8. The fund is responsible for maintenance and support of customized code
unless contracted with FDISG.
3. Support of Customized Code. (Code changed by Fund or FDISG on a customized
basis)
3.1 Software Revisions. At times, FDISG will provide software updates to
components (third party or FDISG software) to either enhance the product or
address quality deficiencies. FDISG is responsible for notifying the Fund of
these updates, and what changes have been made. The Fund is responsible for
installing the updates and modifying any code which they have customized to
accommodate these enhancements. Assistance can be provided by FDISG at stated
billable rates.
3.2 Support of Modified Code. FDISG will provide application, technical
and workflow support for modified code only on a time and materials basis.
FDISG may request the replacement of the modified code with the original code
in order to assist in the determination of the problem source.
3.3 Mainframe Resource Utilization. If customized code requires greater
FDISG mainframe CICS, DASD, or CPU resources than the base FDISG delivered
IMPRESS Plus solution, FDISG reserves the right to charge the Fund for this
usage. If there is concern that excessive resource utilization could impair
the mainframe system, FDISG reserves the right to disallow this modified code
from executing on the mainframe. The Fund is advised to consult with FDISG in
order to determine if planned customization may negatively impact mainframe
resources.
4. Roles and Responsibilities.
4.1 FDISG shall not be responsible for the support of any Directly
Obtained Third Party Software or any other third party products. The Fund is
responsible for network connectivity, Operating Systems, gateways, and other
third party products. FDISG is not responsible for hardware not listed in
Exhibit 2 of Schedule G or software not listed in Sections 1, 2.1.1, or 2.1.2
of Exhibit 1 of Schedule G, unless specifically covered in a separate
agreement.
4.2 Additional support tasks may be provided on a time and material basis.
This may include workflow analysis, customization, network design, third party
product installation and additional training.
<PAGE> 68
SCHEDULE H
ACE + SOFTWARE AND SUPPORT TERMS
ARTICLE 1 - SYSTEM, SUPPORT AND IMPLEMENTATION
1.1 Software and Support. FDISG shall provide or has previously provided
to the Fund and the Fund shall acquire from FDISG the right to use the computer
software programs set forth in Exhibit 1 of this Schedule H (the "SOFTWARE"),
for the fees indicated in Schedule C of Amendment Number 3 to the Agreement.
Software includes related user manuals and reference guides (collectively,
"DOCUMENTATION"). One copy of the Documentation shall be provided to the Fund
at no additional cost. FDISG shall provide only the machine readable object
version of the Software and not source code. Additional terms and conditions
concerning the Software are set forth in Exhibit 1 of Schedule H ("Exhibit 1").
Subject to the terms and conditions set forth in this Schedule H, FDISG grants
to the Fund and the Fund accepts from FDISG the non-exclusive, non-transferable
license to use the Software during the term of the Agreement ("LICENSE"). Some
software components ("THIRD PARTY SOFTWARE") required to be used with the
Software were developed by a third party ("THIRD PARTY VENDOR"). Third Party
Software is licensed to the Fund only pursuant to shrink wrapped or other
agreements between the Third Party Vendor and the Fund directly. Exhibit 1
shall indicate the Third Party Software that the Fund is responsible to obtain
and license. FDISG shall provide the Fund with all error corrections, minor
enhancements and interim upgrades to the Software which are made generally
available to FDISG client's of the Software ("SOFTWARE SUPPORT"), but shall not
provide a License to any substantial added functionality, new interfaces, new
architecture, new platforms or other major software development efforts, as
determined solely by FDISG.
1.2 Ownership. FDISG or its licensor shall retain title to and ownership
of the Software, copies, derivative works, inventions, discoveries, patentable
or copyrightable matter, concepts, expertise, techniques, patents, copyrights,
trade secrets and other related legal rights ("PROPRIETARY INFORMATION").
FDISG reserves all rights in the Proprietary Information not expressly granted
to the Fund in this Schedule H. Upon FDISG's request, the Fund shall inform
FDISG in writing of the quantity and location of any Software.
1.3 Equipment, System Implementation and Access. Fund is responsible for
acquiring, installing and maintaining the data processing and related equipment
("EQUIPMENT") also set forth in Exhibit 1 of Schedule H. Additional terms and
conditions concerning the Equipment are also set forth in Exhibit 1. The
Equipment identified in Exhibit 1 represents the minimum equipment requirements
to run the Software. FDISG disclaims responsibility for the performance of the
Software in the event that the Fund utilizes equipment different than that
which is set forth in Exhibit 1. FDISG and the Fund shall (a) within a
reasonable time after the Effective Date, agree upon the tasks required to
implement the Software, Third Party Software and Equipment ("SYSTEM") and the
party responsible and time frames for each task ("SCOPE OF WORK"); (b) perform
their respective assigned tasks according to the Scope of Work; and (c) if not
the party assigned to a task, cooperate with the responsible party. To the
extent the Scope of Work is incomplete, FDISG shall follow its reasonable and
customary practices. Upon prior notice by FDISG to the Fund, the Fund shall
give reasonable access to the System to FDISG, FDISG's employees, affiliates,
representatives, agents, contractors, licensors and suppliers ("FDISG'S
AGENTS") who are providing services under the Agreement or auditing adherence
to the Agreement.
1.4 Use of Software. Fund may use the Software during the term of this
Agreement only on the Equipment and only to process the Fund's data for
internal business purposes (which shall not, for purposes of this Agreement,
include use by Fund to provide services to its customers on a service bureau
basis) in connection with the Fund's use of the FDISG System and only at the
locations identified in the Agreement. If the Equipment is inoperative due to
malfunction, the license grant shall, upon written notice to FDISG, be
temporarily extended to authorize the Fund to use the Software on any other
equipment approved in writing by FDISG until the Equipment is returned to
operable condition. FDISG, in its reasonable discretion, may suspend any
Software Support while the Software is being used on such other Equipment. No
right is granted for use of the Software by any third party or by the Fund to
process for any third party, or for any other purpose whatsoever, except as
expressly provided in this paragraph..
1.5 Software Installation and Acceptance. FDISG shall advise the Fund
that the Software as listed in Exhibit 1 is installed and functioning on the
Equipment ("Software Installation Date") so that implementation and training
activities can proceed. The Fund shall be deemed to have accepted the Software
thirty (30) days after Software Installation Date or thirty (30) days after the
Fund's first use of Software to process live production data ("SOFTWARE
ACCEPTANCE DATE").
1.6 Copies of Software. The Fund may not copy the software except for
backup and archival purposes only, and the Fund shall include on all copies of
the Software all copyright and other proprietary notices or legends included on
the Software. The provisions of this Paragraph do not apply to Fund data files
in machine-readable form.
<PAGE> 69
1.7 No-Export. The Software shall not be shipped or used by the fund
outside the United States. The Fund shall comply with all applicable export
and re-export restrictions and regulations of the U.S. Department of Commerce
or other U.S. agency or authority. The Software shall not be transferred to a
prohibited country or otherwise in violation of any such restrictions or
regulations.
1.8 Termination. Terms and conditions of this Schedule H which require
their performance after the termination of the Agreement, including but not
limited to the License and Software use restrictions, limitations of liability,
indemnification, and confidentiality obligations, shall survive and be
enforceable despite the termination of the Agreement.
ARTICLE 2 - WARRANTIES AND REPRESENTATIONS
2.1 Software. For the term of the Agreement, FDISG warrants ("Performance
Warranty") that the Software shall perform on the Equipment substantially in
accordance with the Documentation, except for Third Party Software as set forth
in Paragraph 2.2 below. The timely correction of errors and deficiencies in
the Software shall be Fund's sole and exclusive remedy for the Performance
Warranty. FDISG warrants ("Rights Warranty") it has the right to license the
Software in accordance with the Agreement. Provided the Fund gives FDISG
timely written notice, reasonable assistance, including assistance from the
Fund's employees, agents, independent contractors and affiliates (collectively,
"Fund's Agents"), and sole authority to defend or settle the action, then FDISG
shall do the following ("Infringement Indemnification"): (a) defend or settle,
at its expense, any action brought against the Fund or the Fund's Agents to the
extent the action is based on a claim that the Software infringes a duly issued
United States' patent or copyright or violates a third party's proprietary
trade secrets or other similar intellectual property rights ("Infringement");
and (b) pay damages and costs finally awarded against the Fund or the Fund's
Agents directly attributable to such claim. FDISG shall have no Infringement
Indemnification obligation if the alleged Infringement is based upon the Fund's
use of the Software with equipment or software not furnished or approved by
FDISG or if such claim arises from FDISG's compliance with the Fund's designs,
or from the Fund's modifications of the Software. The Infringement
Indemnification states FDISG's entire liability for Infringement and shall be
the Fund's sole and exclusive remedy for the Rights Warranty.
2.2 Third Party Warranties. All warranties for the Third Party Software,
if any, are specifically set forth in the Software Exhibits, Exhibit 1 or in
the applicable agreements supplied by the Third Party Vendors. Subject to the
terms of the Exhibit 1 and to the extent permitted by FDISG's suppliers, FDISG
conveys to Fund all Third Party Software warranties made by the Third Party
Vendors.
2.3 Exclusion of Warranties. THE WARRANTIES SET FORTH IN PARAGRAPH 2.1
ABOVE AS TO THE SOFTWARE AND IN PARAGRAPH 2.2 ABOVE AS TO THIRD PARTY SOFTWARE
ARE IN LIEU OF ALL OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARISING
OUT OF OR RELATED TO THIS SCHEDULE G. FDISG SPECIFICALLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY,
NON-INFRINGEMENT AND FITNESS FOR A PARTICULAR PURPOSE.
2.4 Fund Responsibility. The System is an information system only,
designed to assist the Fund and the Fund's Agents in performing their
professional activities and is not intended to replace the professional skill
and judgment of the Fund's Agents. Fund shall be solely responsible for: (a)
acts or omissions of the Fund's Agents in entering data into the System,
including its accuracy and adequacy; (b) checking the correctness and accuracy
of the System output and data; and (c) any use of or reliance upon the System
output by the Fund's Agents. Except for the Infringement Indemnification and
as limited by applicable law, the Fund shall indemnify, defend and hold FDISG
and FDISG's Agents harmless from any losses, costs, damages, and liabilities,
including without limitation, reasonable attorneys' fees and court costs,
relating to any claim by any third party arising from or related to the Fund's
and the Fund's Agents' use of the System or System output.
ARTICLE 3 - MISCELLANEOUS
3.1 Confidentiality Obligations. Each party shall keep confidential any
information relating to the other party's business which is clearly designated
or described in writing to be confidential ("Confidential Information"). Each
party shall keep and instruct its employees and agents to keep such information
confidential by using at least the same care and discretion as used with that
party's own confidential information. Information shall not be subject to such
confidentiality obligations if it is: (a) in the public domain, (b) known to a
party, prior to the time of disclosure by the other party, (c) lawfully and
rightfully disclosed to a party by a third party on a non-confidential basis,
(d) developed by a party without reference to Confidential Information or (e)
required to be disclosed by law. If either party, its employees or agents
breaches or threatens to breach the obligations relating to use of the
Confidential
<PAGE> 70
Information, the other party may obtain injunctive relief, in addition to its
other remedies, inadequate monetary damages and irreparable harm being
acknowledged.
3.2 Confidential and Privileged Information. The Proprietary Information,
other FDISG software and related information, and the Agreement are
Confidential Information of FDISG and FDISG's Agents. Absent FDISG's written
permission, Fund shall not duplicate FDISG's Confidential Information. Fund
accepts full responsibility for complying with all laws, rules and regulations
concerning use and disclosure of privileged data regarding any information
placed or stored in the System or output from the System. Fund shall not
modify or reverse engineer the Software without FDISG's prior written consent.
<PAGE> 71
EXHIBIT 1 OF SCHEDULE H
SOFTWARE/HARDWARE
1. FDISG Software.
1.1 FDISG Software includes the following products:
ACE +
2. Third Party Software.
2.1 Directly Obtained Third-Party Software. The following Third Party
Software are separately licensed by the Third Party Vendor directly to the Fund
subject to the respective terms and conditions of "shrink-wrapped" or other
agreements between the Third Party Vendor and the Fund. The Third Party
Software in the Required Column must be obtained by the Fund. The Third Party
Software in the Optional column is helpful but not required unless the
indicated features are being used. The Fund accepts the provisions of such
agreements, including the warranty provisions, if any, and agrees to comply
with the terms set forth in such agreements:
<TABLE>
<CAPTION>
Required Optional
-------- --------
<S> <C>
Windows 3.1 Reachout PC Link (for external FDISG Support of ACE +)
DOS 3.3 or higher
</TABLE>
3. Hardware.
3.1 It is recommended that ACE + run on a PC Network (LAN) to fully use its
database features. The network should have at least 200 Mb of available disk
space. ACE + will also run on an individual local (hard) drive. PC
specifications are:
o 2 or more IBM PC Compatible 486/66 (486/33 minimum) Mhz (or
Pentium) with 16 Mb Ram (8 Mb minimum)
o 500 Mb Local (hard) drives (for backup only)
o External Fax/Modems (9600 baud or greater)(for PC faxing or
Reachout only)
o HP Laserjet 4 w/ Windows Drivers
3.2 PC/Mainframe Connection: ACE + data is based on mainframe ASCII files.
These files must be transmitted from the mainframe to LAN or PC. This can be
accomplished various ways. FDISG uses a mainframe to Gateway and BARR/SNA
transmission.
<PAGE> 72
SCHEDULE I
DISASTER RECOVERY SUMMARY
OVERVIEW
First Data's data center is a free standing building that is self sufficient
with back-up water supply, fuel storage, and diesel generator backup. The
building is protected with 24 hour on site guard protection as well as security
camera coverage throughout the property. Access is by picture ID only and all
doors are protected with card key access. Additionally, all systems are
protected by ACF2 Security. Security is audited on a regular basis.
Additionally, First Data maintains a reliable, tested disaster recovery system.
A tape backup system is set up on a daily rotation schedule with a full backup
of all data. The backup jobs run automatically every night and all tapes are
sent off-site on a daily basis to a physically secured facility. A business
resumption site has been established in our Providence facility. This Hot Site
is fully equipped with equipment, wiring and supplies in the case of a disaster
or business recovery.
A disaster is defined as any unforeseen business interruption or outage that
renders the data center or telecommunications network inoperable or
inaccessible for an undetermined amount of time suspending normal processing.
First Data's Disaster Recovery Plan provides us with the required procedures
and resource references to execute a full recovery of the data center and
associated critical processing.
This Plan addresses:
o Computer and communications equipment
o Programs, data and documentation
o Building and environmental concerns
o Fire detection and building evacuation
o Personnel, and
o Client Liaisons.
Due to contractual requirements, the data center must provide on-line
accessibility and processing availability within 24 hours of a declared
disaster. Total "downtime" is not to exceed 48 hours.
All outages that affect any client are considered priority one and all
available resources will be utilized to resolve outages, failures or slowdowns.
APPROACH
In a disaster situation, numerous issues and tasks must be addressed
immediately. To ensure all get equal attention, "teams" have been developed.
These teams are comprised of experienced First Data personnel responsible to
execute specific assigned functions critical to the overall recovery. Each team
will activate their procedures concurrently to affect a full system recovery at
the hot site. Some of the teams will act as support teams providing
<PAGE> 73
financial, administrative, and logistical coordination. The remaining recovery
teams will address more specific data and telecommunications issues.
o Support Teams
Financial/Administrative Support
Human Resources/Corporate Communications
Applications Team
Client Liaison Team
o Recovery Teams
Management Teams
Systems Software
Data Center Operations
Vendor
Telecommunications Team
Production Control
Facilities/Hardware
Each team will be headed by a team leader and a designated alternate. If, for
any reason, the team leader is unavailable, the alternate will assume
responsibility for the team notification and progress reporting to the team
management.
Dial backup capabilities, diverse routing of communications circuits and
triangulation present the best options for insuring continued system access in
the event of a communications failure. First Data can demonstrate each of these
capabilities at the client's request.
TESTING SUMMARY
First Data/FDT has contracted with Comdisco to provide hotsite disaster
recovery and backup services. First Data's overall goal is to establish network
connectivity for on-line and transmission capability, restore the application
and recover forward to a point in time and then re-process a batch cycle.
Using Comdisco's site at North Bergen, the First Data Technology (FDT)
operating system will be recovered while testing FDISG recoverability for all
network and application platforms.
The recovery will take place remotely with FDT, using the Business Recovery
Facilities (BRF) in Denver, and Westboro staff working out of the new BRF
in Tewksbury, MA. Comdisco will have staff at both BRFs, as well as North
Bergen, to assist whenever needed.
Tests are conducted annually. The test runs for 48 contiguous hours. Multiple
shifts will be required for FDT, FDISG, and Comdisco staff. Specific staff
requirements will be determined as the scope of the test becomes more clearly
defined.
The systems recovery portion of the test will take place at the Comdisco site in
New Jersey utilizing an IBM ES9000 with related peripherals. All the equipment
used in testing is
<PAGE> 74
compatible with the FDT hardware located in Denver. All tape mounts will be
handled by Comdisco staff in New Jersey, and the telecommunications testing
will be staffed by FDT with Comdisco assisting in New Jersey.
FDISG Test Objectives
o Test recoverability from both of Comdisco's new Business Recovery
Facilities
o Test transmission and network connectivity with clients
o Check and verify tape volumes stored offsite
o Benchmark the restore time for all (500) DASD volumes
o Ship all tapes from Denver to New Jersey
o Document (CDRS/FDISG) connectivity procedures
o Recover all applications to previous business cycle
<PAGE> 1
EXHIBIT 9(a)(6)
EXHIBIT 1
LIST OF FUNDS
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Advisor Cash Management Fund Class A and Class C Shares
AIM Advisor Flex Fund Class A and Class C Shares
AIM Advisor Income Fund Class A and Class C Shares
AIM Advisor International Value Fund Class A and Class C Shares
AIM Advisor Large Cap Value Fund Class A and Class C Shares
AIM Advisor MultiFlex Fund Class A and Class C Shares
AIM Advisor Real Estate Fund Class A and Class C Shares
</TABLE>
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A, Class B and Class C Shares
AIM Capital Development Fund Class A, Class B and Class C Shares
AIM Charter Fund Class A, Class B and Class C Shares
AIM Weingarten Fund Class A, Class B and Class C Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A and Class C Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A, Class B and Class C Shares
AIM Global Utilities Fund Class A, Class B and Class C Shares
AIM Growth Fund Class A, Class B and Class C Shares
AIM High Yield Fund Class A, Class B and Class C Shares
AIM Income Fund Class A, Class B and Class C Shares
AIM Intermediate Government Fund Class A, Class B and Class C Shares
AIM Municipal Bond Fund Class A, Class B and Class C Shares
AIM Value Fund Class A, Class B and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM Cash
Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A, Class B and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B and Class C Shares
AIM Global Growth Fund Class A, Class B and Class C Shares
AIM Global Income Fund Class A, Class B and Class C Shares
AIM Asian Growth Fund Class A, Class B and Class C Shares
AIM European Development Fund Class A, Class B and Class C Shares
</TABLE>
<PAGE> 2
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund Class A Shares
AIM Tax-Exempt Bond Fund
Of Connecticut Class A Shares
Intermediate Portfolio AIM Tax-Free Intermediate Shares -
Class A
</TABLE>
On behalf of the Funds and respective Portfolios and Classes as set forth in
this Exhibit 1, which may be amended from time to time.
By: /s/ ROBERT H. GRAHAM
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ LEONARD A. WEISS
Title: EVP AND CFO
Effective as of August 4, 1997.
<PAGE> 1
EXHIBIT 9(a)(7)
EXHIBIT 2
PREFERRED REGISTRATION
TECHNOLOGY ESCROW AGREEMENT
Account Number 0609111-00002-0109001
Recitals
This Preferred Registration Technology Escrow Agreement including any
Exhibits ("Agreement") is effective this 10th day of September 1997, by and
among Data Securities International, Inc. ("DSI"), a Delaware corporation, First
Data Investor Services Group, Inc. ("Depositor"), and each registered investment
company listed on the attached Schedule A hereof ("Preferred Registrant").
WHEREAS, Depositor has entered into a certain Remote Access and
Related Services Agreement dated December 23, 1994, as amended by Amendment
Number 3 dated as of February 1, 1997 (the "Remote Agreement") with the
Preferred Registrant which pursuant thereto certain proprietary software, as
described in Section 12(i) of the Remote Agreement, in object-code form and
other materials of Depositor have been licensed to Preferred Registrant (the
"Software");
WHEREAS, Depositor and Preferred Registrant desire the Agreement to be
supplementary to said contract pursuant to 11 United States Code Section
365(n);
WHEREAS, availability of or access to the source code and other
proprietary data related to the Software is critical to Preferred Registrant in
the conduct of its business;
WHEREAS, Depositor has deposited or will deposit with DSI such source
code and other proprietary data to provide for retention, administration and
controlled access for Preferred Registration under conditions specified herein;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in consideration of the promises, mutual
covenants and conditions contained herein, the parties hereto agree as follows:
1. Deposit Account. Following the delivery of the executed Agreement, DSI
shall open a deposit account ("Deposit Account") for Depositor. The
opening of the Deposit Account means that DSI shall establish an account
ledger in the name of Depositor, assign a deposit account number
("Deposit Account Number"), calendar renewal notices to be sent to
Depositor as provided in Section 30, and request the initial deposit
("Initial Deposit") from Depositor. Depositor has an obligation to make
the Initial Deposit. In the event that Depositor has not made the
Initial Deposit within sixty (60) days of the execution of this
1
<PAGE> 2
Agreement, DSI shall request the initial Deposit from Depositor and
notify Preferred Registrant that such Initial Deposit has not been
received.
2. Preferred Registration Account. Following the execution and delivery of
the Agreement, DSI shall open a registration account ("Registration
Account") for Preferred Registrant. The opening of the Registration
Account means that DSI shall establish under the Deposit Account an
account ledger with a unique registration number ("Registration Number")
in the name of Preferred Registrant, calendar renewal notices to be sent
to Preferred Registrant as provided in Section 30, and request the
Initial Deposit from Depositor. DSI shall notify Preferred Registrant
upon receipt of Initial Deposit.
3. Term of Agreement. The Agreement will commence on the effective date
and continue through January 31, 2000, unless terminated earlier as
provided in the Agreement. The Agreement may be extended for one (1)
year terms.
4. Exhibit A, Notices and Communications. Notices and invoices to
Depositor, Preferred Registrant or DSI should be sent to the parties at
the addresses identified in the Exhibit A.
Documents, payment of fees, deposits of material, and any written
communication should be sent to the DSI offices as identified in the
Exhibit A.
Depositor and Preferred Registrant agree to each name their respective
designated contact ("Designated Contact") to receive notices from DSI
and to act on their behalf in the performance of their obligations as
set forth in the Agreement. Depositor and Preferred Registrant agree to
notify DSI immediately in the event of a change of their Designated
Contact in the manner stipulated in Exhibit A.
5. Exhibit B and Deposit Material. Depositor will submit proprietary data
and related material ("Deposit Material") to DSI for retention and
administration in the Deposit Account.
The Deposit Material will be submitted together with a completed
document called a "Description of Deposit Material", hereinafter
referred to as Exhibit B. Each Exhibit B should be signed by Depositor
prior to submission to DSI and will be signed by DSI upon completion of
the Deposit Material inspection.
Depositor represents and warrants that it lawfully possesses all Deposit
Material, can transfer Deposit Material to DSI and has the authority to
store Deposit Material in accordance with the terms of the Agreement.
6. Deposit Material Inspection. Upon receipt of an Exhibit B and Deposit
Material, DSI will be responsible only for reasonably matching the
labeling of the materials to the item descriptions listed on the Exhibit
B and validating the count of the materials to the quantity listed on
the Exhibit B. DSI will not be responsible for any other claims made by
2
<PAGE> 3
the Depositor on the Exhibit B. Acceptance will occur when DSI concludes
that the Deposit Material Inspection is complete. Upon acceptance DSI
will sign the Exhibit B and assign it the next Exhibit B number. DSI
shall issue a copy of the Exhibit B to Depositor and Preferred
Registrant within ten (10) days of acceptance.
7. Initial Deposit. The Initial Deposit will consist of all material
initially supplied by Depositor to DSI.
8. Deposit Changes. Depositor may desire or may be obligated to update the
Deposit Account with supplemental or replacement Deposit Material of
technology releases.
Supplemental Deposit ("Supplemental") is Deposit Material which is to be
added to the Deposit Account.
Replacement Deposit ("Replacement") is Deposit Material which will
replace existing Deposit Material as identified by any one or more
Exhibit B(s) in the Deposit Account. Replaced Deposit Material will be
destroyed or returned to Depositor.
9. Deposit. The existing deposit ("Deposit") means all Exhibit B(s) and
their associated Deposit Material currently in DSI's possession.
Destroyed or returned Deposit Material is not part of the Deposit;
however, DSI shall keep records of the destruction or return of Deposit
Material.
10. Replacement Option. Within ten (10) days of receipt of Replacement from
Depositor, DSI will send a letter to Preferred Registrant stating that
Depositor requests to replace existing Deposit Material, and DSI will
include a copy of the new Exhibit B(s) listing the new Deposit Material.
Preferred Registrant has twenty (20) days from the mailing of such
letter by DSI to instruct DSI to retain the existing Deposit Material
held by DSI, and if so instructed, DSI will change the Replacement to a
Supplemental. Conversion to Supplemental may cause an additional
storage unit fee as specified by DSI's Fee and Services Schedule.
If Preferred Registrant does not instruct DSI to retain the existing
Deposit Material, DSI shall permit such Deposit Material to be replaced
with the Replacement. Within ten (10) days of acceptance of the
Replacement by DSI, DSI shall issue a copy of the executed Exhibit B(s)
to Depositor and Preferred Registrant. DSI will either destroy or
return to Depositor all Deposit Material replaced by the Replacement.
11. Storage Unit. DSI will store the Deposit in defined units of space,
called storage units. The cost of the first storage unit will be
included in the annual Deposit Account fee.
12. Deposit Obligations of Confidentiality. DSI agrees to establish a locked
receptacle in which it shall place the Deposit and shall put the
receptacle under the administration of
3
<PAGE> 4
one or more of its officers, selected by DSI, whose identity shall be
available to Depositor at all times. DSI shall exercise a
professional level of care in carrying out the terms of the Agreement.
DSI acknowledges Depositor's assertion that the Deposit shall contain
proprietary data and that DSI has an obligation to preserve and
protect the confidentiality of the Deposit.
Except as provided for in the Agreement, DSI agrees that it shall not
divulge, disclose, make available to third parties, or make any use
whatsoever of the Deposit.
13. Audit Rights. DSI agrees to keep records of the activities undertaken
and materials prepared pursuant to the Agreement. DSI may issue to
Depositor and Preferred Registrant an annual report profiling the
Deposit Account. Such annual report will identify the Depositor,
Preferred Registrant, the current Designated Contacts, selected
special services, and the Exhibit B history, which includes Deposit
Material acceptance and destruction or return dates.
Upon reasonable notice, during normal business hours and during the
term of the Agreement, Depositor or Preferred Registrant will be
entitled to inspect the records of DSI pertaining to the Agreement,
and accompanied by an employee of DSI, inspect the physical status and
condition of the Deposit. The Deposit may not be changed during the
audit.
14. Renewal Period of Agreement. Upon payment of the initial fee or
renewal fee, the Agreement will be in full force and will have an
initial period of at least one (1) year unless otherwise specified.
The Agreement may be renewed for additional periods upon receipt by
DSI of the specified renewal fees prior to the last day of the period
("Expiration Date"). DSI may extend the period of the Agreement to
cover the processing of any outstanding instruction made during any
period of the Agreement.
Preferred Registrant has the right to pay renewal fees and other
related fees. In the event Preferred Registrant pays the renewal fees
and Depositor is of the opinion that any necessary condition for
renewal is not met, Depositor may so notify DSI and Preferred
Registrant in writing. The resulting dispute will be resolved
pursuant to the dispute resolution process defined in Section 25.
15. Expiration. If the Agreement is not renewed, or is otherwise
terminated, all duties and obligations of DSI to Depositor and
Preferred Registrant will terminate. If Depositor requests the return
of the Deposit, DSI shall return the Deposit to Depositor only after
any outstanding invoices and the Deposit return fee are paid. If the
fees are not received by the Expiration Date of the Agreement, DSI, at
its option, may destroy the Deposit.
16. Certification by Depositor. Depositor represents to Preferred
Registrant that:
4
<PAGE> 5
a. The Deposit delivered to DSI consists of the following: source
code deposited on computer magnetic media; all necessary and
available information, proprietary information, and technical
documentation which will enable a reasonably skilled
programmer of Preferred Registrant to create, maintain and/or
enhance the Software without the aid of Depositor or any other
person or reference to any other materials; maintenance tools
(test programs and program specifications); proprietary or
third party system utilities (compiler and assembler
descriptions); description of the system/program generation;
descriptions and locations of programs not owned by Depositor
but required for use and/or support; and names of key
developers for the technology on Depositor's staff.
b. The Deposit will be defined in the Exhibit B(s).
These representations shall be deemed to be made continuously
throughout the term of the Agreement.
17. Indemnification. Depositor and Preferred Registrant agree to defend
and indemnify DSI and hold DSI harmless from and against any and all
claims, actions and suits, whether in contract or in tort, and from
and against any and all liabilities, losses, damages, costs, charges,
penalties, counsel fees, and other expenses of any nature (including,
without limitation, settlement costs) incurred by DSI as a result of
performance of the Agreement except in the event of a judgment which
specifies that DSI acted with gross negligence or willful misconduct.
18. Filing for Release of Deposit by Preferred Registrant. Upon notice to
DSI by Preferred Registrant of the occurrence of a release condition
as defined in Section 21 and payment of the release request fee, DSI
shall notify Depositor by certified mail or commercial express mail
service with a copy of the notice from Preferred Registrant. If
Depositor provides contrary instruction within ten (1O) days of the
mailing of the notice to Depositor, DSI shall not deliver a copy of
the Deposit to Preferred Registrant.
19. Contrary Instruction. "Contrary Instruction" is the filing of an
instruction with DSI by Depositor stating that a Contrary Instruction
is in effect. Such Contrary Instruction means an officer of Depositor
warrants that a release condition has not occurred or has been cured.
DSI shall send a copy of the instruction by certified mail or
commercial express mail service to Preferred Registrant. DSI shall
notify both Depositor and Preferred Registrant that there is a dispute
to be resolved pursuant to Section 25. Upon receipt of Contrary
Instruction, DSI shall continue to store the Deposit pending Depositor
and Preferred Registrant joint instruction, resolution pursuant to
Section 25, order by a court of competent jurisdiction, or termination
by non-renewal of the Agreement.
20. Release of Deposit to Preferred Registrant. Pursuant to Section 18, if
DSI does not receive Contrary Instruction from Depositor, DSI is
authorized to release the Deposit, or if more than one Preferred
Registrant is registered to the Deposit, a copy of the Deposit,
5
<PAGE> 6
to the Preferred Registrant filing for release following receipt of
any fees due to DSI including Deposit copying and delivery fees.
21. Release Conditions of Deposit to Preferred Registrant.
Release conditions are:
a. Depositor ceases to do business, makes an assignment for the
benefit of creditors, becomes insolvent (as revealed by its
books and records or otherwise), is generally unable to pay
its debts as such debts become due, or commences, or has
commenced against it a case under any chapter of state or
federal bankruptcy laws; and Depositor fails to cure any such
event within 60 days after receiving notice from Preferred
Registrant; and
b. Preferred Registrant has paid all amounts due Depositor under
the Remote Agreement.
22. Grant of Use License. Subject to the terms and conditions of the
Agreement, Depositor hereby transfers and upon execution by DSI, DSI
hereby accepts a non-exclusive, nontransferable, royalty-free license
("Use License") for the unexpired term of the Remote Agreement subject
to Section 15 thereof which DSI will transfer to Preferred Registrant
upon controlled release of the Deposit as described in the Agreement.
The Use License will be solely for Preferred Registrant's internal
purposes in connection with support, maintenance, and operation of the
Software solely as set forth in the Remote Agreement and not for any
other purpose or person.
23. Use License Representation. Depositor represents and warrants to
Preferred Registrant and DSI that it has no knowledge of any
incumbrance or infringement of the Deposit, or that any claim has been
made that the Deposit infringes any patent, trade secret, copyright or
other proprietary right of any third party. Depositor warrants that it
has the full right, power, and ability to enter into and perform the
Agreement, to grant the foregoing Use License, and to permit the
Deposit to be placed with DSI.
24. Conditions Following Release. Following a release and subject to
payment to DSI of all outstanding fees, DSI shall transfer the Use
License to Preferred Registrant. Additionally Preferred Registrant
shall be required to maintain the confidentiality of the released
Deposit.
25. Disputes. In the event of a dispute, DSI shall so notify Depositor and
Preferred Registrant in writing. Upon agreement of the parties at the
time of a dispute, such dispute will be settled by arbitration in
accordance with the commercial rules of the American Arbitration
Association ("AAA"). Unless otherwise agreed to by Depositor and
Preferred Registrant, arbitration will take place in San Diego,
California, USA.
6
<PAGE> 7
26. Verification Rights. Depositor grants to Preferred Registrant the
option to verify the Deposit for accuracy, completeness and
sufficiency. Depositor agrees to permit DSI and at least one employee
of Preferred Registrant to be present at Depositor's facility to
verify, audit and inspect of the Deposit for the benefit of Preferred
Registrant. If DSI is present or is selected to perform the
verification, DSI will be paid according to DSI's then current
verification service hourly rates and any out of pocket expenses.
27. General. DSI may act in reliance upon any instruction, instrument, or
signature believed to be genuine and may assume that any employee
giving any written notice, request, advice or instruction in
connection with or relating to the Agreement has apparent authority
and has been duly authorized to do so. DSI may provide copies of the
Agreement or account history information to any employee of Depositor
or Preferred Registrant upon their request. For purposes of
termination or replacement, Deposit Material shall be returned only to
Depositor's Designated Contact, unless otherwise instructed by
Depositor's Designated Contact.
DSI is not responsible for failure to fulfill its obligations under the
Agreement due to causes beyond DSI's control.
The Agreement is to be governed by and construed in accordance with
the laws of the State of California.
The Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof, and supersedes all previous
communications, representations, understandings, and agreements,
either oral or written, between the parties. The Agreement may be
amended only in a writing signed by the parties.
If any provision of the Agreement is held by any court to be invalid
or unenforceable, that provision will be severed from the Agreement
and any remaining provisions will continue in full force.
28. Title to Media. Subject to the terms of the Agreement, title to the
media, upon which the proprietary data is written or stored, is and
shall be irrevocably vested in DSI. Notwithstanding the foregoing,
Depositor will retain ownership of the proprietary data contained on
the media including all copyright, trade secret, patent or other
intellectual property ownership rights subsisting in such proprietary
data.
29. Termination of Rights. The Use License as described above will
terminate in the event that the Agreement is terminated without the
Use License transferring to Preferred Registrant.
30. Fees. Fees are due upon receipt of signed contract, receipt of Deposit
Material, or when service is requested, whichever is earliest. If
invoiced fees are not paid within sixty (60) days of the date of the
invoice, DSI may terminate the Agreement. If the payment is not
7
<PAGE> 8
timely received by DSI, DSI shall have the right to accrue and collect
interest at the rate of one and one-half percent per month (18% per
annum) from the date of the invoice for all late payments.
Renewal fees will be due in full upon the receipt of invoice unless
otherwise specified by the invoice. In the event that renewal fees are
not received thirty (30) days prior to the Expiration Date, DSI shall
so notify Depositor and Preferred Registrant. If the renewal fees are
not received by the Expiration Date, DSI may terminate the Agreement
without further notice and without liability of DSI to Depositor or
Preferred Registrant.
DSI shall not be required to process any request for service unless
the payment for such request shall be made or provided for in a manner
satisfactory to DSI.
All service fees and renewal fees will be those specified in DSI's Fee
and Services Schedule in effect at the time of renewal or request for
service, except as otherwise agreed. For any increase in DSI's
standard fees, DSI shall notify Depositor and Preferred Registrant at
least ninety (90) days prior to the renewal of the Agreement. For any
service not listed on the Fee and Services Schedule, DSI shall provide
a quote prior to rendering such service.
Fees invoiced by DSI are the responsibility of the Preferred
Registrant and as such all invoices in accordance with this Agreement
are to be sent to the Preferred Registrant.
8
<PAGE> 9
On behalf of the Investment Companies
and respective Portfolios and Classes
set forth in Schedule A attached
hereto as may be amended from
time to time.
<TABLE>
<S> <C>
By:/s/ ROBERT H. GRAHAM FIRST DATA INVESTOR SERVICES
--------------------------------- GROUP, INC.
Name: Robert H. Graham
------------------------------- By:/s/ ILLEGIBLE
Title: President ---------------------------------
------------------------------ Name: ILLEGIBLE
-------------------------------
Title: Executive Vice President
------------------------------
DATA SECURITIES
INTERNATIONAL, INC.
By:/s/ CHRISTIE WOODWARD
---------------------------------
Name: Christie Woodward
-------------------------------
Title: Contract Administrator
------------------------------
</TABLE>
<PAGE> 10
SCHEDULE A
LIST OF FUNDS
AIM ADVISOR FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Advisor Cash Management Fund Class A and Class C Shares
AIM Advisor Flex Fund Class A and Class C Shares
AIM Advisor Income Fund Class A and Class C Shares
AIM Advisor International Value Fund Class A and Class C Shares
AIM Advisor Large Cap Value Fund Class A and Class C Shares
AIM Advisor MultiFlex Fund Class A and Class C Shares
AIM Advisor Real Estate Fund Class A and Class C Shares
</TABLE>
AIM EQUITY FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Blue Chip Fund Class A, Class B Shares and Class C Shares
AIM Capital Development Fund Class A, Class B Shares and Class C Shares
AIM Charter Fund Class A, Class B Shares and Class C Shares
AIM Weingarten Fund Class A, Class B Shares and Class C Shares
AIM Aggressive Growth Fund Class A Shares
AIM Constellation Fund Class A Shares and Class C Shares
</TABLE>
AIM FUNDS GROUP
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Balanced Fund Class A, Class B Shares and Class C Shares
AIM Global Utilities Fund Class A, Class B Shares and Class C Shares
AIM Growth Fund Class A, Class B Shares and Class C Shares
AIM High Yield Fund Class A, Class B Shares and Class C Shares
AIM Income Fund Class A, Class B Shares and Class C Shares
AIM Intermediate Government Fund Class A, Class B Shares and Class C Shares
AIM Municipal Bond Fund Class A, Class B Shares and Class C Shares
AIM Value Fund Class A, Class B Shares and Class C Shares
AIM Money Market Fund Class A, Class B, Class C and AIM Cash Reserve Shares
</TABLE>
AIM INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM International Equity Fund Class A, Class B Shares and Class C Shares
AIM Global Aggressive Growth Fund Class A, Class B Shares and Class C Shares
AIM Global Growth Fund Class A, Class B Shares and Class C Shares
AIM Global Income Fund Class A, Class B Shares and Class C Shares
AIM Asian Growth Fund Class A, Class B Shares and Class C Shares
AIM European Development Fund Class A, Class B Shares and Class C Shares
</TABLE>
AIM INVESTMENT SECURITIES FUNDS
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
Limited Maturity Treasury Portfolio AIM Limited Maturity Treasury Shares
</TABLE>
AIM TAX-EXEMPT FUNDS, INC.
<TABLE>
<CAPTION>
Portfolios: Classes:
<S> <C>
AIM Tax-Exempt Cash Fund Class A Shares
AIM Tax-Exempt Bond Fund of Connecticut Class A Shares
Intermediate Portfolio AIM Tax-Free Intermediate Shares- Class A
</TABLE>
<PAGE> 11
EXHIBIT A
DESIGNATED CONTACT
Account Number: 0609111-00002-01090011
<TABLE>
<S> <C>
NOTICES, DEPOSIT MATERIAL RETURNS AND INVOICES TO DEPOSITOR SHOULD BE ADDRESSED TO:
COMMUNICATION, INCLUDING DELINQUENCIES TO First Data Investor Services Group, Inc.
DEPOSITOR SHOULD BE ADDRESSED TO: ------------------------------------------------
4400 Computer Drive
First Data Investor Services Group, Inc. ------------------------------------------------
- ---------------------------------------- Westboro, MA 01581
4400 Computer Drive ------------------------------------------------
- ----------------------------------------
Westboro, MA 01581 ------------------------------------------------
- ----------------------------------------
Invoice Contact: Brendan Bowen
- ---------------------------------------- --------------------------------
Designated Contact: John Corey
---------------------
Telephone: (508)871-9601
------------------------------
Facsimile:
------------------------------
State of Incorporation: Massachusetts
-----------------
NOTICES AND COMMUNICATION, INCLUDING INVOICES TO PREFERRED REGISTRANT SHOULD BE
DELINQUENCIES TO PREFERRED REGISTRANT ADDRESSED TO:
SHOULD BE ADDRESSED TO: AIM Fund Services, Inc.
-----------------------------------------------
AIM Fund Services, Inc. Eleven Greenway Plaza
Eleven Greenway Plaza -----------------------------------------------
Houston, Texas 77046 Houston, Tx 77046
-----------------------------------------------
-----------------------------------------------
Designated Contact: Jack Caldwell Invoice Contact: Jack Caldwell
--------------------- -------------------------------
Telephone: (713)214-1633
------------------------------
Facsimile:
------------------------------
Requests from Depositor or Preferred Registrant INVOICE INQUIRIES AND FEE REMITTANCES TO DSI
Contact should be given Contact or authorized SHOULD BE ADDRESSED TO:
employee Registrant.
DSI
CONTRACTS, DEPOSIT MATERIAL AND NOTICES TO DSI Attn: Accounts Receivable
SHOULD BE ADDRESSED TO:
DSI
Attn: Contract Administration
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Telephone:
------------------------------
Facsimile:
------------------------------
Date:
-----------------------------------
</TABLE>
<PAGE> 12
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number: 0609111-00002
--------------------------------------------------------
Depositor Company Name: First Data Investor Services Group
--------------------------------------------------------
DEPOSIT TYPE:
X Initial Supplemental Replacement
- ------ ------ ------
If Replacement: Destroy Deposit Return Deposit
------ ------
ENVIRONMENT:
Host System CPU/OS: MS Windows 3.11 or MS/Windows 95 OS on Intel X86 processor
based PC
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS: MS Windows 3.11 OS on Intel Pentium 133 MHz PC
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler:Impress Imaging-Plexus AD v4.1, Informix ESQL v2.2, MS Visual C++v4.1
----------------------------------------------------------------------
Impress Clearinghouse & Toolbar-MS Visual C++ v4.1
----------------------------------------------------------------------
ACE Plus - MS Visual Basic 4.0, MS Access v2.0
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: Impress Imaging System Version: V5.2.06.01
---------------------- -------------------------
Impress Clearinghouse V5.2.02.01
---------------------- -------------------------
Impress Toolbar V5.2.01.01
---------------------- -------------------------
ACE Plus V2.05.07
---------------------- -------------------------
<TABLE>
<CAPTION>
Item Label Description Media Quantity
<S> <C> <C>
AIM Funds Source, CD 1
August 8, 1997
Case Arrived cracked DSI
</TABLE>
<TABLE>
<S> <C>
For Depositor, I certify that the above For DSI, I received the above described
described Deposit Material was sent to DSI: Deposit Material subject to the terms on
the reverse side of this Exhibit:
By:/s/ ILLEGIBLE By: /S/ CHRISTIE WOODWARD
--------------------------------------- ---------------------------------------
Print Name: ILLEGIBLE Print Name: CHRISTIE WOODWARD
------------------------------- -------------------------------
Date: 9-3-97 Date of Acceptance: 9-10-97
------------------------------------- -----------------------
</TABLE>
<PAGE> 13
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number: 0609111-00002
------------------------------------------------------
Depositor Company Name: First Data Investor Services Group
------------------------------------------------------
DEPOSIT TYPE:
[X] Initial [ ] Supplemental [ ] Replacement
If Replacement: [ ] Destroy Deposit [ ] Return Deposit
ENVIRONMENT:
Host System CPU/OS: 3090/MVS
------------------------------------------------------------
Version:
-----------------------------------------------------------------------
Backup:
------------------------------------------------------------------------
Source System CPU/OS: 3090/MVS
----------------------------------------------------------
Version:
-----------------------------------------------------------------------
Compiler: Standard IBM Compiler
----------------------------------------------------------------------
Special Instructions:
----------------------------------------------------------
DEPOSIT MATERIAL:
Exhibit B Name: FSR Source Code-931761 Version:
---------------------------- --------------------------
FSR JCL-931384
Item Label Description Media Quantity
DSN-P03AIM.PRIV.VENDOR.SEA.CSSP Data Tape 1
ROD_PANLIB VOLSER-932154 DSI
DSN_P03AIMPRIV.VENDOR.SEQ.ESC Data Tape 1
ROW.TAPE VOLSER=932155
<TABLE>
<S> <C>
For Depositor, I certify that the above described For DSI, I received the above described Deposit
Deposit Material was sent to DSI: Material subject to the terms on the reverse side
of this Exhibit:
By: /s/ NOT LEGIBLE By: /s/ CHRISTIE WOODWARD
---------------------------------------------- ---------------------------------------------
Print Name: NOT LEGIBLE Print Name: CHRISTIE WOODWARD
-------------------------------------- -------------------------------------
Date: NOT LEGIBLE Date of Acceptance: NOT LEGIBLE
------------------------------------------- -----------------------------
</TABLE>
<PAGE> 1
EXHIBIT 9(b)
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is
made as of ________________, 1998, by and between AIM Growth Series (the
"Company") and INVESCO (NY), INC. ("INVESCO (NY)").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company;
WHEREAS, the Company currently operates eight separate mutual funds,
each organized as a separate and distinct series consisting of shares of
beneficial interest (such existing funds and such funds as may hereafter be
established being referred to in this Agreement as the "Funds" and singly as a
"Fund");
WHEREAS, the Company is part of a complex of investment companies that
are sub-advised and/or sub-administered by INVESCO (NY) and with which INVESCO
(NY) has entered into Fund Accounting and Pricing Agent Agreements (the
"INVESCO (NY) Funds");
WHEREAS, the Company desires to retain INVESCO (NY) to act as its
accounting and pricing agent, and INVESCO (NY) is willing to act in such
capacities.
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereinafter set forth, the Company and INVESCO (NY) hereby agree as
follows:
SECTION 1. APPOINTMENT. The Company hereby appoints INVESCO
(NY) to act as the accounting and pricing agent for each Fund for the period
and on the terms and conditions set forth in this Agreement. INVESCO (NY)
hereby accepts such appointment and agrees to render the services set forth for
the compensation herein provided.
SECTION 2. DEFINITIONS. As used in this Agreement and in
addition to the terms defined elsewhere herein, the following terms shall have
the meanings assigned to them in this Section:
(a) "Authorized Person" means any officer of the
Company and any other person, whether or not any such person is an
officer or employee of the Company, duly authorized by the Board of
Trustees (the "Board"), the President or any Vice President of the
Fund to give Oral and/or Written Instructions on behalf of the Company
or any Fund.
(b) "Commission" means the Securities and
Exchange Commission.
(c) "Custodian" means the custodian or custodians
employed by the Company to maintain custody of the Fund's assets.
<PAGE> 2
(d) "Governing Documents" means the Declaration
of Trust, By-Laws and other applicable charter documents of the
Company, all as they may be amended from time to time.
(e) "Oral Instruction" means oral instructions
actually received by INVESCO (NY) from an Authorized Person or from a
person reasonably believed by INVESCO (NY) to be an Authorized Person,
provided that, any Oral Instruction shall be promptly confirmed by
Written Instructions.
(f) "Prospectus" means the current prospectus and
statement of additional information of a Fund, taken together.
(g) "Shares" means shares of beneficial interest
of any of the Funds.
(h) "Shareholder" means any owner of Shares.
(i) "Written Instructions" means written
instructions delivered by hand, mail, tested telegram or telex, cable
or facsimile sending device received by INVESCO (NY) and signed by an
Authorized Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its
responsibilities hereunder, INVESCO (NY) shall comply with all terms and
provisions of the Governing Documents, the Prospectus and all applicable state
and federal laws including, without limitation, the 1940 Act and the rules and
regulations promulgated by the Commission thereunder.
SECTION 4. SERVICES. In consideration of the compensation
payable hereunder and subject to the supervision and control of the Company's
Boards, INVESCO (NY) shall provide the following services to the Funds:
(a) PRICING AGENT. As pricing agent, INVESCO (NY) shall:
(1) Obtain security market quotes from services
approved by the investment manager of the Funds or, if such
quotes are unavailable, then obtain such prices from the
investment manager of the Funds or from such sources as the
investment manager may direct, and, in either case, calculate
the market value of the Funds' investments; and
(2) Value the assets of the Funds and compute the
net asset value per Share of the Funds at such dates and times
and in the manner specified in the then currently effective
Prospectus and transmit to the Funds' investment manager.
(b) ACCOUNTING AGENT. As fund accounting agent, INVESCO
(NY) shall:
- 2 -
<PAGE> 3
(1) Calculate the net income of each Fund;
(2) Calculate capital gains or losses for each
Fund from the sale or disposition of assets, if any;
(3) Maintain the general ledger and other
accounts, books and financial records of the Company, as
required under Section 31(a) of the 1940 Act and the rules
promulgated by the Commission thereunder in connection with
the services provided by INVESCO (NY);
(4) Perform the following functions on a daily
basis:
(A) journalize each Fund's investment,
capital share and income and expense activities;
(B) reconcile cash and investment
balances of each Fund with the Custodian and provide
the Funds' investment manager with the beginning cash
balance available for investment purposes and update
the cash availability throughout the day as required
by the investment manager;
(C) verify investment buy/sell trade
tickets received from a Fund's investment manager and
transmit trades to a Fund's Custodian for proper
settlement;
(D) maintain individual ledgers for
investment securities;
(E) maintain historical tax lots for
investment securities;
(F) calculate various contractual
expenses (e.g., advisory and custody fees);
(G) post to and prepare the Funds'
statement of assets and liabilities and statement of
operations; and
(H) monitor expense accruals and notify
an Authorized Person of any proposed adjustments;
(5) Receive and act upon notices, Oral and
Written Instructions, certificates, instruments or other
communications from a Fund's shareholder servicing and
transfer agent;
(6) Assist in the preparation of financial
statements semiannually
- 3 -
<PAGE> 4
which will include the following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) changes in net assets;
(E) cash statement; and
(F) schedule of capital gains and
losses;
(7) Prepare monthly security transaction
listings;
(8) Prepare quarterly broker security
transactions summaries; and
(9) At the reasonable request of the Company,
assist in the preparation of various reports or other
financial documents required by federal, state and other
appropriate laws and regulations.
SECTION 5. COMPENSATION. As compensation for the services
rendered by INVESCO (NY) hereunder during the term of the Agreement, each Fund
shall pay to INVESCO (NY) monthly such fees as shall be agreed to from time to
time by the Company and INVESCO (NY), in writing and attached hereto as
Schedule A. In addition, as may be agreed to from time to time in writing by
the Company and INVESCO (NY), each Fund shall reimburse INVESCO (NY) for
certain expenses that it incurs in rendering services with respect to that Fund
under this Agreement.
SECTION 6. RELIANCE BY INVESCO (NY) ON INSTRUCTIONS. Unless
otherwise provided in this Agreement, INVESCO (NY) shall act only upon Oral or
Written Instructions. INVESCO (NY) shall be entitled to rely upon any such
Instructions actually received by it under this Agreement. The Company agrees
that INVESCO (NY) shall incur no liability to the Company or any of the Funds
in acting upon Oral or Written Instructions given to INVESCO (NY) hereunder,
provided that, such Instructions reasonably appear to have been received from
an Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE COMPANY. INVESCO
(NY) shall cooperate with the Company's agents and employees, including,
without limitation, their independent accountants, and shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that all necessary information is made available to such agents to the
extent necessary in the performance of their duties to the Company.
- 4 -
<PAGE> 5
SECTION 8. CONFIDENTIALITY. INVESCO (NY), on behalf of
itself and its employees, agrees to treat confidentially all records and other
information relating to the Company and the Funds except when requested to
divulge such information by duly constituted authorities provided that
notification and prior approval is obtained from the Company, which approval
shall not be unreasonably withheld and may not be withheld if INVESCO (NY), in
its judgment, may be subject to civil or criminal contempt proceedings for
failure to comply.
SECTION 9. STANDARD OF CARE. In the performance of its
responsibilities hereunder, INVESCO (NY) shall exercise care and diligence in
the performance of its duties and act in good faith and use its best efforts to
ensure the accuracy and completeness of all services under this Agreement. In
performing services hereunder, INVESCO (NY):
(a) shall be under no duty to take any action on
behalf of the Company or the Funds except as specifically set forth
herein or as may be specifically agreed to by INVESCO (NY) in writing,
and in computing the net asset value per Share of a Fund, INVESCO (NY)
may rely upon any information furnished to it including, without
limitation, information (1) as to the accrual of liabilities of a Fund
and as to liabilities of a Fund not appearing on the books of account
kept by INVESCO (NY), (2) as to the existence, status and proper
treatment of reserves, if any, authorized by a Fund, (3) as to the
sources of quotations to be used in computing net asset value, (4) as
to the fair value to be assigned to any securities or other property
for which price quotations are not readily available and (5) as to the
sources of information with respect to "corporate actions" affecting
portfolio securities of a Fund (information as to "corporate actions"
shall include information as to dividends, distributions, interest
payments, prepayments, stock splits, stock dividends, rights
offerings, conversions, exchanges, recapitalizations, mergers,
redemptions, calls, maturity dates and similar actions, including
ex-dividend and record dates and the amounts and terms thereof);
(b) shall be responsible and liable for all
losses, damages and costs (including reasonable attorneys' fees)
incurred by the Company or any Fund which is due to or caused by
INVESCO (NY)'s negligence in the performance of its duties under this
Agreement or for INVESCO (NY)'s negligent failure to perform such
duties as are specifically assumed by INVESCO (NY) in this Agreement,
provided that, to the extend that duties, obligations and
responsibilities are not expressly set forth in this Agreement,
INVESCO (NY) shall not be liable for any act or omission that does not
constitute willful misfeasance, bad faith or negligence on the part of
INVESCO (NY) or reckless disregard by INVESCO (NY) of such duties,
obligations and responsibilities; and
(c) without limiting the generality of
the foregoing, INVESCO (NY) shall not, in connection with INVESCO
(NY)'s duties under this Agreement, be under any duty or obligation to
inquire into and shall not be liable for or in respect of:
(1) the validity or invalidity or
authority or lack of authority of any Oral or Written
Instruction, notice or other instrument which
conforms
- 5 -
<PAGE> 6
to the applicable requirements of this Agreement, if
any and that INVESCO (NY) reasonably believes to be
genuine; and
(2) delays or errors or loss of data
occurring by reason of circumstances beyond INVESCO
(NY)'s control including, without limitation, acts of
civil or military authorities, national emergencies,
labor difficulties, fire, mechanical breakdown,
denial of access, earthquake, flood or catastrophe,
acts of God, insurrection, war, riots, or failure of
the mails, transportation, communication or power
supply.
Notwithstanding any other provisions of this Agreement, the following
provisions shall apply with respect to INVESCO (NY)'s computation of a Fund's
net asset value: INVESCO (NY) shall be held to the exercise of reasonable care
in computing and determining net asset value as provided in Section 4(a),
above, but shall not be held accountable or liable for any losses, damages or
expenses of a Fund or any Shareholder or former Shareholder may incur arising
from or based upon errors or delays in the determination of such net asset
value unless such error or delay was due to INVESCO (NY)'s negligence or
willful misfeasance in the computation and determination of such net asset
value. The parties hereto acknowledge, however, that INVESCO (NY) causing an
error or delay in the determination of net asset value may, but does not in an
of itself, constitute negligence or willful misfeasance. In no event shall
INVESCO (NY) be liable or responsible to the Company or a Fund or any other
party for any error or delay which continued or was undetected after the date
of an audit of the Company or any Fund performed by the certified public
accountants employed by the Company if, in the exercise of reasonable care in
accordance with generally accepted accounting principles, such accountants
should have become aware of such error or delay in the course of performing
such audit. INVESCO (NY)'s liability for any such negligence or willful
misfeasance which results in an error in determination of such net asset value
be limited to the direct out-of-pocket loss a Fund and/or any Shareholder or
former Shareholder shall actually incur.
Without limiting the generality of the foregoing, INVESCO (NY)
shall not be held accountable or liable to a Fund a Shareholder or former
Shareholder or any other person for any delays or losses, damages or expenses
any of them may suffer or incur resulting from (1) INVESCO (NY)'s failure to
receive timely and suitable notification concerning quotations, corporate
actions or similar matters relating to or affecting portfolio securities of a
Fund or (2) any errors in the computation of a net asset value based upon or
arising out of quotations or information as to corporate actions if received by
INVESCO (NY) from a source that INVESCO (NY) was authorized to rely upon.
Nevertheless, INVESCO (NY) will use its best judgment in determining whether to
verify through other sources any information that it has received as to
quotations or corporate actions if INVESCO (NY) has reason to believe that any
such information is incorrect.
SECTION 10. RECEIPT OF ADVICE. If INVESCO (NY) is in doubt
as to any action to be taken or omitted by it, INVESCO (NY) may request, and
shall be entitled to rely upon, directions and advice from the Company,
including Oral or Written Instructions where
- 6 -
<PAGE> 7
appropriate, or from counsel of its own choosing (who may also be counsel for
the Company or any Fund), with respect to any question of law. In case of
conflict between directions, advice or Oral and Written Instructions received
by INVESCO (NY) pursuant to this Section, INVESCO (NY) shall be entitled to
rely on and follow the advice received from counsel as described above.
INVESCO (NY) shall be protected in any action or in action that it takes in
reliance on any directions, advice or Oral or Written Instructions received
pursuant to this Section that INVESCO (NY), after the receipt of the same, in
good faith believes to be consistent with such directions, advice or Oral or
Written Instructions, as the case may be. Notwithstanding the foregoing,
nothing in this Section shall be construed as imposing on INVESCO (NY) any
obligation to seek such directions, advice or Oral or Written Instruction, or
to act in accordance with them when received, unless the same is a condition to
INVESCO (NY)'s properly taking or omitting to take such action under the terms
of this Agreement.
SECTION 11. INDEMNIFICATION OF INVESCO (NY). The Company
agrees to indemnify and hold harmless INVESCO (NY) and its officers, directors,
employees, nominees and subcontractors, if any, from all taxes, charges,
expenses, assessments, claims and liabilities, including, without limitation,
liabilities arising under the 1940 Act, the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, the Commodities Exchange Act
and any state or foreign securities or blue sky laws, and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, arising
directly or indirectly from any action or thing that INVESCO (NY) takes or
omits to take or do:
(a) at the request or on the direction of or in
reliance upon the advice of the Company;
(b) upon Oral or Written Instructions; or
(c) in the performance by INVESCO (NY) of its
responsibilities under this Agreement;
provided that, INVESCO (NY) shall not be indemnified against any liability to
the Company or the Funds, or any expenses incident thereto, arising out of
INVESCO (NY)'s own willful misfeasance, bad faith or negligence or reckless
disregard of its duties in connection with the performance of its duties and
obligations specifically described in this Agreement.
SECTION 12. INDEMNIFICATION OF THE COMPANY. INVESCO (NY)
agrees to indemnify and hold harmless the Company and its officers, trustees,
directors and employees, from all taxes, charges, expenses, assessments, claims
and liabilities, including, without limitation, liabilities arising under the
1940 Act, the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the Commodities Exchange Act and any state or foreign
securities or blue sky laws, and expenses, including, without limitation,
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or omission of INVESCO (NY) that does not meet the standard of
care to which INVESCO (NY) is subject under Section 9, above.
- 7 -
<PAGE> 8
SECTION 13. LIMITATION OF LIABILITY OF SHAREHOLDERS AND
TRUSTEES OF THE COMPANY. It is expressly agreed that the obligations of the
Company hereunder shall not be binding upon any of the shareholders, trustees,
directors, officers, nominees, agents or employees of the Company personally,
but shall only bind the assets and property of the applicable Funds, as
provided in the Governing Documents. The execution and delivery of this
Agreement has been authorized by the Board of the Company, and this Agreement
has been executed and delivered by an authorized officer of the Company acting
as such, and neither such authorization by the Board nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the applicable Fund as provided in the
Governing Documents.
SECTION 14. DURATION AND TERMINATION. This Agreement shall
continue with respect to the Company and each Fund until termination with
respect to the Company, or with respect to one or more Funds, is effected by
the Company or INVESCO (NY) upon sixty days' prior written notice to the other.
In the event of the "assignment" of this Agreement within the meaning of the
1940 Act, this Agreement shall terminate automatically.
SECTION 15. NOTICES. All notices and other communications
hereunder, including Written Instructions, shall be in writing or by confirming
telegram, cable, telex or facsimile sending device. Notices with respect to a
party shall be directed to such address as may from time to time be designated
by that party to the other.
SECTION 16. FURTHER ACTIONS. The Company and INVESCO (NY)
agree to perform such further acts and to execute such further documents as may
be necessary or appropriate to effect the purposes of this Agreement.
SECTION 17. AMENDMENTS. This Agreement, or any part thereof,
may be amended only by an instrument in writing signed by the Company and
INVESCO (NY).
SECTION 18. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
SECTION 19. SHAREHOLDER LIABILITY. It is expressly agreed
that the obligations of the Company hereunder shall not be binding upon any of
the Trustees, Shareholders, nominees, officers, agents or employees of the
Company personally, but shall only bind the assets and property of the Funds,
as provided in the Company's Agreement and Declaration of Trust. The execution
and delivery of this Agreement has been authorized by the Trustees of the
Company and this Agreement has been executed and delivered by an authorized
officer of the Company acting as such; neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets
- 8 -
<PAGE> 9
and property of the Funds, as provided in the Company's Agreement and
Declaration of Trust.
SECTION 20. MISCELLANEOUS. This Agreement embodies the
entire agreement and understanding between the Company and INVESCO (NY) and
supersedes all prior agreements and understandings relating to the subject
matter hereof, provided that the Company and INVESCO (NY) may embody in one or
more separate documents their agreement or agreements with respect to such
matters that this Agreement provides may be later agreed to by and between the
Company and INVESCO (NY) from time to time. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
This Agreement shall be governed by and construed in accordance with California
law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the Company and INVESCO (NY) and their respective
successors.
IN WITNESS WHEREOF, the Company and INVESCO (NY) have caused
this Agreement to be executed by their officers designated below as of this
day, month and year first above written.
<TABLE>
<C> <S>
AIM GROWTH SERIES
By: /s/ KENNETH W. CHANCEY
------------------------------------
Kenneth W. Chancey
Vice President, Principal Accounting
Officer and (Acting) CFO
Attest: /s/ MICHAEL A. SILVER
------------------------------------
Michael A. Silver
Assistant Secretary
INVESCO (NY), INC.
By: /s/ HELGE K. LEE
-----------------------------------
Helge K. Lee
Chief Legal and Compliance Officer
and Secretary
Attest: /s/ MICHAEL A. SILVER
------------------------------------
Michael A. Silver
Assistant Secretary
</TABLE>
- 9 -
<PAGE> 10
SCHEDULE A
FUND ACCOUNTING AND PRICING AGENT FEES
The Fund shall pay a Fee to INVESCO (NY) determined as a percentage of
the Fund's net assets. The annualized rate at which the fee is paid (the Fee
Rate) and the Fee shall be calculated as set forth below:
- - An Asset Multiplier is determined by multiplying .0003 times the first $5
billion in average net assets of the INVESCO (NY) Funds plus .0002 times
the net assets over $5 billion.
- - The Fee Rate is determined by dividing the Asset Multiplier by the net
assets of the INVESCO (NY) Funds.
- - The Monthly Fee is determined then by multiplying the average daily Fee Rate
by the number of days in the month and by the Fund's average daily net
assets then dividing by 365/or 366
Example: For Fund X having $100 million in average net assets during December
1997, in which the INVESCO (NY) Funds have average net assets of $8 billion:
<TABLE>
<S> <C>
Asset Multiplier = (.0003) ($5 billion) + (.0002) ($3 billion) = $2.1 million
Fee Rate = $2.1 million = .0002625
------------
$8 billion
Monthly Fee = ( 31 ) (.0002625) ($100 million) = $2,229.45
-------
( 365 )
</TABLE>
- 10 -
<PAGE> 1
EXHIBIT 9(c)(5)
A I M DISTRIBUTORS, INC.
SHAREHOLDER SERVICE AGREEMENT
(BROKERS FOR BANK TRUST DEPARTMENTS)
[LOGO APPEARS HERE]
A I M Distributors, Inc.
_________________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto,
which may be amended from time to time by AIM Distributors (the "Funds"), for
the servicing of our clients who are shareholders of, and the administration of
accounts in, the Funds. We understand that this Shareholder Service Agreement
(the "Agreement") has been adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act") by each of the Funds, under a Distribution
Plan (the "Plan") adopted pursuant to said Rule, and is subject to applicable
rules of the National Association of Securities Dealers, Inc. ("NASD"). This
Agreement defines the services to be provided by us for which we are to receive
payments pursuant to the Plan. The Plan and the Agreement have been approved
by a majority of the directors or trustees of the applicable Fund, including a
majority of directors or trustees who are not interested persons of the
applicable Fund, and who have no direct or indirect financial interest in the
operation of the Plan or related agreements, by votes cast in person at a
meeting called for the purpose of voting on the Plan. Such approval included a
determination by the directors or trustees of the applicable Fund, in the
exercise of their reasonable business judgement and in light of their fiduciary
duties, that there is a reasonable likelihood that the Plan will benefit the
Fund and the holders of its Shares. The terms and conditions of this Agreement
shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic
<PAGE> 2
Shareholder Service Agreement Page 2
(Brokers for Bank Trust Departments)
shareholder reports and other communications received from AIM
Distributors by us relating to shares of the Funds owned by our clients.
AIM Distributors, on behalf of the Funds, agrees to pay all
out-of-pocket expenses actually incurred by us in connection with the
transfer by us of such proxy statements and reports to our clients as
required under applicable laws or regulations.
3. We agree to transfer to AIM Distributors in a timely manner as set forth
in the applicable prospectus, federal funds in an amount equal to the
amount of all purchase orders placed by us and accepted by AIM
Distributors. In the event that AIM Distributors fails to receive such
federal funds on such date (other than through the fault of AIM
Distributors), we shall indemnify the applicable Fund and AIM
Distributors against any expense (including overdraft charges) incurred
by the applicable Fund and/or AIM Distributors as a result of the
failure to receive such federal funds.
4. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
7. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
8. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
9. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this
<PAGE> 3
Shareholder Service Agreement Page 3
(Brokers for Bank Trust Departments)
Agreement or to such other address as we shall have designated in
writing to AIM Distributors.
10. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation
by us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for any such cause. This Agreement may be terminated
with respect to any Fund at any time by the vote of a majority of the
directors or trustees of such Fund who are disinterested directors or by
a vote of a majority of the Fund's outstanding shares, on not less than
60 days' written notice to us at our principal place of business. This
Agreement will be terminated by any act which terminates the Selected
Dealer Agreement between us and AIM Distributors or a Fund's
Distribution Plan, and in any event, shall terminate automatically in
the event of its assignment by us, the term "assignment" for this
purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which shall constitute the same
instrument. This Agreement shall not relieve us or AIM Distributors
from any obligations either may have under any other agreements between
us.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 4
Shareholder Service Agreement Page 4
(Brokers for Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
------------------------------------
(Firm Name)
------------------------------------
(Address)
------------------------------------
City/State/Zip/County
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Dated:
---------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
<PAGE> 5
Shareholder Service Agreement Page 5
(Brokers for Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
*AIM Aggressive Growth Fund
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Select Growth Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
</TABLE>
__________________________________
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 6
Shareholder Service Agreement Page 6
(Brokers for Bank Trust Departments)
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Basic Value Fund
AIM Developing Markets Fund
AIM Dollar Fund
AIM Emerging Markets Fund
AIM Emerging Markets Debt Fund
AIM Europe Growth Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Government Income Fund
AIM Global Growth and Income Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications Fund
AIM Global Trends Fund
AIM International Growth Fund
AIM Japan Growth Fund
AIM Latin American Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
AIM Strategic Income Fund
AIM Worldwide Growth Fund
</TABLE>
<PAGE> 7
A I M DISTRIBUTORS, INC.
[AIM Logo] SHAREHOLDER SERVICE AGREEMENT
(BANK TRUST DEPARTMENTS)
A I M Distributors, Inc.
_________________________, 19_____
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with A I M Distributors, Inc. ("AIM
Distributors") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the servicing of our clients who are shareholders of, and the
administration of accounts in, the Funds. We understand that this Shareholder
Service Agreement (the "Agreement") has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "1940 Act") by each of the Funds,
under a Distribution Plan (the "Plan") adopted pursuant to said Rule, and is
subject to applicable rules of the National Association of Securities Dealers,
Inc. ("NASD"). This Agreement defines the services to be provided by us for
which we are to receive payments pursuant to the Plan. The Plan and the
Agreement have been approved by a majority of the directors or trustees of the
applicable Fund, including a majority of directors or trustees who are not
interested persons of the applicable Fund, and who have no direct or indirect
financial interest in the operation of the Plan or related agreements, by votes
cast in person at a meeting called for the purpose of voting on the Plan. Such
approval included a determination by the directors or trustees of the
applicable Fund, in the exercise of their reasonable business judgement and in
light of their fiduciary duties, that there is a reasonable likelihood that the
Plan will benefit the Fund and the holders of its Shares. The terms and
conditions of this Agreement shall be as follows:
1. To the extent that we provide continuing personal shareholder services
and administrative support services to our customers who may from time
to time own shares of the Funds of record or beneficially, including but
not limited to, forwarding sales literature, answering routine customer
inquiries regarding the Funds, assisting customers in changing dividend
options, account designations and addresses, and in enrolling into any
of several special investment plans offered in connection with the
purchase of the Funds' shares, assisting in the establishment and
maintenance of customer accounts and records and in the processing of
purchase and redemption transactions, investing dividends and capital
gains distributions automatically in shares of the Funds and providing
such other services as AIM Distributors or the customer may reasonably
request, you shall pay us a fee periodically. We represent that we
shall accept fees hereunder only so long as we continue to provide such
personal shareholder services.
2. We agree to transmit to AIM Distributors in a timely manner, all
purchase orders and redemption requests of our clients and to forward to
each client all proxy statements, periodic shareholder reports and other
communications received from AIM Distributors by us relating
<PAGE> 8
Shareholder Service Agreement Page 2
(Bank Trust Departments)
to shares of the Funds owned by our clients. AIM Distributors, on
behalf of the Funds, agrees to pay all out-of-pocket expenses actually
incurred by us in connection with the transfer by us of such proxy
statements and reports to our clients as required under applicable laws
or regulations.
3. We agree to make available upon AIM Distributors's request, such
information relating to our clients who are beneficial owners of Fund
shares and their transactions in such shares as may be required by
applicable laws and regulations or as may be reasonably requested by AIM
Distributors.
4. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
5. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current prospectuses applicable to the Funds,
copies of which will be supplied to us by AIM Distributors; and we shall
have no authority to act as agent for any Fund or AIM Distributors.
Neither a Fund, nor A I M Advisors, Inc. ("AIM") will be a party, nor
will they be represented as a party, to any agreement that we may enter
into with our clients and neither a Fund nor AIM shall participate,
directly or indirectly, in any compensation that we may receive from our
clients in connection with our acting on their behalf with respect to
this Agreement.
6. In consideration of the services and facilities described herein, we
shall receive a maximum annual service fee and asset-based sales charge,
payable monthly, as set forth on Schedule A hereto. We understand that
this Agreement and the payment of such service fees and asset-based
sales charge has been authorized and approved by the Board of Directors
or Trustees of the applicable Fund, and that the payment of fees
thereunder is subject to limitations imposed by the rules of the NASD.
7. AIM Distributors reserves the right, in its discretion and without
notice, to suspend the sale of any Fund or withdraw the sale of shares
of a Fund, or upon notice to us, to amend this Agreement. We agree that
any order to purchase shares of the Funds placed by us after notice of
any amendment to this Agreement has been sent to us shall constitute our
agreement to any such amendment.
8. All communications to AIM Distributors shall be duly given if mailed to
A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. Any notice to us shall be duly given if mailed to us at the
address specified by us in this Agreement or to such other address as we
shall have designated in writing to AIM Distributors.
9. This Agreement may be terminated at any time by AIM Distributors on not
less than 60 days' written notice to us at our principal place of
business. We, on 60 days' written notice addressed to AIM Distributors
at its principal place of business, may terminate this Agreement. AIM
Distributors may also terminate this Agreement for cause on violation by
us of any of the provisions of this Agreement, said termination to
become effective on the date of mailing notice to us of such
termination. AIM Distributors's failure to terminate for any cause
shall not constitute a waiver of AIM Distributors's right to terminate
at a later date for
<PAGE> 9
Shareholder Service Agreement Page 3
(Bank Trust Departments)
any such cause. This Agreement may be terminated with respect to any
Fund at any time by the vote of a majority of the directors or trustees
of such Fund who are disinterested directors or by a vote of a majority
of the Fund's outstanding shares, on not less than 60 days' written
notice to us at our principal place of business. This Agreement will be
terminated by any act which terminates the Agreement for Purchase of
Shares of The AIM Family of Funds(R) between us and AIM Distributors or
a Fund's Distribution Plan, and in any event, it shall terminate
automatically in the event of its assignment by us, the term
"assignment" for this purpose having the meaning defined in Section
2(a)(4) of the 1940 Act.
10. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer in the state(s) in which we engage in such
activities, or (ii) we are registered as a broker-dealer in the state(s)
in which we engage in such activities. We represent that we are
registered as a broker-dealer with the NASD if required under applicable
law.
11. This Agreement and the Agreement for Purchase of Shares of The AIM
Family of Funds(R) through Bank Trust Departments constitute the entire
agreement between us and AIM Distributors and supersede all prior oral
or written agreements between the parties hereto. This Agreement may be
executed in counterparts, each of which shall be deemed an original but
all of which shall constitute the same instrument.
12. This Agreement and all rights and obligations of the parties hereunder
shall be governed by and construed under the laws of the State of Texas.
13. This Agreement shall become effective as of the date when it is executed
and dated by AIM Distributors.
<PAGE> 10
Shareholder Service Agreement Page 4
(Bank Trust Departments)
The undersigned agrees to abide by the foregoing terms and conditions.
-----------------------------------
(Firm Name)
-----------------------------------
(Address)
-----------------------------------
City/State/Zip/County
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Dated:
----------------------------
ACCEPTED:
A I M DISTRIBUTORS, INC.
By:
------------------------
Name:
------------------------
Title:
------------------------
Dated:
------------------------
Please sign both copies and return to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
<PAGE> 11
Shareholder Service Agreement Page 5
(Bank Trust Departments)
SCHEDULE A
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Advisor Funds, Inc.
AIM Advisor Flex Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Equity Funds, Inc.
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Charter Fund (Retail Class)
AIM Constellation Fund (Retail Class)
AIM Weingarten Fund (Retail Class)
AIM Aggressive Growth Fund *
AIM Funds Group
AIM Balanced Fund
AIM Global Utilities Fund
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Money Market Fund
AIM Municipal Bond Fund
AIM Select Growth Fund
AIM Value Fund
AIM International Funds, Inc.
AIM Asian Growth Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
AIM International Equity Fund
AIM Investment Securities Funds
AIM Limited Maturity Treasury Fund
AIM Special Opportunities Funds
AIM Small Cap Opportunities Fund
AIM Tax-Exempt Funds, Inc.
AIM High Income Municipal Fund
AIM Tax-Exempt Cash Fund
AIM Tax-Exempt Bond Fund of Connecticut
</TABLE>
__________________________________
* Shares of AIM Aggressive Growth Fund may only be sold to current
shareholders who maintain open accounts in AIM Aggressive Growth Fund.
<PAGE> 12
Shareholder Service Agreement Page 6
(Bank Trust Departments)
THE FOLLOWING FUNDS ARE ADDED AS OF THE CLOSE OF BUSINESS MAY 29, 1998:
<TABLE>
<CAPTION>
Funds Fees
----- ----
<S> <C>
AIM Basic Value Fund
AIM Developing Markets Fund
AIM Dollar Fund
AIM Emerging Markets Fund
AIM Emerging Markets Debt Fund
AIM Europe Growth Fund
AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
AIM Global Government Income Fund
AIM Global Growth and Income Fund
AIM Global Health Care Fund
AIM Global Infrastructure Fund
AIM Global Resources Fund
AIM Global Telecommunications Fund
AIM Global Trends Fund
AIM International Growth Fund
AIM Japan Growth Fund
AIM Latin American Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
AIM Strategic Income Fund
AIM Worldwide Growth Fund
</TABLE>
<PAGE> 1
EXHIBIT 11(a)
[PRICEWATERHOUSECOOPERS LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of AIM Growth Series (Formerly, G.T.
Global Growth Series):
RE: AIM Worldwide Growth Fund (formerly, GT Global Worldwide Fund)
AIM International Growth Fund (formerly, GT Global International
Growth Fund)
AIM New Pacific Growth Fund (formerly, GT Global New Pacific
Growth Fund)
AIM Europe Growth Fund (formerly, GT Global Europe Growth Fund)
AIM Small Cap Growth (formerly, GT Global America Small Cap
Growth Fund)
AIM Mid Cap Equity (formerly, GT Global America Mid Cap Growth
Fund)
AIM Basic Value (formerly, GT Global America Value Fund)
AIM Japan Growth Fund (formerly, GT Global Japan Growth Fund)
We hereby consent to the inclusion of our report dated February 17,
1998 on our audits of the financial statements and financial highlights of the
above referenced funds as of December 31, 1997 in the Statement of Additional
Information with respect to the Post-Effective Amendment to the Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, of AIM
Growth Series. We further consent to the reference to our Firm under the
caption "Financial Highlights" in the Prospectus and "Independent Accountants"
in the Statement of Additional Information.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 25, 1998
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EXHIBIT 11(b)
August 24, 1998
AIM Growth Series
50 California Street, 27th Floor
San Francisco, California 94111
Ladies and Gentlemen:
We hereby consent to the reference to our firm in the prospectuses
that are being filed as part of Post-Effective Amendment No. 45 to the
registration statement of AIM Growth Series on Form N-1A (File No. 2-57526).
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By: /s/ R. DARRELL MOUNTS
R. Darrell Mounts
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EXHIBIT 18
MULTIPLE CLASS PLAN
OF
AIM INVESTMENT FUNDS
AIM INVESTMENT PORTFOLIOS
AIM GROWTH SERIES
AIM SERIES TRUST
1. This Multiple Class Plan ("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. Advisor Class Shares - shall mean those Shares of a Fund designated as
Advisor Class Shares in the Fund's organizing documents.
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, as well as those Shares deemed to be
Class A Shares for purposes of this Plan.
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, as well as those Shares deemed to be
Class C Shares for purposes of this Plan. Class C Shares may not be
available for each Fund.
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.
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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 - each of AIM Investment Funds, AIM Investment Portfolios, AIM
Growth Series, and AIM Series Trust.
n. Plan of Distribution - any plan adopted under Rule 12b-1 under the Act
with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a separate
investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the ongoing
provision of personal services to Fund shareholders and/or the
maintenance of shareholder accounts.
q. Share - a share of common stock or of beneficial interest in a Fund, as
applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear directly any and
all Distribution Fees and/or Service Fees payable by such Class pursuant
to a Plan of Distribution adopted by the Fund with respect to such Class.
b. 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.
c. 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.
d. 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.
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
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prospectus, which may be reduced or eliminated for certain money market
fund shares, for larger purchases, under a combined purchase privilege,
under a right of accumulation, under a letter of intent or for certain
categories of purchasers as permitted by Rule 22(d) of the Act and as set
forth in the Fund's prospectus. Class A Shares that are not subject to a
front-end sales charge as a result of the foregoing shall be subject to a
CDSC for the CDSC Period set forth in Section 5(a) of this Plan if so
provided in the Fund's prospectus. The offering price of Shares subject
to a front-end sales charge shall be computed in accordance with Rule
22c-1 and Section 22(d) of the Act and the rules and regulations
thereunder. Class A Shares shall be subject to ongoing Service Fees
and/or Distribution Fees approved from time to time by the Directors and
set forth in the Fund's prospectus.
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) to the extent provided for in the Fund's prospectus, 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, except that Class B Shares of AIM Series Trust which
were acquired prior to June 1, 1998 shall convert to Class A Shares as of
the close of business on the last business day of the month in which the
seventh anniversary of the initial issuance of such Class B Shares
occurs.
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. Advisor Class Shares. Advisor Class Shares shall be (i) offered at net
asset value and (ii) offered only to certain categories of investors as
approved from time to time by the Trustees and as set forth in the Fund's
prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do not
incur a front-end sales charge and of Class B Shares and Class C Shares as
follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be the period
set forth in the Fund's prospectus. The CDSC Rate shall be as set forth
in the Fund's prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A Shares
unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall be six
years. The CDSC Rate for the Class B Shares shall be as set forth in the
Fund's prospectus, the relevant portions of which are incorporated herein
by this reference.
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c. Class C Shares. The CDSC Period for the Class C Shares shall be one year.
The CDSC Rate for the Class C Shares shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated herein by
reference.
d. Method of Calculation. The CDSC shall be assessed on an amount equal to
the lesser of the then current market value or the cost of the Shares
being redeemed. No CDSC shall be imposed on increases in the net asset
value of the Shares being redeemed above the initial purchase price. No
CDSC shall be assessed on Shares derived from reinvestment of dividends
or capital gains distributions. The order in which Shares are to be
redeemed when not all of such Shares would be subject to a CDSC shall be
determined by the Distributor in accordance with the provisions of Rule
6c-10 under the Act.
e. Waiver. The Distributor may in its discretion waive a CDSC otherwise due
upon the redemption of Shares and disclosed in the Fund's prospectus or
statement of additional information and, for the Class A Shares, as
allowed under Rule 6c-10 under the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted as follows:
a. Class A Shares may be exchanged for Class A Shares of such other mutual
funds as are disclosed in the Fund's prospectus, subject to such terms
and limitations as disclosed in the Fund's prospectus and statement of
additional information.
b. Class B Shares may be exchanged for Class B Shares of such other mutual
funds as are disclosed in the Fund's prospectus, subject to such terms
and limitations as disclosed in the Fund's prospectus and statement of
additional information.
c. Class C Shares may be exchanged for Class C Shares of such other mutual
funds as are disclosed in the Fund's prospectus, subject to such terms
and limitations as disclosed in the Fund's prospectus and statement of
additional information.
d. Advisor Class Shares may be exchanged for Advisor Class Shares of such
other mutual funds as are disclosed in the Fund's prospectus, subject to
such terms and limitations as disclosed in the Fund's prospectus and
statement of additional information.
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.
f. CDSC Computation. The CDSC payable upon redemption of Class A Shares,
Class B Shares, and Class C Shares subject to a CDSC shall be computed in
the manner described in the Fund's prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's prospectus,
relevant portions of which are incorporated
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<PAGE> 5
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
under 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. This Plan shall not take effect until a majority of the Directors of a Fund,
including a majority of the Directors who are not interested persons of the
Fund, shall find that the Plan, as proposed and including the expense
allocations, is in the best interests of each Class individually and the
Fund as a whole.
10. This Plan may not be amended to materially change the provisions of this
Plan unless such amendment is approved in the manner specified in Section 9
above.
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