<PAGE> 1
As filed with the Securities and Exchange Commission on April 28, 2000
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
---
Pre-Effective Amendment No.
----
Post-Effective Amendment No. 48 X
---- ---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 44 X
---
(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
----------------
Copy to:
Samuel D. Sirko, Esq. Arthur J. Brown, Esq.
A I M Advisors, Inc. R. Darrell Mounts, Esq.
11 Greenway Plaza, Suite 100 Kirkpatrick & Lockhart LLP
Houston, Texas 77046 1800 Massachusetts Avenue, N.W.,
2nd Floor
Washington, D.C. 20036
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective
date of this Amendment
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
- ---
X on May 1, 2000 pursuant to paragraph (b)
- ---
60 days after filing pursuant to paragraph (a)(1)
- ---
on (date) pursuant to paragraph (a)(1)
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
on (date) pursuant to paragraph (a)(2)
- ---
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. 48 includes
a manually executed signature page for one master trust, Growth Portfolio.
<PAGE> 2
AIM BASIC VALUE FUND
--------------------------------------------------------------------------
AIM Basic Value Fund seeks to provide long-term growth of capital.
PROSPECTUS AIM--Registered Trademark--
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 3
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AIM BASIC VALUE FUND
--------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
Submission of Matters to Shareholders 4
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 4
--------------------
AIM BASIC VALUE FUND
--------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing all of its investable
assets in the Value Portfolio (the portfolio), which in turn normally invests at
least 65% of its total assets in equity securities of U.S. issuers that have
market capitalizations of greater than $500 million and that the portfolio
managers believe to be undervalued in relation to long-term earning power or
other factors.
The portfolio may also invest up to 35% of its total assets in equity
securities of U.S. issuers that have market capitalizations of less than $500
million and in investment-grade non-convertible debt securities, U.S. government
securities and high-quality money market instruments, all of which are issued by
U.S. issuers. The portfolio may also invest up to 25% of its total assets in
foreign securities.
In selecting investments, the portfolio managers seek to identify those
companies whose prospects and growth potential are undervalued by investors and
that provide the potential for attractive returns. The portfolio managers
allocate investments among fixed-income securities based on their views as to
the best values then available in the marketplace. The portfolio managers
consider whether to sell a particular security when any of those factors
materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the portfolio may temporarily
hold all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, or high-quality debt securities. As a result, the
fund or the portfolio may not achieve its investment objective.
If the fund's Board of Trustees determines that it is in the best interests of
the fund and its shareholders, the fund may redeem its investment in the
portfolio.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the portfolio invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
The fund currently participates in the initial public offering (IPO) market,
and a significant portion of the fund's returns currently are attributable to
its investment in IPOs, which have a magnified impact due to the fund's small
asset base. As the fund's assets grow, it is probable that the effect of the
fund's investment in IPOs on its total returns will decline, which may reduce
the fund's total returns.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 5
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AIM BASIC VALUE FUND
--------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. Total return information in the bar chart
and table below may be affected by special market factors, including the fund's
investments in initial public offerings, which may have a magnified impact on
the fund due to its small asset base. There is no guarantee that, as the fund's
assets grow, it will continue to experience substantially similar performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1996 ....................................... 15.12%
1997 ....................................... 27.23%
1998 ....................................... 7.02%
1999 ....................................... 32.04%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
21.10% (quarter ended June 30, 1999) and the lowest quarterly return was -12.63%
(quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR INCEPTION DATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 24.75% 20.41% 10/18/95
Class B 26.13 21.01 10/18/95
Class C -- 9.72 5/3/99
Russell 1000-- Registered Trademark -- Index(1) 20.91 26.35(2) 10/31/95(2)
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) The Russell 1000-- Registered Trademark -- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 1,000
largest companies in the Russell 3000-- Registered Trademark -- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.
(2) The average annual total return given is since the date closest to the
inception date of the classes with the longest performance history.
2
<PAGE> 6
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AIM BASIC VALUE FUND
--------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -------------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------------
(expenses that are deducted
from fund assets)(2) CLASS A CLASS B CLASS C
- -------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.73% 0.73% 0.73%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 0.63 0.63 0.63
Total Annual Fund
Operating Expenses(3) 1.71 2.36 2.36
- -------------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) This fee table, and the expense example below, reflect the expenses of both
the fund and the portfolio.
(3) The investment advisor reimbursed a portion of the Portfolio expenses. Total
Annual Fund Operating Expenses including the reimbursement for Class A,
Class B and Class C shares were 1.69%, 2.34% and 2.34%, respectively.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $714 $1,059 $1,427 $2,458
Class B 739 1,036 1,460 2,535
Class C 339 736 1,260 2,696
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $714 $1,059 $1,427 $2,458
Class B 239 736 1,260 2,535
Class C 239 736 1,260 2,696
- ----------------------------------------------
</TABLE>
3
<PAGE> 7
--------------------
AIM BASIC VALUE FUND
--------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor for the
Value Portfolio (the portfolio), and is responsible for its day-to-day
management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173. The advisor supervises all aspects of the portfolio's
operations and provides investment advisory services to the portfolio, including
obtaining and evaluating economic, statistical and financial information to
formulate and implement investment programs for the portfolio.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the portfolio, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.73% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the portfolio, all of whom are officers of A I M Capital Management, Inc., a
wholly owned subsidiary of the advisor, are
- - Evan G. Harrel, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1998. From 1994 to 1998, he was Vice President and portfolio manager
with Van Kampen American Capital Asset Management, Inc.
- - Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the
fund since 2000 and has been associated with the advisor and/or its affiliates
since 1998. From 1995 to 1998, he was Portfolio Manager for American Indemnity
Company.
- - Bret W. Stanley, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1998. From 1994 to 1998, he was Vice President and portfolio manager
with Van Kampen American Capital Asset Management, Inc.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Basic Value Fund are subject to the maximum
5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on March 14, 2000, the Board of Trustees voted to request
shareholders to approve certain proposals relating to the restructuring of the
fund.
The fund currently invests all of its investable assets in the portfolio. The
Board approved a restructuring of the fund which will eliminate the fund's
current master-feeder structure and cause the fund to redeem its interest in the
portfolio. The portfolio will then be terminated. The fund's investment
strategies will be the same as the portfolio's current investment strategies.
The fund's portfolio managers will be the current portfolio managers of the
portfolio. The Board of Trustees is requesting shareholder approval of the
following items related to the restructuring:
- - A new advisory agreement between the Trust and the advisor. The Board of
Trustees has concluded that the terms of the new advisory agreement are
substantially the same as the advisory portion of the current advisory
agreement with the portfolio, except: (1) the advisor would directly manage
the fund's investments and would receive an annual fee for the investment
advisory services that it provides to the fund at a rate equal to the combined
rate of the fee charged to the portfolio and the fee charged to the fund for
administrative services; (2) the proposed advisory agreement adds provisions
relating to certain functions that would be performed by the advisor in
connection with the fund's securities lending program and for which the
advisor would receive compensation; and (3) the proposed advisory agreement
clarifies non-exclusivity provisions that are set forth in the current
advisory agreement;
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment
4
<PAGE> 8
--------------------
AIM BASIC VALUE FUND
--------------------
restrictions are described in the fund's statement of additional information;
- - Making the fund's investment objective non-fundamental. The investment
objective would not be changed. If the investment objective of the fund
becomes non-fundamental, it can be changed in the future by the Board of
Trustees without further approval by shareholders.
The Board of Trustees has called a meeting of the fund's shareholders to be held
on or about May 31, 2000 to vote on these and other proposals. Only shareholders
of record as of April 3, 2000 will be entitled to vote at the meeting. Proposals
that are approved are expected to become effective on or about June 5, 2000.
The Board of Trustees has also approved a new administrative services
agreement between the advisor and the fund. The administrative and accounting
services to be provided to the fund are substantially the same services that the
advisor provides to the portfolio and the fund under the current agreements.
5
<PAGE> 9
--------------------
AIM BASIC VALUE FUND
--------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report, which is available upon request.
Total return information in this table may have been affected by special
market factors, including the fund's investments in initial public offerings,
which have had a magnified impact on the fund due to its small asset base. There
is no guarantee that, as the fund's assets grow, it will continue to experience
substantially similar performance.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
OCTOBER 18,
YEAR ENDED DECEMBER 31, TO
------------------------------------------ DECEMBER 31,
1999(a) 1998 1997(a) 1996(a) 1995(a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.13 $17.25 $14.65 $12.76 $11.43
Income from investment operations:
Net investment income (loss) 0.05 0.04 0.09 (0.01) 0.03
Net gains on securities (both realized and
unrealized) 5.75 1.16 3.87 1.94 1.30
Total from investment operations 5.80 1.20 3.96 1.93 1.33
Less distributions:
Dividends from net investment income -- -- (0.03) -- --
Distributions from net realized gains (0.09) (0.32) (1.33) (0.04) --
Total distributions (0.09) (0.32) (1.36) (0.04) --
Net asset value, end of period $23.84 $18.13 $17.25 $14.65 $12.76
Total return(b) 32.04% 7.02% 27.23% 15.12% 11.64%
- -----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $70,791 $9,074 $7,688 $2,529 $870
Ratio of expenses to average net assets:
With expense reductions and/or reimbursement 1.69%(c) 1.74% 1.99% 2.00% 2.00%(d)
Without expense reductions and/or
reimbursement 1.71%(c) 2.11% 2.97% 5.51% 50.54%(d)
Ratio of net investment income (loss) to average
net assets:
With expense reductions and/or reimbursement 0.23%(c) 0.25% 0.56% (0.10)% 1.10%(d)
Without expense reductions and/or
reimbursement 0.21%(c) (0.08)% (0.42)% (3.61)% (47.44)%(d)
Ratio of interest expense to average net assets -- -- 0.03% -- --
Portfolio turnover rate 63% 148% 93% 256% --
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $31,870,865.
(d) Annualized.
6
<PAGE> 10
--------------------
AIM BASIC VALUE FUND
--------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
- -------------------------------------------------------------------------------------------------------- ------------
OCTOBER 18, MAY 3, 1999
YEAR ENDED DECEMBER 31, TO THROUGH
------------------------------------- DECEMBER 31, DECEMBER 31,
1999(a) 1998 1997(a) 1996(a) 1995(a) 1999(a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.79 $ 17.04 $ 14.54 $12.75 $ 11.43 $ 21.07
Income from investment operations:
Net investment income (loss) (0.09) (0.08) (0.01) (0.10) 0.01 (0.06)
Net gains on securities (both realized
and unrealized) 5.62 1.15 3.83 1.93 1.31 2.31
Total from investment operations 5.53 1.07 3.82 1.83 1.32 2.25
Less distributions:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gains (0.09) (0.32) (1.32) (0.04) -- (0.09)
Total distributions (0.09) (0.32) (1.32) (0.04) -- (0.09)
Net asset value, end of period $ 23.23 $ 17.79 $17.04 $14.54 $ 12.75 $ 23.23
Total return(b) 31.13% 6.34% 26.44% 14.35% 11.55% 10.72%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $55,785 $17,406 $16,717 $5,503 $ 1,254 $ 7,669
Ratio of expenses to average net assets:
With expense reductions and/or
reimbursement 2.34%(c) 2.39% 2.64% 2.65% 2.65%(d) 2.34%(e)
Without expense reductions and/or
reimbursement 2.36%(c) 2.76% 3.62% 6.16% 51.19%(d) 2.36%(e)
Ratio of net investment income (loss) to
average net assets:
With expense reductions and/or
reimbursement (0.42)%(c) (0.40)% (0.09)% (0.75)% 0.45%(d) (0.42)%(e)
Without expense reductions and/or
reimbursement (0.44%(c) (0.72)% (1.07)% (4.26)% (48.09)%(d) (0.44)%(e)
Ratio of interest expense to average net
assets -- -- 0.03% -- -- --
Portfolio turnover rate 63% 148% 93% 256% -- 63%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated based upon average shares outstanding during the period.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $31,150,693.
(d) Annualized.
(e) Ratios are annualized and based on average net assets of $2,389,446.
7
<PAGE> 11
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 12
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 13
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 14
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 15
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 16
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 17
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 18
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 19
--------------------
AIM BASIC VALUE FUND
--------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Basic Value Fund
SEC 1940 Act file number: 811-2699
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com BVA-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 20
AIM SMALL CAP
GROWTH FUND
--------------------------------------------------------------------------
AIM Small Cap Growth Fund seeks to provide long-term growth of capital.
PROSPECTUS AIM--Registered Trademark--
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
The fund has been closed to new
investors since November 8, 1999.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 21
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
Fund Closure 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 22
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing all of its investable
assets in the Small Cap Portfolio (the portfolio), which in turn normally
invests at least 65% of its total assets in equity securities of U.S. issuers
that have market capitalizations less than that of the largest company in the
Russell 2000--Registered Trademark-- Index.
The portfolio may also invest up to 35% of its total assets in equity
securities of U.S. issuers that have market capitalizations greater than that of
the largest company in the Russell 2000--Registered Trademark--Index, and in
investment-grade non-convertible debt securities, U.S. government securities and
high-quality money market instruments, all of which are issued by U.S. issuers.
The portfolio may also invest up to 25% of its total assets in foreign
securities.
In selecting investments, the portfolio managers seek to identify those
companies that have strong earnings momentum or demonstrate other potential for
growth of capital. The portfolio managers anticipate that the portfolio, when
fully invested, will generally be comprised of companies that are currently
experiencing a greater than anticipated increase in earnings. The portfolio
managers allocate investments among fixed-income securities based on their views
as to the best values then available in the marketplace. The portfolio managers
consider whether to sell a particular security when any of those factors
materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the portfolio may temporarily
hold all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, or high-quality debt securities. As a result, the
fund or the portfolio may not achieve its investment objective.
If the fund's Board of Trustees determines that it is in the best interests of
the fund and its shareholders, the fund may redeem its investment in the
portfolio.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the portfolio invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity. This is
especially true with respect to equity securities of smaller companies, whose
prices may go up and down more than equity securities of larger,
more-established companies. Also, since equity securities of smaller companies
may not be traded as often as equity securities of larger, more-established
companies, it may be difficult or impossible for the portfolio to sell
securities at a desirable price.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity and the potential lack of strict
financial and accounting controls and standards.
If the seller of a repurchase agreement in which the portfolio invests
defaults on its obligation or declares bankruptcy, the portfolio may experience
delays in selling the securities underlying the repurchase agreement. As a
result, the portfolio may incur losses arising from decline in the value of
those securities, reduced levels of income and expenses of enforcing its rights.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 23
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. Total return information in the bar chart
and table below may be affected by special market factors, including the
portfolio's investments in initial public offerings, which may have a magnified
impact on the portfolio due to its small asset base. There is no guarantee that,
as the portfolio's assets grow, it will continue to experience substantially
similar performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1996 ....................................... 13.81%
1997 ....................................... 16.22%
1998 ....................................... 23.15%
1999 ....................................... 90.64%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
38.10% (quarter ended December 31, 1999) and the lowest quarterly return was
- -20.18% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ---------------------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR INCEPTION DATE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 80.17% 30.17% 10/18/95
Class B 84.40 30.86 10/18/95
Class C -- 64.56 5/3/99
Russell 2000--Registered Trademark-- Index(1) 21.26 15.17(2) 10/31/95(2)
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) The Russell 2000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 2,000
smallest companies in the Russell 3000--Registered Trademark-- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.
(2) The average annual total return given is since the date closest to the
inception date of Class A and Class B shares.
2
<PAGE> 24
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -----------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------
(expenses that are deducted
from fund assets)(2) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.72% 0.72% 0.72%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses: 0.47 0.47 0.47
Total Annual Fund
Operating Expenses 1.54 2.19 2.19
- -----------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) This fee table, and the expense example below, reflects the expenses of both
the fund and the portfolio.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. Although your actual returns
and costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $698 $1,010 $1,343 $2,284
Class B 722 985 1,375 2,359
Class C 322 685 1,175 2,524
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $698 $1,010 $1,343 $2,284
Class B 222 685 1,175 2,359
Class C 222 685 1,175 2,524
- ----------------------------------------------
</TABLE>
3
<PAGE> 25
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the investment advisor for the
Small Cap Portfolio (the portfolio), and is responsible for its day-to-day
management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173. The advisor supervises all aspects of the portfolio's
operations and provides investment advisory services to the portfolio, including
obtaining and evaluating economic, statistical and financial information to
formulate and implement investment programs for the portfolio.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the portfolio, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.72% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the portfolio, all of whom are officers of A I M Capital Management, Inc., a
wholly owned subsidiary of the advisor, are
- - Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1994.
- - Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1989.
- - Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Small Cap Growth Fund are subject to the
maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
FUND CLOSURE
Due to the sometimes limited availability of common stocks of smaller companies
that meet the investment criteria for the fund, the fund discontinued public
sales of its shares to new investors on November 8, 1999, after assets reached
$500 million. Existing shareholders of the fund who maintain open accounts are
permitted to continue to make additional investments in the fund.
During this closed period, the fund may impose different standards for
additional investments. Also, during this closed period the fund will continue
to pay Rule 12b-1 fees, however, the Rule 12b-1 fees for Class A shares will be
reduced from 0.35% to 0.25% of the fund's average daily net assets attributable
to Class A shares. The Rule 12b-1 fees for Class B and Class C shares will not
be reduced during this closed period.
The fund may resume sales of shares to new investors at some future date if
the Board of Trustees determines that it would be in the best interest of
shareholders.
4
<PAGE> 26
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report which is available upon request.
Total return information in this table may have been affected by special
market factors, including the portfolio's investment in initial public
offerings, which have had a magnified impact on the portfolio due to its small
asset base. There is no guarantee that, as the portfolio's assets grow, it will
continue to experience substantially similar performance.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED DECEMBER 31, OCTOBER 18, TO
----------------------------------------------- DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.03 $14.27 $12.52 $11.80 $11.43
Income from investment operations:
Net investment income (loss) (0.09) (0.19) (0.18) (0.05) 0.04
Net gains on securities (both realized and
unrealized) 15.47 3.45 2.20 1.69 0.33
Total from investment operations 15.38 3.26 2.02 1.64 0.37
Less distributions from net realized gains (0.54) (0.50) (0.27) (0.92) --
Net asset value, end of period $ 31.87 $17.03 $14.27 $12.52 $11.80
Total return(b) 90.64% 23.15% 16.23% 13.81% 3.24%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $428,378 $24,737 $10,896 $8,448 $1,931
Ratio of expenses to average net assets
excluding interest expense:
With expense reductions and/or reimbursement 1.54%(c) 1.76% 1.92% 2.00% 2.00%(d)
Without expense reductions and/or
reimbursement 1.54%(c) 2.20% 2.52% 3.09% 24.20%(d)
Ratio of net investment income (loss) to average
net assets:
With expense reductions and/or reimbursement (0.38)%(c) (1.29)% (1.40)% (0.38)% 1.68%(d)
Without expense reductions and/or
reimbursement (0.38)%(c) (1.73)% (2.00)% (1.47)% (20.52)%(d)
Portfolio turnover rate 56% 190% 233% 150% --
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $154,008,731.
(d) Annualized.
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
YEAR ENDED DECEMBER 31, OCTOBER 18, TO
----------------------------------------------- DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.64 $14.06 $12.42 $11.78 $11.43
Income from investment operations:
Net investment income (loss) (0.24) (0.29) (0.26) (0.14) 0.02
Net gains on securities (both realized and
unrealized) 15.06 3.37 2.17 1.70 0.33
Total from investment operations 14.82 3.08 1.91 1.56 0.35
Less distributions from net realized gains (0.54) (0.50) (0.27) (0.92) --
Net asset value, end of period $ 30.92 $16.64 $14.06 $12.42 $11.78
Total return(b) 89.40% 22.22% 15.47% 13.14% 3.06%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $240,150 $26,448 $21,222 $ 10,694 $2,024
Ratio of expenses to average net assets:
With expense reductions and/or reimbursement 2.19%(c) 2.40% 2.57% 2.65% 2.65%(d)
Without expense reductions and/or
reimbursement 2.19%(c) 2.85% 3.17% 3.74% 24.85%(d)
Ratio of net investment income (loss) to average
net assets:
With expense reductions and/or reimbursement (1.03)%(c) (1.96)% (2.05)% (1.03)% 1.03%(d)
Without expense reductions and/or
reimbursement (1.03)%(c) (2.40)% (2.65)% (2.12)% (21.17)%(d)
Portfolio turnover rate 56% 190% 233% 150% --
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $91,786,448.
(d) Annualized.
5
<PAGE> 27
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
-------------
MAY 3, 1999
THROUGH
DECEMBER 31,
1999(a)
- --------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 19.03
Income from investment operations:
Net investment income (loss) (0.17)
Net gains on securities (both realized and
unrealized) 12.59
Total from investment operations 12.42
Less distributions from net realized gains (0.54)
Net asset value, end of period $ 30.91
Total return(b) 65.56%
- --------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------
Net assets, end of period (000s omitted) $40,530
Ratio of expenses to average net assets:
With expense reductions and/or reimbursement 2.19%(c)
Without expense reductions and/or
reimbursement 2.19%(c)
Ratio of net investment income (loss) to average
net assets:
With expense reductions and/or reimbursement (1.03)%(c)
Without expense reductions and/or
reimbursement (1.03)%(c)
Portfolio turnover rate 56%
- --------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $15,466,094.
6
<PAGE> 28
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 29
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 30
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 31
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 32
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 33
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 34
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 35
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 36
-------------------------
AIM SMALL CAP GROWTH FUND
-------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports only)
</TABLE>
- --------------------------------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ----------------------------------
AIM Small Cap Growth Fund
SEC 1940 Act file number: 811-2699
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com SCG-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 37
STATEMENT OF
ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C 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 MAY 1, 2000 RELATING TO THE
AIM BASIC VALUE FUND PROSPECTUS AND THE AIM SMALL CAP GROWTH FUND PROSPECTUS,
EACH DATED MAY 1, 2000
<PAGE> 38
TABLE OF CONTENTS
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INTRODUCTION......................................................................................................1
Submission of Matters to Shareholders....................................................................1
GENERAL INFORMATION ABOUT THE FUNDS...............................................................................3
The Trust and Its Shares.................................................................................3
INVESTMENT POLICIES...............................................................................................4
Selection of Investments.................................................................................5
Equity-Linked Derivatives................................................................................5
Investment in Other Investment Companies.................................................................6
Foreign Securities.......................................................................................6
Warrants or Rights.......................................................................................7
Lending of Portfolio Securities..........................................................................7
Commercial Bank Obligations..............................................................................8
Repurchase Agreements....................................................................................8
Borrowing, Reverse Repurchase Agreements and "Roll" Transactions.........................................8
When-Issued or Forward Commitment Securities.............................................................9
Temporary Defensive Strategies...........................................................................9
OPTIONS AND FUTURES...............................................................................................9
Special Risks of Options and Futures.....................................................................9
Writing Call Options....................................................................................10
Writing Put Options.....................................................................................11
Purchasing Put Options..................................................................................12
Purchasing Call Options.................................................................................12
Index Options...........................................................................................13
Interest Rate and Stock Index Futures Contracts.........................................................14
Options on Futures Contracts............................................................................16
Limitation on Use of Futures and Options on Futures.....................................................16
Cover ..................................................................................................17
RISK FACTORS.....................................................................................................17
Illiquid Securities.....................................................................................17
Debt Securities.........................................................................................18
Equity Securities.......................................................................................18
Small Cap Companies.....................................................................................19
INVESTMENT LIMITATIONS...........................................................................................19
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................21
General Brokerage Policy................................................................................21
Allocation of Portfolio Transactions....................................................................22
Allocation of Initial Public Offering ("IPO") Securities Transactions...................................22
Section 28(e) Standards.................................................................................23
Brokerage Commissions Paid..............................................................................24
Portfolio Trading and Turnover..........................................................................24
MANAGEMENT.......................................................................................................24
Trustees and Executive Officers.........................................................................24
Investment Management and Administration Services Relating to Funds and the Portfolios..................26
Expenses of the Funds and the Portfolios................................................................28
</TABLE>
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<TABLE>
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THE DISTRIBUTION PLANS...........................................................................................29
The Class A and C Plan..................................................................................29
The Class B Plan........................................................................................29
Both Plans..............................................................................................29
THE DISTRIBUTOR..................................................................................................33
SALES CHARGES AND DEALER CONCESSIONS.............................................................................35
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................38
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................41
HOW TO PURCHASE AND REDEEM SHARES................................................................................43
Backup Withholding......................................................................................44
NET ASSET VALUE DETERMINATION....................................................................................45
DIVIDEND ORDER...................................................................................................46
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................47
Reinvestment of Dividends and Distributions.............................................................47
Tax Matters.............................................................................................47
Taxation of the Funds...................................................................................47
Exchange and Reinstatement Privileges and Wash Sales....................................................48
Taxation of the Portfolios..............................................................................48
Taxation of the Funds' Shareholders.....................................................................49
Non-U.S. Shareholders...................................................................................49
SHAREHOLDER INFORMATION..........................................................................................50
MISCELLANEOUS INFORMATION........................................................................................52
Charges for Certain Account Information.................................................................52
Custodian...............................................................................................52
Transfer Agency Services................................................................................52
Independent Accountants.................................................................................53
Legal Matters...........................................................................................53
Shareholder Liability...................................................................................53
Names ..................................................................................................53
Control Persons and Principal Holders of Securities.....................................................53
INVESTMENT RESULTS...............................................................................................54
Total Return Quotations.................................................................................54
Performance Information.................................................................................56
APPENDIX.........................................................................................................60
Description of Bond Ratings.............................................................................60
Description of Commercial Paper Ratings.................................................................61
Absence of Rating.......................................................................................61
FINANCIAL STATEMENTS.............................................................................................FS
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<PAGE> 40
INTRODUCTION
This Statement of Additional Information relates to the Class A, Class B
and Class C 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.
AIM 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 May 1, 2000, and for Basic Value Fund is included
in a separate Prospectus dated May 1, 2000. 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, AIM
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 Prospectuses; and, in order to avoid repetition, reference will
be made to sections of the Prospectuses. Additionally, the Prospectuses 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 Prospectuses and this Statement of Additional
Information, may be obtained from the SEC by paying the charges prescribed under
its rules and regulations.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on March 14, 2000, the Board of Trustees of the Trust
voted to request shareholder approval to amend the fundamental investment
restrictions of Basic Value Fund. The Board of Trustees has called a meeting of
Basic Value Fund's shareholders to be held on or about May 31, 2000 to vote on
these and other proposals. Only shareholders of record as of April 3, 2000 will
be entitled to vote at the meeting. Proposals that are approved are expected to
become effective on or about June 5, 2000.
If shareholders approve the proposal to amend Basic Value Fund's
fundamental investment restrictions, Basic Value Fund will operate under the
following fundamental investment restrictions:
(a) The Fund is a "diversified company" as defined in the 1940 Act. The
Fund will not purchase the securities of any issuer if, as a result,
the Fund would fail to be a diversified company within the meaning of
the 1940 Act, and the rules and regulations promulgated thereunder, as
such statute, rules, and regulations are amended from time to time or
are interpreted from time to time by the SEC staff (collectively, the
"1940 Act Laws and Interpretations") or except to the extent that the
Fund may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act Laws and Interpretations, the "1940
Act Laws, Interpretations and Exemptions"). In complying with this
restriction, however, the Fund may purchase securities of other
investment companies to the extent permitted by the 1940 Act Laws,
Interpretations and Exemptions.
(b) The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
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<PAGE> 41
(c) The Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions
involving the acquisition, disposition or resale of its portfolio
securities, regardless of whether the Fund may be considered to be an
underwriter under the Securities Act of 1933.
(d) The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act Laws, Interpretations and Exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the Fund's investments in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) tax-exempt obligations issued by governments
or political subdivisions of governments. In complying with this
restriction, the Fund will not consider a bank-issued guaranty or
financial guaranty insurance as a separate security.
(e) The Fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the Fund from investing in issuers
that invest, deal, or otherwise engage in transactions in real estate
or interests therein, or investing in securities that are secured by
real estate or interests therein.
(f) The Fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the Fund from
engaging in transactions involving futures contracts and options
thereon or investing in securities that are secured by physical
commodities.
(g) The Fund may not make personal loans or loans of its assets to persons
who control or are under the common control with the Fund, except to
the extent permitted by 1940 Act Laws, Interpretations and Exemptions.
This restriction does not prevent the Fund from, among other things,
purchasing debt obligations, entering into repurchase agreements,
loaning its assets to broker-dealers or institutional investors, or
investing in loans, including assignments and participation interests.
(h) The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies and restrictions as the
Fund.
The investment restrictions set forth above provide Basic Value Fund with
the ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though Basic Value Fund has this flexibility, the Board of
Trustees has adopted non-fundamental investment restrictions for Basic Value
Fund relating to certain of these restrictions which the advisor must follow in
managing Basic Value Fund. Any changes to these guidelines, which are set forth
below, require the approval of the Board of Trustees.
If the shareholders approve the proposal to amend the Fund's
non-fundamental investment restrictions, the Basic Value Fund will operate under
the following non-fundamental investment restrictions:
1. In complying with the fundamental restriction regarding issuer
diversification, the Fund will not, with respect to 75% of its total
assets, purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Fund's
total assets would be invested in the securities of that issuer, or
(ii) the Fund would hold more than 10% of the outstanding voting
securities of that issuer. The Fund may (i) purchase securities of
other investment companies as permitted by Section 12(d)(1) of the
1940 Act and (ii) invest its assets in securities of other money
market funds and lend money to other investment companies and their
series portfolios that
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<PAGE> 42
have AIM or an affiliate of AIM as an investment advisor (an "AIM
Advised Fund"), subject to the terms and conditions of any exemptive
orders issued by the SEC.
2. In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the Fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The Fund may
borrow from banks, broker-dealers or an AIM Advised Fund. The Fund may
not borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The Fund may not purchase
additional securities when any borrowings from banks exceed 5% of the
Fund's total assets.
3. In complying with the fundamental restriction regarding industry
concentration, the Fund may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in
the same industry.
4. In complying with the fundamental restriction with regard to making
loans, the Fund may lend up to 33 1/3% of its total assets and may
lend money to another AIM Advised Fund, on such terms and conditions
as the SEC may require in an exemptive order.
5. Notwithstanding the fundamental restriction with regard to investing
all assets in an open-end fund, the Fund may not invest all of its
assets in the securities of a single open-end management investment
company with the same fundamental investment objectives, policies and
restrictions as the Fund.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from changes in values of assets will not
be considered a violation of the restriction.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust previously operated under the name GT 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 two Funds, AIM
New Pacific Growth Fund, AIM Euroland Growth Fund (formerly AIM Europe Growth
Fund), AIM Japan 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 Class C shares. The Board of Trustees is authorized to establish
additional series of shares, or additional classes of shares of any fund, at any
time. 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 GT Global Growth Series.
The term "majority of the outstanding shares" of the Trust, a particular
Fund or 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, such class or such Portfolio 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, such class or such Portfolio are present or represented
by proxy, or (b) more than 50% of the outstanding shares of the Trust, such
Fund, such class or such Portfolio.
Class A, Class B and Class C 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
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<PAGE> 43
fully transferable when issued and have no preemptive rights and have such
conversion and exchange rights as set forth in the Prospectuses and this
Statement of Additional Information. Fractional shares have proportionately the
same rights, including voting rights, as are provided for a full share. Other
than the automatic conversion of Class B shares to Class A shares, there are no
conversion rights.
Shareholders of the Funds and the Trust's other series do not have
cumulative voting rights, and therefore the holders of more than 50% of the
outstanding shares of the Funds and the Trust's other series voting together for
election of trustees may elect all of the members of the Trust's Board. In such
event, the remaining holders cannot elect any trustees of the Trust.
On any matter submitted to a vote of shareholders, shares of a 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 a Fund may
vote on matters affecting only that class. The shares of a 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 accounts.
Normally there will be no annual meeting of shareholders for any of the
Funds in any year, except as required under the Investment Company Act of 1940,
as amended (the "1940 Act"). 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 of each Fund. Each share of a Fund
represents as 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 a Fund is equal in earnings, assets and
voting privileges except that each class normally has exclusive voting rights
with respect to its distribution plan and bears the expenses, if any, related to
the distribution of its shares.
INVESTMENT POLICIES
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 Delaware business 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 a 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.
A change in a Portfolio's investment objective, policies or limitations
that is not approved by the Board or shareholders of the corresponding Fund
could require that 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 a 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.
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In addition to selling an interest therein to the Funds, each Portfolio may
sell interests therein to other non-affiliated investment companies and/or other
institutional investors. All institutional investors in a Portfolio will pay a
proportionate share of that 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 a Portfolio, it would not be
required to sell its shares at the same public offering price as the
corresponding Fund and may charge different sales commissions. Therefore,
investors in a Fund may experience different returns than investors in another
investment company that invests exclusively in a Portfolio. As of the date of
the Prospectuses and this Statement of Additional Information, the Funds are the
only institutional investors in the Portfolios.
The Funds may be materially affected by the actions of other large
investors, if any, in the Portfolios. For example, as with all open-end
investment companies, if a large investor were to redeem its interest in a
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 a Portfolio that have a greater pro rata
ownership interest in the Portfolio than the corresponding Fund could have
effective voting control over the operation of the Portfolio.
Unless specifically noted, the Fund's investment policies described in this
Statement of Additional Information are not fundamental policies and may be
changed by vote of the Trust's Board of Trustees without shareholder approval.
SELECTION OF INVESTMENTS
For purposes of the Prospectuses and this Statement of Additional
Information, 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.
The debt obligations that the Portfolios may invest in are limited to U.S.
government securities and corporate debt securities of issuers domiciled in the
U.S. Each Portfolio will limit its purchases of debt securities to investment
grade debt 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 AIM to be of
equivalent quality.
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.
Equity securities in which the Funds may invest include common stocks,
preferred stock, convertible debt securities and warrants to acquire such
securities.
EQUITY-LINKED DERIVATIVES
The Portfolios may invest in equity-linked derivative products designed to
replicate the composition and performance of particular indices. Examples of
such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark
Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial
Average Instruments ("DIAMONDS") and Optimised Portfolios as Listed Securities
("OPALS"). Investments in equity-linked derivatives involve the same risks
associated with a direct investment in the types of securities included in the
indices such products are designed to track. There can be no assurance that the
trading price of the equity-linked derivatives will equal the underlying value
of the basket of securities purchased to replicate a particular index or that
such basket will replicate the index. Investments in equity-linked derivatives
may constitute investment in other investment companies. See "Investments in
Other Investment Companies" herein.
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INVESTMENT IN OTHER INVESTMENT COMPANIES
Each Portfolio may invest in other investment companies to the extent
permitted by the 1940 Act, and the rules and regulations thereunder, and if
applicable, exemptive orders granted by the SEC. The following restrictions
apply to investments in other investment companies other than Affiliated Money
Market Funds (defined below): (i) a Portfolio may not purchase more than 3% of
the total outstanding voting stock of another investment company; (ii) a
Portfolio may not invest more than 5% of its total assets in securities issued
by another investment company; and (iii) a Portfolio may not invest more than
10% of its total assets in securities issued by other investment companies other
than Affiliated Money Market Funds. With respect to a Portfolio's purchase of
shares of another investment company, including Affiliated Money Market Funds,
the Portfolio will indirectly bear its proportionate share of the advisory fees
and other operating expenses of such investment company. The Portfolios have
obtained an exemptive order from the SEC allowing them to invest in money market
funds that have AIM or an affiliate of AIM as an investment adviser (the
"Affiliated Money Market Funds"), provided that investments in Affiliated Money
Market Funds do not exceed 25% of the total assets of such Portfolio.
FOREIGN SECURITIES
Each of the Portfolios may hold foreign securities. Such investments may
include American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other securities representing underlying 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 which evidence
ownership of underlying securities issued by a foreign corporation. EDRs are
receipts issued in Europe which evidence a similar ownership arrangement.
Generally, ADRs, in registered form, are designed for use in the United States
securities markets, and EDRs, in bearer form, are designed for use in European
securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in
OTC markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates.
To the extent a Portfolio invests in securities denominated in foreign
currencies, each Portfolio bears the risk of changes in the exchange rates
between U.S. currency and the foreign currency, as well as the availability and
status of foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. Each of the
Portfolios may also invest in foreign securities listed on recognized U.S.
securities exchanges or traded in the U.S. over-the-counter market. Such foreign
securities may be issued by foreign companies located in developing countries in
various regions of the world. A "developing country" is a country in the initial
stages of its industrial cycle. As compared to investment in the securities
markets of developed countries, investment in the securities markets of
developing countries involves exposure to markets that may have substantially
less trading volume and greater price volatility, economic structures that are
less diverse and mature, and political systems that may be less stable.
Investments by a Portfolio in foreign securities, whether denominated in
U.S. currencies or foreign currencies, may entail all of the risks set forth
below. Investments by a Portfolio in ADRs, EDRs or similar securities also may
entail some or all of the risks as set forth below.
Currency Risk. The value of each Portfolio's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated and increases when the
value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and Monetary
Union ("EMU"), namely Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain established a common
European currency known as the "euro" and each member's local currency became a
denomination of the euro. It is anticipated that each participating country will
replace its local
6
<PAGE> 46
currency with the euro on July 1, 2002. Any other European country that is a
member of the European Union and satisfies the criteria for participation in the
EMU may elect to participate in the EMU and may supplement its existing currency
with euro. The anticipated replacement of existing currencies with the euro on
July 1, 2002 could cause market disruptions before or after July 1, 2002 and
could adversely affect the value of securities held by a Portfolio.
Political and Economic Risk. The economies of many of the countries in
which the Portfolios may invest are not as developed as the United States
economy and may be subject to significantly different forces. Political or
social instability, expropriation or confiscatory taxation, and limitations on
the removal of funds or other assets could also adversely affect the value of
each Portfolio's investments.
Regulatory Risk. Foreign companies are not registered with the SEC and are
generally not subject to the regulatory controls imposed on United States
issuers and, as a consequence, there is generally less publicly available
information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Portfolios may be reduced by a withholding tax at the source, which tax
would reduce dividend income payable to the Portfolios' shareholders.
Market Risk. The securities markets in many of the countries in which the
Portfolios invest will have substantially less trading volume than the major
United States markets. As a result, the securities of some foreign companies may
be less liquid and experience more price volatility than comparable domestic
securities. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States.
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. 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 of 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. 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
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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 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 331/3% of its total assets,
i.e., each Portfolio's total assets will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of a Portfolio's
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. Each Portfolio may not make additional investments if
borrowings exceed 5% of its total assets. A Portfolio may borrow in connection
with meeting requests for the redemption of a Portfolio's shares. Any borrowing
by a Portfolio may cause greater fluctuation in the value of its 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
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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. A
Portfolio may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for redemption.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES
Each 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 a 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 a Portfolio. If a 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 a Portfolio 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 a Portfolio may incur a loss.
TEMPORARY DEFENSIVE STRATEGIES
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, each of the Portfolios may
temporarily hold all or a portion of its assets in cash (U.S. dollars, foreign
currencies or multinational currency units), money market instruments, or
high-quality debt securities. Each of the Portfolios may also invest up to 25%
of its total assets in Affiliated Money Market Funds for these purposes. To the
extent a Portfolio employs a temporary defensive strategy, it will not be
invested so as to achieve directly its investment objectives.
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 or A-1 by 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
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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) There is no assurance that a liquid secondary market will exist
for any particular option, futures contract or option thereon at any
particular time.
(5) 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
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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
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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 (European style) the expiration date. A Portfolio 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 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.
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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
"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.
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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.
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
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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 Futures Contract of September deutschmarks 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 deutschmarks 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
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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 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")
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will not exceed 5% of the total assets 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.
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
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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 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 may invest in U.S. government securities and corporate debt
securities of issuers domiciled in the United States. Each Portfolio limits its
purchases of debt securities to investment grade obligations. The value of debt
securities held by a Portfolio will fluctuate with changes in the perceived
creditworthiness of the issues of such securities and interest rates. 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 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.
EQUITY 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.
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SMALL CAP COMPANIES
The Small Cap 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.
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. 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. See "Submission of
Matters to Shareholders" herein. 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;
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(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.
The approval of the Fund and of other investors in a Portfolio, if any, is
not required to change the investment objective, policies or limitations of that
Portfolio, unless otherwise specified. Written notice shall be provided to
shareholders of a Fund thirty days prior to any changes in a Portfolio's
investment objective.
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
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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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for each Fund, selects
broker-dealers, effects the Funds' investment portfolio transactions, allocates
brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate. While AIM seeks reasonably competitive commission rates, the Funds may not
pay the lowest commission or spread available. See "Section 28(e) Standards"
below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock markets
outside the United States. Although in recent years many overseas stock markets
have adopted a system of negotiated rates, a number of markets maintain an
established schedule of minimum commission rates.
AIM may determine target levels of commission business with various brokers
on behalf of its clients (including the Funds) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Funds and other mutual funds advised by AIM or A I M Capital Management, Inc.
(collectively, the "AIM Funds") in particular, including sales of the Funds and
of the other AIM Funds. In connection with (3) above, the Funds' trades may be
executed directly by dealers that sell shares of the AIM Funds or by other
broker-dealers with which such dealers have clearing arrangements. AIM will not
use a specific formula in connection with any of these considerations to
determine the target levels.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to another AIM Fund or account (and may invest in affiliated
money market funds) provided the Funds follow procedures adopted by the Boards
of Directors/Trustees of the various AIM Funds, including the Trust. These
inter-fund transactions do not generate brokerage commissions but may result in
custodial fees or taxes or other related expenses.
Under the 1940 Act, certain persons affiliated with the Trust are
prohibited from dealing with the Funds as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the Funds from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust are members except in accordance with certain conditions. These
conditions may restrict the ability of a Fund to purchase municipal securities
being publicly underwritten by such syndicate, and the Fund may be required to
wait until the syndicate has been terminated before buying such securities. At
such time, the market price of the securities may be higher or lower than the
original offering price. A person affiliated with the Trust may, from time to
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time, serve as placement agent or financial advisor to an issuer of municipal
securities and be paid a fee by such issuer. Each Fund may purchase such
municipal securities directly from the issuer, provided that the purchase is
reviewed by the Board of Trustees and a determination is made that the placement
fee or other remuneration paid by the issuer to a person affiliated with the
Trust is fair and reasonable in relation to the fees charged by others
performing similar services.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of
these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or about the same time, AIM will fairly allocate transactions in
such securities among the Fund(s) and these accounts. AIM may combine such
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") SECURITIES TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed by
AIM may become interested in participating in security distributions that are
available in an IPO, and occasions may arise when purchases of such securities
by one AIM Fund or account may also be considered for purchase by one or more
other AIM Funds or accounts. In such cases, it shall be AIM's practice to
specifically combine or otherwise bunch indications of interest for IPO
securities for all AIM Funds and accounts participating in purchase transactions
for that security, and to allocate such transactions in accordance with the
following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks
to participate in a particular IPO by reviewing a number of factors, including
suitability of the investment with the AIM Fund's or account's investment
objective, policies and strategies, the liquidity of the AIM Fund or account if
such investment is purchased, and whether the portfolio manager intends to hold
the security as a long-term investment. The allocation of limited supply
securities issued in IPOs will be made to eligible AIM Funds and accounts in a
manner designed to be fair and equitable for the eligible AIM Funds and
accounts, and so that there is equal allocation of IPOs over the longer term.
Where multiple funds or accounts are eligible, rotational participation may
occur, based on the extent to which an AIM Fund or account has participated in
previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM
Fund and account with an asset level of less than $500 million will be placed in
one of three tiers, depending upon its asset level. The AIM Funds and accounts
in the tier containing funds and accounts with the smallest asset levels will
participate first, each receiving a 40 basis point allocation (rounded to the
nearest share round lot that approximates 40 basis points) (the "Allocation"),
based on that AIM Fund's or account's net assets. This process continues until
all of the AIM Funds and accounts in the three tiers receive their Allocations,
or until the shares are all allocated. Should securities remain after this
process, eligible AIM Funds and accounts will receive their Allocations on a
straight pro rata basis. For the tier of AIM Funds and accounts not receiving a
full Allocation, the Allocation may be made only to certain AIM Funds or
accounts so that each may receive close to or exactly 40 basis points.
22
<PAGE> 62
When any AIM Fund and/or account with substantially identical investment
objectives and policies participates in syndicates, they will do so in amounts
that are substantially proportionate to each other. In these cases, the net
assets of the largest AIM Fund will be used to determine in which tier, as
described in the paragraph above, such group of AIM Funds or accounts will be
placed. If no AIM Fund is participating, then the net assets of the largest
account will be used to determine tier placement. The price per share of
securities purchased in such syndicate transactions will be the same for each
AIM Fund and account.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and appropriately assist AIM
in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally, in
written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the broker-dealers
used by AIM tend to follow a broader universe of securities and other matters
than AIM's staff can follow. In addition, the research provides AIM with a
diverse perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Funds. However, the Funds are not under any obligation to deal with any
broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
23
<PAGE> 63
BROKERAGE COMMISSIONS PAID
For the fiscal years ended December 31, 1999, 1998 and 1997, the Small Cap
Portfolio paid aggregate brokerage commissions of $381,535, $113,203 and
$91,971, respectively. For the fiscal years ended December 31, 1999, 1998 and
1997, the Value Portfolio paid aggregate brokerage commissions of $205,721,
$61,274 and $22,202, 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. High portfolio turnover (over 100%) 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, 1999 and 1998 the Small
Cap Portfolio's and Value Portfolio's portfolio turnover rates were 56% and
190%, and 63% and 148%, respectively.
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation
of the Funds. The Board of Trustees has approved all significant agreements
between the Trust and persons or companies furnishing services to the Funds
including the investment management and administration agreement with AIM, the
agreements with AIM Distributors regarding distribution of the Funds' shares,
the custody agreement and the transfer agency agreement. The day-to-day
operations of the Funds are delegated to the officers of the Trust, subject
always to the investment objectives and policies of the Funds and to the general
supervision of the Trust's Board. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc., the parent corporation of
AIM.
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 WITH
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (53) Trustee, Director, President and Chief Executive Officer, A I M Management
Chairman and Group Inc.; Director and President, A I M Advisors, Inc.; Director
President and Senior Vice President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and Fund Management
Company; and Director and Chief Executive Officer, Managed
Products, AMVESCAP PLC.
C. DEREK ANDERSON (58) Trustee Senior Managing Partner, Plantagenet Capital Management, LLC (an
456 Montgomery Street investment partnership); Chief Executive Officer, Plantagenet
Suite 200 Holdings, Ltd. (an investment banking firm); Director, Premium
San Francisco, CA 94104 Wear, Inc. (formerly Munsingwear, Inc.) (a casual apparel company),
"R" Homes, Inc., Big Online, Inc., Champagne Albert Le Brun and
various other privately owned companies.
</TABLE>
- ----------------
* A trustee who is an "interested person" of the Trust and A I M Advisors,
Inc. as defined in the 1940 Act.
24
<PAGE> 64
<TABLE>
<CAPTION>
POSITIONS
HELD WITH
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
<S> <C> <C>
FRANK S. BAYLEY (60) Trustee Partner, law firm of Baker & McKenzie; Trustee, The Badgley Funds
Two Embarcadero Center (public no load mutual funds); Director and Chairman, Stimson
Suite 2400 Marina, Inc., a subsidiary of C.D. Stimson Company (a private
San Francisco, CA 94111 investment company).
RUTH H. QUIGLEY (65) Trustee Private investor; President, Quigley Friedlander & Co., Inc. (a
1055 California Street financial advisory services firm) from 1984 to 1986.
San Francisco, CA 94108
MELVILLE B. COX (56) Vice President Vice President and Chief Compliance Officer, A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
GARY T. CRUM (52) Vice President Director and President, A I M Capital Management, Inc.; Director
and Executive Vice President, A I M Management Group Inc.;
Director and Senior Vice President, A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
CAROL F. RELIHAN (45) Vice President Director, Senior Vice President, General Counsel and Secretary,
A I M Advisors, Inc.; Senior Vice President, General Counsel and
Secretary, A I M Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company; 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.
SAMUEL D. SIRKO (40) Vice President Vice President, Assistant General Counsel and Assistant Secretary,
and Secretary A I M Advisors, Inc.; and Assistant General Counsel and Assistant
Secretary, 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.
DANA R. SUTTON (41) Vice President Vice President and Fund Controller, A I M Advisors, Inc.; and
and Treasurer Assistant Vice President and Assistant Treasurer, Fund Management
Company.
</TABLE>
The Board of Trustees has a Nominating and Audit Committee, comprised of
Miss Quigley (Chairman) and Messrs. Anderson and Bayley, 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
25
<PAGE> 65
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 an annual retainer component plus a per-meeting fee
component, 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, 1999, Mr. Anderson, Mr. Bayley, Mr.
Arthur Patterson (a trustee until September 27, 1999, when he retired) and Miss
Quigley, who are not directors, officers or employees of AIM or any affiliated
company, received total compensation of $22,943, $23,357, $15,634 and $23,357,
respectively, from the Trust for their services as Trustees. For the year ended
December 31, 1999, 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 $106,500, $108,500, $80,000 and $108,500,
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.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES RELATING TO FUNDS AND THE
PORTFOLIOS
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, was organized in
1976 and, together with its subsidiaries, manages or advises approximately 110
investment portfolios encompassing a broad range of investment objectives. AIM
and their world-wide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual
clients around the world.
AIM is a direct, wholly owned subsidiary of AIM Management, a holding
company that has been engaged in the financial services business since 1976. AIM
is also the sole shareholder of the Funds' principal underwriter, AIM
Distributors.
AIM Management and AIM are indirect wholly owned subsidiaries of AMVESCAP
PLC, 11 Devonshire Square, London, EC2M 4YR, England. AMVESCAP PLC and its
subsidiaries are an independent 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. Certain of the
directors and officers of AIM are also executive officers of the Trust and their
affiliations are shown under "Management" herein.
In addition to the investment resources of their Houston and London
offices, AIM draws upon the expertise, personnel, data and systems of other
offices in Atlanta, Boston, Dallas, Denver, Louisville, Miami, New York,
Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo and
Toronto. In managing the Portfolios, AIM employs a team approach, taking
advantage of its investment resources around the world.
AIM and the Trust have adopted a Code of Ethics which requires investment
personnel and certain other employees (a) to pre-clear personal securities
transactions subject to the Code of Ethics; (b) file reports regarding such
transactions; (c) refrain from personally engaging in (i) short-term trading of
a security, (ii) transactions involving a security within seven days of an AIM
Fund transaction involving the same security (subject to a de minimis
exception), and (iii) transactions involving securities being considered for
investment by an AIM Fund (subject to the de minimis exception); and (d) abide
by certain other provisions of the Code of Ethics. The de minimis exception
under the Code of Ethics covers situations where there is no material conflict
of interest because of the large market capitalization of a security and the
relatively small number of shares involved in a personal transaction. The Code
of Ethics also generally prohibits AIM employees who are registered with the
NASD from purchasing securities in initial public offerings. Personal trading
reports are periodically reviewed by AIM, and the Board of Directors reviews
quarterly and annual reports (which summarize any significant violations of the
Code of Ethics). Sanctions for violating the Code of Ethics may include censure,
monetary penalties, suspension or termination of employment.
AIM serves as each Portfolio's investment manager and administrator under
an investment management and administration contract between the Growth
Portfolio and AIM ("Portfolio Management
26
<PAGE> 66
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).
AIM became investment manager and/or administrator to the Funds and the
Portfolios effective June 1, 1998. Prior to that date, Chancellor LGT Asset
Management, Inc. served as investment manager and administrator.
Each Portfolio paid the following investment management and administration
fees net of any expense limitations (fee waivers) for the years ended December
31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Small Cap Portfolio $1,228,974 $159,738 $120,544
Value Portfolio 313,525 133,235 74,372
</TABLE>
For the fiscal year ended December 31, 1999, the Advisor reimbursed Small
Cap Portfolio and Value Portfolio for their respective investment management and
administration fees in the amounts $14,220, and $11,951, respectively.
For the fiscal years ended December 31, 1999, 1998 and 1997, each Fund paid
AIM and/or the prior investment manager and administrator the following
administrative services fees:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Small Cap Portfolio $646,828 $84,258 $63,460
Basic Value Portfolio 167,058 70,124 39,171
</TABLE>
The Funds pay AIM administration fees, computed daily and paid monthly, at
the annualized rate of 0.25% of each Fund's average daily net assets. The Funds
bear their pro rata portion of the investment management and administration fees
paid by the Portfolio to AIM. The Portfolios pay AIM such fees, computed daily
and paid monthly, based on the average daily net assets of each 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 the 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 Funds and
Portfolios pay all expenses not assumed by AIM, AIM Distributors or other
agents. AIM has undertaken to limit each Fund's and each Portfolio's combined
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
27
<PAGE> 67
expenses) to the annual rate of 1.75%, 2.40% and 2.40% of the average daily net
assets of each Fund's Class A, Class B and Class C shares, respectively, until
June 30, 2000.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM will retain its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Contractual fee waivers or reductions set forth in the Fee Tables in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM and the Fund.
Under a master accounting services agreement AIM serves as the Funds'
pricing and accounting agent. For these services, the Funds pay AIM such fees as
are determined in accordance with methodologies established, from time to time,
by the Trust's Board of Trustees.
For the fiscal years ended December 31, 1999, 1998 and 1997, each Fund paid
AIM and the former investment manager and administrator the following accounting
services fees:
<TABLE>
<CAPTION>
FUND 1999 1998 1997
- ---- ---- ---- ----
<S> <C> <C> <C>
Basic Value Fund $30,215 $6,806 $3,938
Small Cap Fund 71,480 6,564 6,379
</TABLE>
[For the fiscal years ended December 31, 1999, 1998 and 1997, the Small Cap
Portfolio and the Value Portfolio paid fees of $1,228,802, $159,738 and
$120,544; and $313,525, $133,235 and $74,372, respectively, to INVESCO (NY),
Inc. For the same periods, the Small Cap Fund and Basic Value Fund paid
administration fees of $646,828, $84,258 and $63,460; and $167,051, $70,124 and
$39,171, respectively, to INVESCO (NY), Inc. For the fiscal years ended December
31, 1999, 1998 and 1997, INVESCO (NY), Inc. reimbursed the Small Cap Portfolio
and Value Portfolio for their respective investment management and
administration fees in the amounts of $93,076 and $67,837; and $60,760, $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 $55,651 and $63,460; and $41,599 and $39,171, respectively.
Accordingly, INVESCO (NY), Inc. reimbursed each Fund and its corresponding
Portfolio investment management and administration fees in the aggregate amounts
of $14,220, $148,727 and $131,297; and $11,951, $102,359 and $113,543,
respectively.]
For the fiscal years ended December 31, 1999, 1998 and 1997, 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, $0 and
$0; and $0, $0 and $38,419, 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, administrative, 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.
28
<PAGE> 68
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to the Class A and Class C shares of the Funds (the
"Class A and C Plan"). The Class A and C Plan provides that the Class A shares
pay 0.35% per annum of their average daily net assets attributable to Class A
shares as compensation to AIM Distributors for the purpose of financing any
activity which is primarily intended to result in the sale of Class A shares.
Under the Class A and C Plan, Class C shares of each Fund pays compensation to
AIM Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class C shares. The Class A and C Plan is designed to compensate
AIM Distributors, on a quarterly basis, for certain promotional and other
sales-related costs, and to implement a dealer incentive program which provides
for periodic payments to selected dealers who furnish continuing personal
shareholder services to their customers who purchase and own Class A or Class C
shares of a Fund. Payments can also be directed by AIM Distributors to selected
institutions who have entered into service agreements with respect to Class A
and Class C shares of each Fund and who provide continuing personal services to
their customers who own Class A and Class C shares of the Funds. 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. 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 and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average daily net assets of the Fund
attributable to the customers of such dealers or financial institutions are
characterized as a service fee, and payments to dealers and other financial
institutions in excess of such amount and payments to AIM Distributors would be
characterized as an asset-based sales charge pursuant to the Class A and C Plan.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc. ("NASD"). The
Class A and C Plan 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 a Fund.
THE CLASS B PLAN
The Trust has also adopted a Master Distribution Plan pursuant to Rule
12b-1 under the 1940 Act relating to Class B shares of the Funds (the "Class B
Plan", and collectively with the Class A and C Plan, the "Plans"). Under the
Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate
of 1.00% of the average daily net assets attributable to Class B shares. Of such
amount, each Fund pays a service fee of 0.25% of the average daily net assets
attributable to Class B shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who purchase
and own Class B shares. 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.
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
29
<PAGE> 69
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 NASD. The Plans conform to rules of the NASD by limiting
payments made to dealers and other financial institutions who provide continuing
personal shareholder services to their customers who purchase and own shares of
the Funds to no more than 0.25% per annum of the average daily net assets of the
funds attributable to the customers of such dealers or financial institutions,
and by imposing a cap on the total sales charges, including asset based sales
charges, that may be paid by the Funds and their respective classes.
AIM Distributors may from time to time waive or reduce any portion of its
12b-1 fee for Class A and Class C shares. Voluntary fee waivers or reductions
may be rescinded at any time without further notice to investors. During periods
of voluntary fee waivers or reductions, AIM Distributors will retain its ability
to be reimbursed for such fee prior to the end of each fiscal year. Contractual
fee waivers or reductions set forth in the Fee Table in a Prospectus may not be
terminated or amended to the Funds' detriment during the period stated in the
agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Funds on an agency basis, may
receive payments from the Funds pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Funds, in
making dealer incentive and shareholder servicing payments under the Plans.
These payments are an obligation of the Funds and not of AIM Distributors.
30
<PAGE> 70
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreements relating to Class B shares in order
to finance distribution expenditures in respect of Class B shares.
For the fiscal year ended December 31, 1999, each Fund paid the following
amounts under the Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
-----------------------------
CLASS A CLASS B CLASS C* CLASS A CLASS B CLASS C*
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Basic Value Fund $111,548 $311,507 $ 23,922 0.35% 1.00% 1.00%
Small Cap Fund 539,031 917,864 102,966 0.35% 1.00% 1.00%
</TABLE>
*Class C shares commenced operations on May 3, 1999.
Actual fees by category paid by the Fund with regard to the Class A shares
during the year ended December 31, 1999 follows:
<TABLE>
<CAPTION>
BASIC VALUE SMALL CAP
FUND FUND
---- ----
<S> <C> <C>
CLASS A
Advertising $ 19,329 $ 70,712
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) 1,681 6,209
Seminars 4,085 13,798
Compensation to Underwriters to
partially offset other
marketing expenses 0 0
Compensation to Dealers including
finder's fees 86,453 448,312
Compensation to Sales Personnel 0 0
Annual Report Total $111,548 $539,031
</TABLE>
Actual fees by category paid by the Fund with regard to the Class B Shares
during the year ended December 31, 1999 as follows:
<TABLE>
<CAPTION>
BASIC VALUE SMALL CAP
FUND FUND
---- ----
<S> <C> <C>
CLASS B
Advertising $ 10,896 $ 61,035
Printing and mailing prospectuses,
semi-annual reports and annual reports
(other than to current shareholders) 937 5,418
Seminars 2,366 11,927
Compensation to Underwriters to partially
offset other marketing expenses 233,630 688,398
Compensation to Dealers 63,678 151,087
Compensation to Sales Personnel 0 0
Annual Report Totals $ 311,507 $917,865
</TABLE>
31
<PAGE> 71
<TABLE>
<CAPTION>
BASIC VALUE SMALL CAP
FUND FUND
---- ----
<S> <C> <C>
CLASS C*
Advertising $ 773 $ 5,171
Printing and mailing prospectuses,
semi-annual reports and annual reports
(other than to current shareholders) 77 426
Seminars 142 861
Compensation to Underwriters to partially
offset other marketing expenses 17,941 77,225
Compensation to Dealers 4,989 19,283
Compensation to Sales Personnel 0 0
Annual Report Totals $ 23,922 $ 102,967
</TABLE>
*Class C shares commenced operations on May 3, 1999.
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 from year to year as long as such continuance is specifically
approved at least annually by the Board of Trustees, including a majority of the
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 and C Plan is amended in a manner
which the Board of Trustees determines would materially increase the charges
paid under the Class A and C 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.
32
<PAGE> 72
The principal differences between the Class A and C Plan, on the one hand,
and the Class B Plan, on the other hand, are: (i) the Class A and C 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 Class B Plan (as defined in such Plan)
and (iii) the Class B Plan expressly authorizes AIM Distributors to assign,
transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
The Trust has entered into distribution arrangements with AIM Distributors,
P.O. Box 4739, Houston, Texas 77210-4739, a registered broker-dealer and a
wholly owned subsidiary of AIM, to act as the distributor of Class A, Class B
and Class C shares of the Funds. Certain Trustees and officers of the Trust are
affiliated with AIM Distributors. A Master Distribution Agreement with AIM
Distributors relating to the Class B shares of the Funds was approved by the
Board of Trustees on May 7, 1998 and a Master Distribution Agreement with AIM
Distributors relating to the Class A shares and Class C shares was approved by
the Board of Trustees on December 10, 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.
The Distribution Agreements provide AIM Distributors with the exclusive
right to distribute shares of the Funds directly and through institutions with
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares of the Funds 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 each Fund's average daily net
assets attributable to Class B shares attributable to the sales efforts of AIM
Distributors.
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.
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
33
<PAGE> 73
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of any Fund) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors 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 former distributor prior to June 1, 1998, for the
fiscal years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
---- ----
SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED
------- -------- ------- --------
<S> <C> <C> <C> <C>
Basic Value Fund $7,787 $2,335 $11,413 $5,770
Small Cap Fund $8,892 $6,814 $24,222 $5,147
</TABLE>
Each Fund pays AIM Distributors sales charges on sales of Class A shares of
the Funds, retains certain amounts of such charges and reallows other amounts of
such charges to broker/dealers who sell shares.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of each Fund and the amount retained by AIM
Distributors for the period June 1, 1998 to December 31, 1998, and for the
fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
JUNE 1, 1998 TO
1999 DECEMBER 31, 1998
---- -----------------
SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED
------- -------- ------- --------
<S> <C> <C> <C> <C>
Basic Value Fund $ 557,430 $ 89,199 $ 1,807 $ 1,695
Small Cap Fund 2,946,172 445,188 12,522 12,218
</TABLE>
The following chart reflects the contingent deferred sales charges paid by
Class A, Class B and Class C* shareholders for the fiscal years ended December
31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Basic Value Fund $6,724 $53,326 $55,700
Small Cap Fund 6,567 16,400 60,107
</TABLE>
*Class C shares commenced operations on May 3, 1999.
34
<PAGE> 74
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge
ranging from 5.50% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund,
AIM Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM
Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund,
AIM European Development Fund, AIM Euroland Growth Fund, AIM Global Utilities
Fund, AIM Global Growth & Income Fund, AIM International Equity Fund, AIM Japan
Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM
Large Cap Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund,
AIM Mid Cap Opportunities Fund, AIM New Pacific Growth Fund, AIM Select Growth
Fund, AIM Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value
Fund and AIM Weingarten Fund.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
----------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- ----------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging
Markets Debt Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer
Products and Services Fund, AIM Global Financial Services Fund, AIM Global
Government Income Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM
Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund,
AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM
High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM
Income Fund, AIM Intermediate Government Fund, AIM Latin American Growth Fund,
AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM Tax-Exempt Bond Fund
of Connecticut.
35
<PAGE> 75
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
----------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
----------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more of Category I,
II or III funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. At the option of the dealer, such
incentives may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representatives
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
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.
36
<PAGE> 76
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional
shares in any of the Funds on or after May 1, 1995, and in circumstances where
AIM Distributors grants an exemption on particular transactions.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares are considered sales of such Class B shares or Class C
shares for purposes of the sales charges and dealer concessions discussed above.
AIM Distributors may pay investment dealers or other financial service
firms for share purchases (measured on an annual basis) of Class A Shares of all
AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate
Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit
plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the
next $1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity
Treasury Fund sold at net asset value to an employee benefit plan in accordance
with this paragraph.
37
<PAGE> 77
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a
pension, profit-sharing, or other benefit plan established exclusively
for the benefit of any such person, such as an IRA, Roth IRA, a
single-participant money-purchase/profit-sharing plan or an individual
participant in a 403(b) Plan (unless such 403(b) plan qualifies as the
purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization
described under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all
participating employees in a single contribution transmittal
(i.e., the Funds will not accept contributions submitted with
respect to individual participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by
submitting an application on behalf of each new participant with
the contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other
employee benefit trust created pursuant to a plan qualified under
Section 401 of the Code) and 457 plans, although more than one
beneficiary or participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and other
Elective Simplified Employee Pension account (SAR-SEP) or a Savings
Incentive Match Plans for Employees IRA (SIMPLE IRA), where the
employer has notified the distributor in writing that all of its
related employee SEP, SAR-SEP or SIMPLE IRA accounts should be linked;
or
o any other organized group of persons, whether incorporated or not,
provided the organization has been in existence for at least six
months and has some purpose other than the purchase at a discount of
redeemable securities of a registered investment company.
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge as provided herein.
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
38
<PAGE> 78
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares
of AIM Floating Rate Fund) within the following 13 consecutive months. By
marking the LOI section on the account application and by signing the account
application, the purchaser indicates that he understands and agrees to the terms
of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge
made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all shares, to make up
such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund,
(ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM
Floating Rate Fund) at the time of the proposed purchase. Rights of Accumulation
are also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. To determine whether or not a reduced initial sales charge
applies to a proposed purchase, AIM Distributors takes into account not only the
money which is invested upon such proposed purchase, but also the value of all
shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash
Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and
Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund)
owned by such purchaser, calculated at their then current public offering price.
If a purchaser so qualifies for a reduced sales charge, the reduced sales charge
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applies to the total amount of money then being invested by such purchaser and
not just to the portion that exceeds the breakpoint above which a reduced sales
charge applies. For example, if a purchaser already owns qualifying shares of
any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000
in a fund, with a maximum initial sales charge of 5.50%, the reduced initial
sales charge of 5.25% will apply to the full $20,000 purchase and not just to
the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the
discount applicable to a particular purchase, the purchaser or his dealer must
furnish AFS with a list of the account numbers and the names in which such
accounts of the purchaser are registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds
at net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a
fund; (b) exchanges of shares of certain funds; (c) use of the reinstatement
privilege; or (d) a merger, consolidation or acquisition of assets of a fund.
The following purchasers will not pay initial sales charges on purchases of
Class A shares because there is a reduced sales effort involved in sales to
these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members of
their immediate family) of AIM Management, its affiliates or The AIM
Family of Funds(R), and any foundation, trust or employee benefit plan
established exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and members of
their immediate family), of CIGNA Corporation or its affiliates, or of
First Data Investor Services Group; and any deferred compensation plan
for directors of investment companies sponsored by CIGNA Investments,
Inc. or its affiliates;
o Sales representatives and employees (and members of their immediate
family) of selling group members or financial institutions that have
arrangements with such selling group members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined above, and
non-qualified plans offered in conjunction therewith, provided the
initial investment in the plan(s) is at least $1 million; the sponsor
signs a $1 million LOI; the employer-sponsored plan(s) has at least
100 eligible employees; or all plan transactions are executed through
a single omnibus account per Fund and the financial institution or
service organization has entered into the appropriate agreements with
the distributor. Section 403(b) plans sponsored by public educational
institutions are not eligible for a sales charge exception based on
the aggregate investment made by the plan or the number of eligible
employees. Purchases of AIM Small Cap Opportunities Fund by such plans
are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or AIM
Constellation Fund on September 8, 1986, or of AIM Charter Fund on
November 17, 1986, who have continuously owned shares having a market
value of at least $500 and who purchase additional shares of the same
Fund;
o Shareholders of record of Advisor Class shares of AIM International
Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have
continuously owned shares of the AIM Funds;
o Unitholders of G/SET series unit investment trusts investing proceeds
from such trusts in shares of AIM Weingarten Fund or AIM Constellation
Fund; provided, however, prior to the
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termination date of the trusts, a unitholder may invest proceeds from
the redemption or repurchase of his units only when the investment in
shares of AIM Weingarten Fund and AIM Constellation Fund is effected
within 30 days of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an AIM Fund
or that sells its assets to an AIM Fund in exchange for shares of an
AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who since
that date continually have owned shares of one or more of these funds;
o Certain former AMA Investment Advisers' shareholders who became
shareholders of the AIM Global Health Care Fund in October 1989, and
who have continuously held shares in the GT Global funds since that
time; and
o Shareholders of record of Advisor Class shares of an AIM Fund on
February 11, 2000 who have continuously owned shares of that AIM Fund,
and who purchase additional shares of that AIM Fund.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in the former GT Global
funds, which are permitted to be made without penalty pursuant to the Code,
other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global funds; (6) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (7) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (8) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code; (10) redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in Section 401(k) of the
Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code
upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Former GT Global funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption in addition to the waivers provided for
redemptions of currently issued Class B shares as described in a 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 the
former GT Global funds, which are permitted to be made without penalty pursuant
to the Code,
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other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global funds; (4) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (5) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (6) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (7) redemptions made in connection with
a distribution from a qualified profit-sharing or stock bonus plan described in
Section 401(k) of the Code to a participant or beneficiary under Section
401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined
pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (8) redemptions
made by or for the benefit of certain states, counties or cities, or any
instrumentalities, departments or authorities thereof where such entities are
prohibited or limited by applicable law from paying a sales charge or
commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex Fund, AIM
Advisor International Value Fund, AIM Advisor Large Cap Value Fund and
AIM Advisor Real Estate Fund by shareholders of record on April 30,
1995, of these Funds, except that shareholders whose broker-dealers
maintain a single omnibus account with AFS on behalf of those
shareholders, perform sub-accounting functions with respect to those
shareholders, and are unable to segregate shareholders of record prior
to April 30, 1995, from shareholders whose accounts were opened after
that date will be subject to a CDSC on all purchases made after March
1, 1996;
o Redemptions following the death or post-purchase disability of (1) any
registered shareholders on an account or (2) a settlor of a living
trust, of shares held in the account at the time of death or initial
determination of post-purchase disability;
o Certain distributions from individual retirement accounts, Section
403(b) retirement plans, Section 457 deferred compensation plans and
Section 401 qualified plans, where redemptions result from (i)
required minimum distributions to plan participants or beneficiaries
who are age 70-1/2 or older, and only with respect to that portion of
such distributions that does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies the distributor of the transfer no later than the time the
transfer occurs; (iii) tax-free rollovers or transfers of assets to
another plan of the type described above invested in Class B or Class
C shares of one or more of the AIM Funds; (iv) tax-free returns of
excess contributions or returns of excess deferral amounts; and (v)
distributions on the death or disability (as defined in the Internal
Revenue Code of 1986, as amended) of the participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual amount of
12% of the account value on a per fund basis, at the time the
withdrawal plan is established, provided the investor reinvests his
dividends;
o Liquidation by the Fund when the account value falls below the minimum
required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies the
distributor prior to the time of investment that the dealer waives the
payment otherwise payable to him.
Upon the redemption of shares of funds in sales charge Categories I and II
(see "Sales Charges and Dealer Concessions") purchased in amounts of $1 million
or more, no CDSC will be applied in the following situations:
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<PAGE> 82
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified
purchasers, as defined above, where the redemptions are in connection
with employee terminations or withdrawals, provided the total amount
invested in the plan is at least $1,000,000; the sponsor signs a $1
million LOI; or the employer-sponsored plan has at least 100 eligible
employees; provided, however, that 403(b) plans sponsored by public
educational institutions shall qualify for the CDSC waiver on the
basis of the value of each plan participant's aggregate investment in
the AIM Funds, and not on the aggregate investment made by the plan or
on the number of eligible employees;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's dealer
waives the amounts otherwise payable to it by the distributor and
notifies the distributor prior to the time of investment; and
o Shares acquired by exchange from Class A shares of funds in sales
charge Categories I and II unless the shares acquired by exchange are
redeemed within 18 months of the original purchase of the Class A
shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may be
purchased appears in the Funds' Prospectuses under the heading "Purchasing
Shares - How to Purchase Shares."
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), 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 under the caption "Reductions
in Initial Sales Charges--Purchases At Net Asset Value."
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 "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in the
Prospectuses under the heading "Redeeming Shares." Shares of the AIM Funds may
be redeemed directly through AIM Distributors or through any dealer who has
entered into an agreement with AIM Distributors. In addition to the Funds'
obligation to redeem shares, AIM Distributors may also repurchase shares as an
accommodation to shareholders. To effect a repurchase, those dealers who have
executed Selected Dealer Agreements with AIM Distributors must phone orders to
the order desk of the Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the
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<PAGE> 83
applicable Fund next determined after the repurchase order is received. Such an
arrangement is subject to timely receipt by AIM 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 Trust intends to redeem all shares
of the Funds in cash.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the 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.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations,
withhold 31% of redemption payments and reportable dividends (whether paid or
accrued) in the case of any shareholder who fails to provide the Fund with a
taxpayer identification number ("TIN") and a certification that he is not
subject to backup withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect
TIN, or
(3) the investor or the Fund is notified by the IRS that the investor
is subject to backup withholding because the investor failed to report all
of the interest and dividends on such investor's tax return (for reportable
interest and dividends only), or
(4) the investor fails to certify to the Fund that the investor is not
subject to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to
non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all
five situations discussed above. Redemption proceeds and long-term gain
distributions are subject to backup withholding only if (1) (2) or (5) above
applies.
Certain payees and payments are exempt from backup withholding and
information reporting. A complete listing of such exempt entities appears in the
Instructions for the Requester of Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an individual
retirement plan (IRA), or a custodial account under Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
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o a state, the District of Columbia, a possession of the United States,
or any of their political subdivisions or instrumentalities
o a foreign government or any of its political subdivisions, agencies or
instrumentalities
o an international organization or any of its agencies or
instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.
o a futures commission merchant registered with the Commodity Futures
Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the 1940
Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct
TIN will be subject to a $50 penalty imposed by the IRS unless such failure is
due to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities
are not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
federal income tax withholding at a 30% rate on ordinary income dividends and
distributions and return of capital distributions. Under applicable treaty law,
residents of treaty countries may qualify for a reduced rate of withholding or a
withholding exemption.
NET ASSET VALUE DETERMINATION
The net asset value per share of each Fund and Portfolio is normally
determined once daily as of the close of the customary trading session 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 share is determined as of the close of the NYSE on such
day. Net asset value per share is determined by dividing the value of the
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equity 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 or 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 the
customary trading session of the NYSE.
Generally, trading in corporate bonds, U.S. Government securities and money
market instruments is substantially completed each day at various times prior to
the close of the customary trading session of the NYSE. The values of such
securities used in computing the net asset value of each Fund's or Portfolio's
shares are determined at such times. Foreign currency exchange rates are also
generally determined prior to the close of the customary trading session of the
NYSE. Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which such values are determined
and the close of the customary trading session of the NYSE which will not be
reflected in the computation of a Fund's 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.
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 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 AIM Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of each Fund unless the
shareholder has requested in writing to receive such dividends and distributions
in cash or that they be invested in shares of another AIM Fund, subject to the
terms and conditions set forth herein under the caption "Shareholder
Information." If a shareholder's account does not have any shares in it on a
dividend or capital gains distribution payment date, the dividend or
distribution will be paid in cash whether or not the shareholder has elected to
have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the Prospectuses. No attempt is made to present a detailed explanation of the
tax treatment of each Fund or its shareholders, and the discussion here and in
the Prospectuses is not intended as a substitute for careful tax planning.
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
Fund must diversify its holdings so that, at the end of each fiscal quarter: (i)
at least 50% of the market value of the Fund's assets is represented by cash,
U.S. Government securities and other securities, with such other securities
limited, with respect to any one issuer, to an amount not greater than 5% of the
Fund's assets and not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities) (the
"Diversification Requirement"). 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.
By qualifying for treatment as a RIC, each Fund (but not its shareholders)
will be relieved of federal income tax on the part of its investment company
taxable income and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) that it distributes to its shareholders. If a
Fund failed to qualify for treatment as a RIC for any taxable year, (1) it would
be taxed as an ordinary corporation on the full amount of its taxable income for
that year without being able to deduct the distributions it makes to its
shareholders and (2) the shareholders would treat all those distributions,
including distributions of net capital gain, as dividends (that is, ordinary
income) to the extent of the Fund's earnings and profits. In addition, the Fund
could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before requalifying for RIC
treatment.
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 "Taxation of the Portfolios" herein for a discussion of the tax
consequences to each Fund of hedging transactions engaged in by its
corresponding Portfolio.
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EXCHANGE AND REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of a Fund's shares ("original shares") within 90
days after purchase thereof and subsequently reacquires shares of that Fund or
acquires shares of another AIM Fund on which a sales charge normally is imposed
("replacement shares"), without paying the sales charge (or paying a reduced
charge) due to an exchange privilege or a reinstatement privilege, then (1) any
gain on the disposition of the original shares will be increased, or the loss
thereon decreased, by the amount of the sales charge paid when those shares were
acquired and (2) that amount will increase the adjusted basis of the replacement
shares that were subsequently acquired. In addition, if a shareholder purchases
shares of a Fund (whether pursuant to the reinstatement privilege or otherwise)
within 30 days before or after redeeming at a loss other shares of that Fund
(regardless of class), all or part of that loss will not be deductible and
instead will increase the basis of the newly purchased shares.
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.
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.
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" with respect to which a Fund has elected not to
have the following rules apply) ("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. These rules may operate to increase the amount
that a Fund must distribute to satisfy the Distribution Requirement (i.e., with
respect to the portion treated as short-term capital gain), which will be
taxable to the shareholders as ordinary income, and to increase the net capital
gain a Fund recognizes, without in either case increasing the cash available to
the Fund. These rules may operate to increase the amount that a Fund must
distribute to satisfy the Distribution Requirement (i.e., with respect to the
portion treated as short-term capital gain), which will be taxable to the
shareholders as ordinary income,
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<PAGE> 88
and to increase the net capital gain a Fund recognizes, without in either case
increasing the cash available to the Fund.
Code section 1092 (dealing with straddles) also may affect the taxation of
certain hedging instruments in which a Fund may invest. That section defines a
"straddle" as offsetting positions with respect to actively traded personal
property; for these purposes, options, Futures and Forward Contracts are
personal property. Under that section, any loss from the disposition of a
position in a straddle generally may be deducted only to the extent the loss
exceeds the unrealized gain on the offsetting position(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise would
be recognized under the mark-to-market rules discussed above. The regulations
under section 1092 also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting position is
acquired within a prescribed period, and "short sale" rules applicable to
straddles. If a Fund makes certain elections, the amount, character and timing
of recognition of gains and losses from the affected straddle positions would be
determined under rules that vary according to the elections made. Because only a
few of the regulations implementing the straddle rules have been promulgated,
the tax consequences to a Fund of straddle transactions are not entirely clear.
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 position, the Portfolio will
be treated as having made an actual sale thereof, with the result that gain will
be recognized at that time unless the completed transaction exception applies. 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 identical property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially identical
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 December will be deemed to have been paid
by the Fund and received by the shareholders on December 31 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.
NON-U.S. SHAREHOLDERS
Ordinary dividends and return of capital distributions 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 distribution 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.
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<PAGE> 89
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus under
the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. If a check used to purchase
shares does not clear, or if any investment order must be canceled due to
nonpayment, the investor will be responsible for any resulting loss to an AIM
Fund or to AIM Distributors.
SHARE CERTIFICATES. Shareholder of the Funds do not have the right to
demand or require the Trust to issue share certificates, although the Trust in
its sole discretion may issue them.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares
are to be held by the Transfer Agent and all dividends and distributions are
reinvested in shares of the 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 AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGE. Normally, shares of an AIM Fund to be
acquired by exchange are purchased at their net asset value or applicable
offering price, as the case may be, determined on the date that such request is
received, but under unusual market conditions such purchases may be delayed for
up to five business days if it is determined that a fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into a fund paying daily dividends, and the release of
the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day
after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain
dealers and investment advisory firms to accept telephone instructions to
exchange shares between any of the AIM Funds. AIM Distributors reserves the
right to impose conditions on dealers or investment advisors who make telephone
exchanges of shares of the funds, including the condition that any such dealer
or investment advisor enter into an agreement (which contains additional
conditions with respect to exchanges of shares) with AIM Distributors. To
exchange shares by telephone, a shareholder, dealer or investment advisor who
has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
shareholder is unable to reach AFS by telephone, he may also request exchanges
by telegraph or use overnight courier services to expedite exchanges by mail,
which will be effective on the business day received by the Transfer Agent as
long as such request is received prior to the close of the customary trading
session of the NYSE. The Transfer Agent and AIM Distributors may in certain
cases be liable for losses due to unauthorized or fraudulent transactions if
they do not follow reasonable procedures for verification of telephone
transactions. Such reasonable procedures may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transaction.
By signing an account application form, an investor appoints 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
50
<PAGE> 90
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 transactions. The Transfer
Agent reserves the right to modify or terminate the telephone exchange privilege
at any time without notice. An investor may elect not to have this privilege by
marking the appropriate box on the application. Then any exchanges must be
effected in writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints 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 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 redemption
privilege at any time without notice. An investor may elect not to have this
privilege by marking the appropriate box on the application. Then any
redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of each Fund's prospectus, signature
guarantees are required in the following situations: (1) requests to transfer
the registration of shares to another owner; (2) telephone exchange and
telephone redemption authorization forms; (3) changes in previously designated
wiring or electronic funds transfer instructions; and (4) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the SEC, and
further provided that such guarantor institution is listed in one of the
reference guides contained in 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.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that the Transfer Agent and AIM Distributors will not be liable for any loss,
expense or cost arising out of any internet
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<PAGE> 91
transaction effected in accordance with the instructions set forth in the forms
if they reasonably believe such request to be genuine. Procedures for
verification of internet transactions include requests for confirmation of the
shareholder's personal identification number and mailing of confirmations
promptly after the transactions. The investor also acknowledges that (1) if he
no longer wants the AIM Internet Connect option, he will notify the Transfer
Agent in writing, and (2) the AIM Internet Connect option may be terminated at
any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital gains, if
any, available for distribution, net capital gains are offset against available
net capital losses, if any, carried forward from previous fiscal periods.
For funds that do not declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by
the shareholder at any time by notice to 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.
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
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.
CUSTODIAN
State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street,
Boston, Massachusetts 02110, is custodian of all securities and cash of the
Portfolios. The Custodian attends to the collection of principal and income,
pays and collects all monies for securities bought and sold by the Portfolios
and performs certain other ministerial duties.
TRANSFER AGENCY SERVICES
AIM Fund Services, Inc., a wholly owned subsidiary of AIM, acts as transfer
agent and dividend disbursing agent for the Funds. The Transfer Agency and
Service Agreement between the Trust and AFS 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.
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<PAGE> 92
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.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue N.W.,
Washington, DC 20036-1800, acts as counsel to the Trust and the Funds.
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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 2000, the trustees and officers of the Trust as a group
owned beneficially less than 1% of all classes of outstanding shares 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 March 31, 2000, and the percentage of the outstanding
shares held by such holders are set forth below.
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<PAGE> 93
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ---- ------------------------- -------- ------------
<S> <C> <C> <C>
Basic Value Fund-- MLPF&S for the Sole Benefit of Its 9.91% - 0 -
Class A Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Basic Value Fund-- MLPF&S for the Sole Benefit of its 14.02% - 0 -
Class B Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Basic Value Fund-- MLPF&S for the Sole Benefit of its 27.88% - 0 -
Class C Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Small Cap Fund-- MLPF&S for the Sole Benefit of its 9.00% - 0 -
Class A Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Small Cap Fund-- MLPF&S for the Sole Benefit of its 13.93% - 0 -
Class B Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Small Cap Fund-- MLPF&S for the Sole Benefit of its 22.83% - 0 -
Class C Customers
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 is as follows:
(n)
P(1+T) = ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable maximum
sales load is deducted at the beginning of the 1, 5, or 10 year
periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the
end of the 1, 5, or 10 year periods (or fractional portion of
such period).
The standardized returns for the Class A and Class B shares of the Basic
Value Fund and Small Cap Fund, stated as average annualized total returns for
the periods shown, were:
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<PAGE> 94
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Basic Value Fund Class A 24.75% N/A N/A 20.41%
Basic Value Fund Class B 26.13% N/A N/A 21.01%
Small Cap Fund Class A 80.17% N/A N/A 30.17%
Small Cap Fund Class B 84.40% N/A N/A 30.86%
</TABLE>
* The inception date for Class A and Class B shares is 10/18/95.
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
(n)
P(1+U) = ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only a stated
portion of, or none of, the applicable maximum sales load at the
beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the
end of the stated period.
The average annual non-standardized returns for the Class A and Class B
shares of the Basic Value Fund and Small Cap Fund, stated as average annualized
total returns for the periods shown, were:
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Basic Value Fund Class A 32.04% N/A N/A 22.05%
Basic Value Fund Class B 31.13% N/A N/A 21.27%
Small Cap Fund Class A 90.64% N/A N/A 31.94%
Small Cap Fund Class B 89.40% N/A N/A 31.06%
</TABLE>
* The inception date for Class A and Class B shares is 10/18/95.
Cumulative total return across a stated period may be calculated as follows:
(n)
P(1+V) = ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a stated
portion of, or none of, the applicable maximum sales load at the
beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment at the
end of the stated period.
The aggregate non-standardized returns (not taking sales charges into
account) for the Class A and Class B shares of the Basic Value Fund and Small
Cap Fund, stated as aggregate total returns for the periods shown, were:
55
<PAGE> 95
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Basic Value Fund Class A 32.04% N/A N/A 131.05%
Basic Value Fund Class B 31.13% N/A N/A 124.90%
Basic Value Fund Class C N/A N/A N/A 10.72%
Small Cap Fund Class A 90.64% N/A N/A 220.61%
Small Cap Fund Class B 89.40% N/A N/A 211.70%
Small Cap Fund Class C N/A N/A N/A 65.56%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of each Fund
are 10/18/95, 10/18/95 and 05/03/99, respectively.
The aggregate non-standardized returns (taking sales charges into account)
for the Class A and Class B shares of the Basic Value Fund and Small Cap Fund,
stated as aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Basic Value Fund Class A 24.75% N/A N/A 118.26%
Basic Value Fund Class B 26.13% N/A N/A 122.90%
Basic Value Fund Class C N/A N/A N/A 9.72%
Small Cap Fund Class A 80.17% N/A N/A 202.85%
Small Cap Fund Class B 84.40% N/A N/A 209.70%
Small Cap Fund Class C N/A N/A N/A 64.56%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of each Fund
are 10/18/95, 10/18/95 and 05/03/99, respectively.
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
All advertisements of a 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. 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.
A 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 and Class
C shares reflects the deduction of the maximum applicable contingent deferred
sales charge on a redemption of shares held for the period.
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<PAGE> 96
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, AIM or its affiliates may waive all or a portion of
their fees and/or assume certain expenses of any Fund. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM and the Fund. Fee waivers or
reductions or commitments to reduce expenses will have the effect of increasing
that Fund's yield or total return.
The performance of each Fund will vary from time to time and past results
are not necessarily indicative of future results. A Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in any Fund.
Each of the Portfolios may participate in the IPO market, and a significant
portion of those Portfolios' returns may be attributable to their investment in
IPOs, which have a magnified impact due to the Portfolios' small asset bases.
There is no guarantee that as the Portfolios' assets grow, they will continue to
invest to the same degree in IPOs or that they will experience substantially
similar performance.
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:
57
<PAGE> 97
<TABLE>
<S> <C>
Advertising Age Investor's Daily
Barron's Journal of the American
Best's Review Society of CLU & ChFC
Broker World Kiplinger Letter
Business Week Money
Changing Times Mutual Fund Forecaster
Christian Science Monitor Mutual Fund Magazine
Consumer Reports Nation's Business
Economist New York Times
EuroMoney Pension World
FACS of the Week Pensions & Investments
Financial Planning Personal Investor
Financial Product News Philadelphia Inquirer
Financial World Smart Money
Financial Services Week USA Today
Forbes U.S. News & World Report
Fortune Wall Street Journal
Global Finance Washington Post
Hartford Courant Inc. CNN
Institutional Investor CNBC
Insurance Forum PBS
Insurance Week
</TABLE>
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:
<TABLE>
<S> <C>
Bank Rate National Monitor Index Micropal, Inc. (data and mutual fund
Bear Stearns Foreign Bond Index rankings and comparisons)
Bond Buyer Index Moody's Investors Service (publications)
CDA/Wiesenberger Investment Company Morgan Stanley Capital International
Services (data and mutual fund All Country (AC) World Index
rankings and comparisons) Morgan Stanley Capital International
CNBC/Financial News Composite Index World Indices
COFI Morningstar, Inc. (data and mutual fund
Consumer Price Index Rankings and comparisons)
Datastream Nasdaq
Donoghue's Organization for Economic Cooperation
Dow Jones Industrial Average And Development (publications)
EAFE Index Salomon Brothers Global
First Boston High Yield Index Telecommunications Index
Fitch IBCA, Inc. (publications) Salomon Brothers World Government
Ibbotson Associates International Bond Index--Non-U.S.
Bond Index Salomon Brothers World Government
International Bank for Reconstruction Bond Index
and Development (publications) Standard & Poor's (publications)
International Finance Corporation Standard & Poor's 500 Composite Stock
Emerging Markets Database Price Index
International Financial Statistics Stangar
Lehman Bond Indices Wilshire Associates
Lipper, Inc. World Bank (publications and reports)
(data and mutual fund rankings and The World Bank Publication of Trends
comparisons) in Developing Countries
Worldscope
</TABLE>
58
<PAGE> 98
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.
59
<PAGE> 99
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
60
<PAGE> 100
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 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.
61
<PAGE> 101
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.
62
<PAGE> 102
FINANCIAL STATEMENTS
FS
<PAGE> 103
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series and Shareholders of
AIM Basic Value Fund:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Basic Value Fund (hereafter referred to as the "Fund") at
December 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights
for each of the periods indicated therein, in conformity
with accounting principles generally accepted in the
United States. These financial statements and financial
highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with auditing standards generally accepted in
the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting
principles used and significant estimates made by
management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian and brokers, provide
a reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-1
<PAGE> 104
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-90.90%
BANKS (MAJOR REGIONAL)-1.32%
FleetBoston Financial Corp. 51,800 $ 1,803,287
- --------------------------------------------------------------
BANKS (MONEY CENTER)-2.63%
Bank of America Corp. 71,425 3,584,642
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.73%
Sigma-Aldrich Corp. 33,300 1,001,081
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.74%
Adaptec, Inc.(a) 20,200 1,007,475
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-5.57%
Computer Associates International,
Inc. 54,900 3,839,569
- --------------------------------------------------------------
Synopsys, Inc.(a) 21,500 1,435,125
- --------------------------------------------------------------
Unisys Corp.(a) 72,400 2,312,275
- --------------------------------------------------------------
7,586,969
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-2.73%
McKesson HBOC, Inc. 165,000 3,722,812
- --------------------------------------------------------------
ELECTRIC COMPANIES-6.73%
Illinova Corp. 82,900 2,880,775
- --------------------------------------------------------------
Niagara Mohawk Holdings Inc.(a) 172,000 2,397,250
- --------------------------------------------------------------
Northeast Utilities 90,300 1,856,794
- --------------------------------------------------------------
Texas Utilities Co. 57,400 2,041,287
- --------------------------------------------------------------
9,176,106
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-3.74%
Koninklijke (Royal) Philips
Electronics N.V.-ADR
(Netherlands) 31,404 4,239,540
- --------------------------------------------------------------
Sony Corp.-ADR (Japan) 3,000 854,250
- --------------------------------------------------------------
5,093,790
- --------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-1.60%
Agilent Technologies, Inc.(a) 17,000 1,314,312
- --------------------------------------------------------------
Kyocera Corp.-ADR (Japan) 3,300 864,600
- --------------------------------------------------------------
2,178,912
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-1.69%
Analog Devices, Inc.(a) 24,700 2,297,100
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-3.13%
Novellus Systems, Inc.(a) 34,800 4,264,087
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-4.18%
Citigroup Inc. 57,600 3,200,400
- --------------------------------------------------------------
MGIC Investment Corp. 41,400 2,491,762
- --------------------------------------------------------------
5,692,162
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-0.73%
Pharmacia & Upjohn, Inc. 22,000 $ 990,000
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-5.05%
Health Management Associates,
Inc.-Class A(a) 514,800 6,885,450
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-2.04%
Manor Care, Inc.(a) 174,100 2,785,600
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-2.85%
United Healthcare Corp. 73,000 3,878,125
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-2.58%
Beckman Coulter, Inc. 69,200 3,520,550
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.70%
UnumProvident Corp. 72,400 2,321,325
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-5.56%
Radian Group Inc. 64,298 3,070,229
- --------------------------------------------------------------
Travelers Property Casualty
Corp.-Class A 53,800 1,842,650
- --------------------------------------------------------------
XL Capital Ltd.-Class A 51,400 2,666,375
- --------------------------------------------------------------
7,579,254
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-2.30%
Mattel, Inc. 238,660 3,132,412
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-4.47%
Millipore Corp. 73,400 2,835,075
- --------------------------------------------------------------
Parker Hannifin Corp. 63,400 3,253,213
- --------------------------------------------------------------
6,088,288
- --------------------------------------------------------------
METAL FABRICATORS-1.91%
Kennametal Inc. 77,300 2,599,213
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-6.98%
Diamond Offshore Drilling, Inc. 49,800 1,522,013
- --------------------------------------------------------------
ENSCO International Inc. 108,000 2,470,500
- --------------------------------------------------------------
Schlumberger Ltd. 37,700 2,120,625
- --------------------------------------------------------------
Transocean Sedco Forex Inc. 100,714 3,392,796
- --------------------------------------------------------------
9,505,934
- --------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-1.08%
Atlantic Richfield Co. 17,100 1,479,150
- --------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-0.97%
Exxon Mobil Corp. 16,353 1,317,439
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-3.69%
Georgia-Pacific Group 44,700 2,268,525
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 105
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS-(CONTINUED)
International Paper Co. 49,000 $ 2,765,438
- --------------------------------------------------------------
5,033,963
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-1.05%
Starwood Hotels & Resorts
Worldwide, Inc. 60,683 1,426,051
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-3.25%
Federated Department Stores,
Inc.(a) 48,500 2,452,281
- --------------------------------------------------------------
Saks Inc.(a) 127,200 1,979,550
- --------------------------------------------------------------
4,431,831
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-3.40%
Albertson's, Inc. 74,500 2,402,625
- --------------------------------------------------------------
Kroger Co. (The)(a) 118,100 2,229,138
- --------------------------------------------------------------
4,631,763
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.57%
First Data Corp. 71,000 3,501,188
- --------------------------------------------------------------
TELEPHONE-1.64%
Bell Atlantic Corp. 36,400 2,240,875
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-2.29%
Waste Management, Inc. 181,567 $ 3,120,683
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$108,033,081) 123,877,517
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-0.22%
U.S. TREASURY BILLS-0.22%(b)
5.37%, 03/23/00 (Cost $297,387) $ 301,000(c) 297,659
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-7.01%
STIC Liquid Assets Portfolio(d) 4,776,360 4,776,360
- --------------------------------------------------------------
STIC Prime Portfolio(d) 4,776,360 4,776,360
- --------------------------------------------------------------
Total Money Market Funds (Cost
$9,552,720) 9,552,720
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.13% (Cost
$117,883,188) 133,727,896
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.87% 2,548,719
- --------------------------------------------------------------
NET ASSETS-100.00% $136,276,615
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 6.
(d) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-3
<PAGE> 106
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$117,883,188) $133,727,896
- ---------------------------------------------------------
Receivables for:
Due from advisor 11,951
- ---------------------------------------------------------
Fund shares sold 2,841,146
- ---------------------------------------------------------
Dividends and interest 178,266
- ---------------------------------------------------------
Variation margin 10,200
- ---------------------------------------------------------
Other assets 57,290
- ---------------------------------------------------------
Total assets 136,826,749
- ---------------------------------------------------------
LIABILITIES:
Payable for fund shares reacquired 125,549
- ---------------------------------------------------------
Accrued advisory fees 142,927
- ---------------------------------------------------------
Accrued accounting services fees 4,247
- ---------------------------------------------------------
Accrued distribution fees 133,065
- ---------------------------------------------------------
Accrued trustees' fees 1,200
- ---------------------------------------------------------
Accrued transfer agent fees 25,891
- ---------------------------------------------------------
Accrued operating expenses 117,255
- ---------------------------------------------------------
Total liabilities 550,134
- ---------------------------------------------------------
Net assets applicable to shares outstanding $136,276,615
=========================================================
NET ASSETS:
Class A $ 70,790,769
=========================================================
Class B $ 55,784,561
=========================================================
Class C $ 7,669,005
=========================================================
Advisor Class $ 2,032,280
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 2,969,093
=========================================================
Class B 2,401,002
=========================================================
Class C 330,070
=========================================================
Advisor Class 84,037
=========================================================
Class A:
Net asset value and redemption price per
share $ 23.84
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $23.84 divided
by 94.50%) $ 25.23
=========================================================
Class B:
Net asset value and offering price per
share $ 23.23
=========================================================
Class C:
Net asset value and offering price per
share $ 23.23
=========================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 24.18
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $3,153 foreign withholding
tax) $ 932,561
- ---------------------------------------------------------
Interest 346,034
- ---------------------------------------------------------
Securities lending income 3,554
- ---------------------------------------------------------
Total investment income 1,282,149
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 480,576
- ---------------------------------------------------------
Accounting services fees 30,215
- ---------------------------------------------------------
Custodian fees 19,843
- ---------------------------------------------------------
Trustees' fees 1,667
- ---------------------------------------------------------
Distribution fees -- Class A 111,548
- ---------------------------------------------------------
Distribution fees -- Class B 311,507
- ---------------------------------------------------------
Distribution fees -- Class C 23,922
- ---------------------------------------------------------
Transfer agent fees 150,366
- ---------------------------------------------------------
Other 225,457
- ---------------------------------------------------------
Total expenses 1,355,101
- ---------------------------------------------------------
Less:
Fee waivers (11,951)
- ---------------------------------------------------------
Expenses paid indirectly (734)
- ---------------------------------------------------------
Net expenses 1,342,416
- ---------------------------------------------------------
Net investment income (loss) (60,267)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES AND FUTURES CONTRACTS:
Net realized gain from:
Investment securities 4,400,124
- ---------------------------------------------------------
Futures contracts 276,515
- ---------------------------------------------------------
4,676,639
- ---------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 12,327,004
- ---------------------------------------------------------
Futures contracts 127,522
- ---------------------------------------------------------
12,454,526
- ---------------------------------------------------------
Net gain from investment securities and
futures contracts 17,131,165
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $17,070,898
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 107
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (60,267) $ (49,775)
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities and futures
and option contracts 4,676,639 44,601
- -------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, futures and option contracts 12,454,526 1,516,960
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 17,070,898 1,511,786
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (256,018) (141,471)
- -------------------------------------------------------------------------------------------
Class B (210,328) (313,992)
- -------------------------------------------------------------------------------------------
Class C (27,898) --
- -------------------------------------------------------------------------------------------
Advisor Class (7,898) (18,735)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 53,925,709 1,006,548
- -------------------------------------------------------------------------------------------
Class B 30,620,885 87,004
- -------------------------------------------------------------------------------------------
Class C 7,050,778 --
- -------------------------------------------------------------------------------------------
Advisor Class 591,949 562,783
- -------------------------------------------------------------------------------------------
Net increase in net assets 108,758,077 2,693,923
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 27,518,538 24,824,615
- -------------------------------------------------------------------------------------------
End of period $136,276,615 $27,518,538
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $116,220,386 $24,031,065
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (2,511) (2,524)
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, futures and option contracts 4,086,510 (27,707)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, futures
and option contracts 15,972,230 3,517,704
- -------------------------------------------------------------------------------------------
$136,276,615 $27,518,538
===========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 108
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Basic Value Fund (the "Fund") is a separate series of AIM Growth Series (the
"Trust"). The Trust is organized as a Delaware business trust and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of six separate series
portfolios, each having an unlimited number of shares of beneficial interest.
The Fund consists of four different classes of shares: Class A shares, Class B
shares, Class C shares and Advisor Class shares. Class A shares are sold with a
front-end sales charge. Class B shares and Class C shares are sold with a
contingent deferred sales charge. Advisor Class shares are sold without a sales
charge. Effective March 1, 1999, the Fund discontinued sales of the Advisor
Class to new investors. Matters affecting each portfolio or class will be voted
on exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is long-term growth of capital. The Fund
invests substantially all of its investable assets in Value Portfolio (the
"Portfolio"). The Portfolio is organized as a Delaware business trust which is
registered under the 1940 Act as an open-end management investment company.
The Portfolio has investment objectives, policies and limitations
substantially identical to those of the Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
December 31, 1999, all of the shares of beneficial interest of the Portfolio
were owned by either the Fund or INVESCO, Inc., which has a nominal ($100)
investment in the Portfolio.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund and the Portfolio in the preparation of their financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the
last sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Trust's and Portfolio's officers in a manner specifically authorized by the
Boards of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Boards
of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was increased by $60,280 and undistributed net realized gains decreased by
$60,280 as a result of net operating loss reclassifications. Net assets of
the Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds of fund share redemptions
as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
FS-6
<PAGE> 109
E. Futures Contracts -- The Portfolio may purchase or sell futures contracts
as a hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Portfolio's agent in acquiring the futures position). During
the period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Portfolio recognizes a realized gain or
loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Portfolio's basis in the contract. Risks
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
F. Expenses -- Distribution expenses directly attributable to a class of
shares are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's and the Portfolio's investment
manager and administrator. The Fund pays AIM administration fees at an annual
rate of 0.25% of the Fund's average daily net assets. The Portfolio pays AIM
investment management and administration fees at an annual rate of 0.475% on the
first $500 million of the Portfolio's average daily net assets, plus 0.45% on
the next $500 million of the Portfolio's average daily net assets, plus 0.425%
on the next $500 million of the Portfolio's average daily net assets, plus 0.40%
on the Portfolio's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the maximum annual
rate of 1.75%, 2.40%, 2.40% and 1.40% of the average daily net assets of the
Fund's Class A, Class B, Class C and Advisor Class shares, respectively. During
the year ended December 31, 1999, AIM reimbursed expenses $11,951.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund and the Portfolio. Prior to July 1,
1999, AIM was the pricing and accounting agent for the Fund and the Portfolio.
The monthly fee for these services paid to AIM was a percentage, not to exceed
0.03% annually, of a Fund's average daily net assets. The annual fee rate was
derived based on the aggregate net assets of the funds which comprised the
following investment companies: AIM Growth Series, AIM Investment Funds, AIM
Series Trust, G.T. Global Variable Investment Series and G.T. Global Variable
Investment Trust. The fee was calculated at the rate of 0.03% of the first $5
billion of assets and 0.02% to the assets in excess of $5 billion. An amount is
allocated to and paid by each such fund based on its relative average daily net
assets. For the year ended December 31, 1999, AIM was paid $30,215 for such
services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $98,065 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $111,548, $311,507 and $23,922,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $89,199 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $6,724 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $734 an under expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of $734
during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit
FS-7
<PAGE> 110
are charged a commitment fee of 0.09% on the unused balance of the committed
line. The commitment fee is allocated among the funds based on their respective
average net assets for the period. Prior to May 28, 1999, the Fund, along with
certain other funds advised and/or administered by AIM, had a line of credit
with BankBoston and State Street Bank & Trust Company. The arrangements with the
banks allowed the Fund and certain other funds to borrow, on a first come, first
served basis, an aggregate maximum amount of $250,000,000.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, securities with an aggregate value of $2,912,369 were on
loan to brokers. The loans were secured by cash collateral of $2,970,631
received by the Portfolio. For the year ended December 31, 1999, the Portfolio
received fees of $3,554 for securities lending.
For international securities, cash collateral is received by the portfolio
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. The 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 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.
NOTE 6-FUTURES CONTRACTS
On December 31, 1999, $250,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
VALUE OF
NO. OF MONTH/ OPEN FUTURES UNREALIZED
CONTRACT CONTRACTS COMMITMENT CONTRACTS APPRECIATION
- --------------------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
S&P 500 Index 12 Mar. 00/Buy $4,452,600 $127,522
- --------------------- --------- ------------ ------------ ------------
</TABLE>
NOTE 7-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Portfolio during the year ended December 31, 1999 was
$118,370,194 and $36,601,100, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $20,307,083
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,008,971)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $15,298,112
=========================================================
</TABLE>
Cost of investments for tax purposes is $118,429,784.
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 3,261,169 $ 70,510,993 472,964 $ 8,362,868
- ----------------------------------------------------------------------------------------------------------------
Class B 2,206,406 46,519,183 587,988 10,276,429
- ----------------------------------------------------------------------------------------------------------------
Class C* 373,145 7,969,386 -- --
- ----------------------------------------------------------------------------------------------------------------
Advisor Class 55,252 1,198,665 41,555 747,776
- ----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 10,995 241,403 7,580 134,463
- ----------------------------------------------------------------------------------------------------------------
Class B 9,168 196,233 16,572 288,515
- ----------------------------------------------------------------------------------------------------------------
Class C* 1,007 21,568 -- --
- ----------------------------------------------------------------------------------------------------------------
Advisor Class 355 7,898 1,044 18,735
- ----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (803,521) (16,826,687) (424,737) (7,490,783)
- ----------------------------------------------------------------------------------------------------------------
Class B (792,971) (16,094,531) (607,196) (10,477,940)
- ----------------------------------------------------------------------------------------------------------------
Class C* (44,082) (940,176) -- --
- ----------------------------------------------------------------------------------------------------------------
Advisor Class (28,204) (614,614) (11,248) (203,728)
- ----------------------------------------------------------------------------------------------------------------
4,248,719 $ 92,189,321 84,522 $ 1,656,335
================================================================================================================
</TABLE>
* Class C Shares commenced sales on May 3, 1999.
FS-8
<PAGE> 111
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A, Class B, and
Advisor Class outstanding during each of the years in the four-year period ended
December 31, 1999 and the period October 18, 1995 (date operations commenced)
through December 31, 1995 and for a share of Class C outstanding during May 3,
1999 (date sales commenced) through December 31, 1999.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
1999(a) 1998 1997(a) 1996(a) 1995(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.13 $ 17.25 $ 14.65 $ 12.76 $ 11.43
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) 0.05 0.04 0.09 (0.01) 0.03
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net gains on securities (both realized and unrealized) 5.75 1.16 3.87 1.94 1.30
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total from investment operations 5.80 1.20 3.96 1.93 1.33
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income -- -- (0.03) -- --
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Distributions from net realized gains (0.09) (0.32) (1.33) (0.04) --
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total distributions (0.09) (0.32) (1.36) (0.04) --
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net asset value, end of period $ 23.84 $ 18.13 $ 17.25 $ 14.65 $ 12.76
============================================================ ======= ======= ======= ======= =======
Total return(b) 32.04% 7.02% 27.23% 15.12% 11.64%
============================================================ ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,791 $ 9,074 $ 7,688 $ 2,529 $ 870
============================================================ ======= ======= ======= ======= =======
Ratio of expenses to average net assets:
With fee waivers and/or reimbursements 1.69%(c) 1.74% 1.99% 2.00% 2.00%(d)
============================================================ ======= ======= ======= ======= =======
Without fee waivers and/or reimbursements 1.71%(c) 2.11% 2.97% 5.51% 50.54%(d)
============================================================ ======= ======= ======= ======= =======
Ratio of net investment income (loss) to average net assets:
With fee waivers and/or reimbursements 0.23%(c) 0.25% 0.56% (0.10)% 1.10%(d)
============================================================ ======= ======= ======= ======= =======
Without fee waivers and/or reimbursements 0.21%(c) (0.08)% (0.42)% (3.61)% (47.44)%(d)
============================================================ ======= ======= ======= ======= =======
Ratio of interest expense to average net assets -- -- 0.03% -- --
============================================================ ======= ======= ======= ======= =======
Portfolio turnover rate 63% 148% 93% 256% --
============================================================ ======= ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $31,870,865.
(d) Annualized.
FS-9
<PAGE> 112
NOTE 9-FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
CLASS C
------------
MAY 3, 1999
CLASS B THROUGH ADVISOR CLASS
---------------------------------------------------------------- DECEMBER 31, -------------
1999(a) 1998 1997(a) 1996(a) 1995(a) 1999(a) 1999(a)
------- ------- ------- ------- ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 17.79 $ 17.04 $ 14.54 $ 12.75 $ 11.43 $ 21.07 $ 18.33
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income
(loss) (0.09) (0.08) (0.01) (0.10) 0.01 (0.06) 0.12
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Net gains on
securities (both
realized and
unrealized) 5.62 1.15 3.83 1.93 1.31 2.31 5.82
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Total from
investment
operations 5.53 1.07 3.82 1.83 1.32 2.25 5.94
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income -- -- -- -- -- -- --
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Distributions from
net realized gains (0.09) (0.32) (1.32) (0.04) -- (0.09) (0.09)
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.09) (0.32) (1.32) (0.04) -- (0.09) (0.09)
- ----------------------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 23.23 $ 17.79 $ 17.04 $ 14.54 $ 12.75 $ 23.23 $ 24.18
======================= ======= ======= ======= ======= ======= ======= =======
Total return(b) 31.13% 6.34% 26.44% 14.35% 11.55% 10.72% 32.45%
======================= ======= ======= ======= ======= ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $55,785 $17,406 $16,717 $ 5,503 $ 1,254 $ 7,669 $ 2,032
======================= ======= ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net assets:
With fee waivers
and/or
reimbursements 2.34%(c) 2.39% 2.64% 2.65% 2.65%(d) 2.34%(e) 1.34%(c)
======================= ======= ======= ======= ======= ======= ======= =======
Without fee waivers
and/or
reimbursements 2.36%(c) 2.76% 3.62% 6.16% 51.19%(d) 2.36%(e) 1.36%(c)
======================= ======= ======= ======= ======= ======= ======= =======
Ratio of net investment
income (loss) to
average net assets:
With fee waivers
and/or
reimbursements (0.42)%(c) (0.40)% (0.09)% (0.75)% 0.45%(d) (0.42)%(e) 0.58%(c)
======================= ======= ======= ======= ======= ======= ======= =======
Without fee waivers
and/or
reimbursements (0.44)%(c) (0.72)% (1.07)% (4.26)% (48.09)%(d) (0.44)%(e) 0.56%(c)
======================= ======= ======= ======= ======= ======= ======= =======
Ratio of interest
expense to average
net assets -- -- 0.03% -- -- -- --
======================= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate 63% 148% 93% 256% -- 63% 63%
======================= ======= ======= ======= ======= ======= ======= =======
<CAPTION>
ADVISOR CLASS
------------------------------------------------
1998 1997(a) 1996(a) 1995(a)
------ ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $17.37 $ 14.72 $ 12.77 $ 11.43
- ----------------------- ------ ------- ------- -------
Income from investment
operations:
Net investment income
(loss) 0.07 0.15 0.03 0.04
- ----------------------- ------ ------- ------- -------
Net gains on
securities (both
realized and
unrealized) 1.21 3.91 1.96 1.30
- ----------------------- ------ ------- ------- -------
Total from
investment
operations 1.28 4.06 1.99 1.34
- ----------------------- ------ ------- ------- -------
Less distributions:
Dividends from net
investment income -- (0.07) -- --
- ----------------------- ------ ------- ------- -------
Distributions from
net realized gains (0.32) (1.34) (0.04) --
- ----------------------- ------ ------- ------- -------
Total distributions (0.32) (1.41) (0.04) --
- ----------------------- ------ ------- ------- -------
Net asset value, end of
period $18.33 $ 17.37 $ 14.72 $ 12.77
======================= ====== ======= ======= =======
Total return(b) 7.43% 27.78% 15.58% 11.72%
======================= ====== ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $1,038 $ 439 $ 191 $ 81
======================= ====== ======= ======= =======
Ratio of expenses to
average net assets:
With fee waivers
and/or
reimbursements 1.39% 1.64% 1.65% 1.65%(d)
======================= ====== ======= ======= =======
Without fee waivers
and/or
reimbursements 1.76% 2.62% 5.16% 50.19%(d)
======================= ====== ======= ======= =======
Ratio of net investment
income (loss) to
average net assets:
With fee waivers
and/or
reimbursements 0.60% 0.91% 0.25% 1.45%(d)
======================= ====== ======= ======= =======
Without fee waivers
and/or
reimbursements 0.23% (0.07)% (3.26)% (47.09)%(d)
======================= ====== ======= ======= =======
Ratio of interest
expense to average
net assets -- 0.03% -- --
======================= ====== ======= ======= =======
Portfolio turnover rate 148% 93% 256% --
======================= ====== ======= ======= =======
</TABLE>
(a) Calculated based upon average shares outstanding during the period.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $31,150,693 and $1,409,352 for
Class B and Advisor Class, respectively.
(d) Annualized.
(e) Ratios are annualized and based on average net assets of $2,389,446.
NOTE 10-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-10
<PAGE> 113
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series and Shareholders
of AIM Small Cap Growth Fund
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Small Cap Growth Fund (hereafter referred to as the
"Fund") at December 31, 1999, the results of its
operations, the changes in its net assets and the
financial highlights for each of the periods indicated
therein, in conformity with accounting principles
generally accepted in the United States. These financial
statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express
an opinion on these financial statements based on our
audits. We conducted our audits of these financial
statements in accordance with auditing standards
generally accepted in the United States which require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made
by management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian and brokers, provide
a reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-11
<PAGE> 114
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-87.26%
AEROSPACE/DEFENSE-0.22%
Primex Technologies, Inc. 75,000 $ 1,556,250
- --------------------------------------------------------------
AIRLINES-0.28%
Frontier Airlines, Inc.(a) 125,000 1,421,875
- --------------------------------------------------------------
Mesaba Holdings, Inc.(a) 50,000 571,875
- --------------------------------------------------------------
1,993,750
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.11%
Tower Automotive, Inc.(a) 50,000 771,875
- --------------------------------------------------------------
BANKS (REGIONAL)-1.02%
Bank of the Ozarks, Inc. 30,000 585,000
- --------------------------------------------------------------
Columbia Bancorp 30,000 213,750
- --------------------------------------------------------------
Prosperity Bancshares, Inc. 40,000 640,000
- --------------------------------------------------------------
Silicon Valley Bancshares(a) 60,000 2,970,000
- --------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 100,250 1,986,203
- --------------------------------------------------------------
Whitney Holding Corp. 25,000 926,562
- --------------------------------------------------------------
7,321,515
- --------------------------------------------------------------
BIOTECHNOLOGY-0.89%
Caliper Technologies Corp.(a) 95,400 6,367,950
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.57%
Cox Radio, Inc.-Class A(a) 15,000 1,496,250
- --------------------------------------------------------------
Entercom Communications Corp.(a) 50,000 3,300,000
- --------------------------------------------------------------
Radio One, Inc.(a) 70,000 6,440,000
- --------------------------------------------------------------
11,236,250
- --------------------------------------------------------------
BUILDING MATERIALS-0.15%
Simpson Manufacturing Co., Inc.(a) 25,000 1,093,750
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.51%
Cambrex Corp. 40,000 1,377,500
- --------------------------------------------------------------
OM Group, Inc. 60,000 2,066,250
- --------------------------------------------------------------
Optical Coating Laboratory, Inc. 25,000 7,400,000
- --------------------------------------------------------------
10,843,750
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-6.76%
Aether Systems, Inc.(a) 35,000 2,506,875
- --------------------------------------------------------------
Aspect Communications Corp.(a) 100,000 3,912,500
- --------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 10,000 487,500
- --------------------------------------------------------------
Davox Corp.(a) 140,000 2,747,500
- --------------------------------------------------------------
Digital Lightwave, Inc.(a) 90,000 5,760,000
- --------------------------------------------------------------
Finisar Corp.(a) 34,900 3,136,637
- --------------------------------------------------------------
Harmonic, Inc.(a) 40,000 3,797,500
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT-(CONTINUED)
Ortel Corp.(a) 90,000 $ 10,800,000
- --------------------------------------------------------------
Paradyne Networks, Inc.(a) 15,000 408,750
- --------------------------------------------------------------
Polycom, Inc.(a) 105,000 6,687,187
- --------------------------------------------------------------
Proxim, Inc.(a) 50,000 5,500,000
- --------------------------------------------------------------
Tut Systems, Inc.(a) 50,000 2,681,250
- --------------------------------------------------------------
48,425,699
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-0.39%
Visual Networks, Inc.(a) 35,000 2,773,750
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-2.27%
Computer Network Technology Corp.(a) 75,000 1,720,312
- --------------------------------------------------------------
Emulex Corp.(a) 100,000 11,250,000
- --------------------------------------------------------------
Gadzoox Networks, Inc.(a) 75,000 3,267,187
- --------------------------------------------------------------
16,237,499
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-3.65%
Actel Corp.(a) 140,000 3,360,000
- --------------------------------------------------------------
Cybex Computer Products Corp.(a) 65,000 2,632,500
- --------------------------------------------------------------
Key Tronic Corp.(a) 200,000 750,000
- --------------------------------------------------------------
Media 100 Inc.(a) 150,000 3,965,625
- --------------------------------------------------------------
SanDisk Corp.(a) 60,000 5,775,000
- --------------------------------------------------------------
Silicon Storage Technology, Inc.(a) 125,000 5,156,250
- --------------------------------------------------------------
SmartDisk Corp.(a) 23,700 776,175
- --------------------------------------------------------------
Xircom, Inc.(a) 50,000 3,750,000
- --------------------------------------------------------------
26,165,550
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-16.88%
Active Voice Corp.(a) 100,000 2,906,250
- --------------------------------------------------------------
Activision, Inc.(a) 115,000 1,760,937
- --------------------------------------------------------------
Allaire Corp.(a) 30,000 4,350,000
- --------------------------------------------------------------
Allscripts, Inc.(a) 30,000 1,320,000
- --------------------------------------------------------------
Alteon Websystems, Inc.(a) 20,000 1,755,000
- --------------------------------------------------------------
Art Technology Group, Inc.(a) 82,900 10,621,562
- --------------------------------------------------------------
Banyan Systems Inc.(a) 75,000 1,500,000
- --------------------------------------------------------------
Best Software, Inc.(a) 85,000 2,507,500
- --------------------------------------------------------------
Brio Technology, Inc.(a) 40,000 1,680,000
- --------------------------------------------------------------
BSQUARE Corp.(a) 30,500 1,279,094
- --------------------------------------------------------------
Business Objects S.A.-ADR
(France)(a) 35,000 4,676,875
- --------------------------------------------------------------
CacheFlow Inc.(a) 19,000 2,483,062
- --------------------------------------------------------------
Concord Communications, Inc.(a) 30,000 1,331,250
- --------------------------------------------------------------
Documentum, Inc.(a) 50,000 2,993,750
- --------------------------------------------------------------
Entrust Technologies, Inc. 90,000 5,394,375
- --------------------------------------------------------------
Great Plains Software, Inc.(a) 30,000 2,242,500
- --------------------------------------------------------------
</TABLE>
FS-12
<PAGE> 115
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
InfoCure Corp.(a) 75,000 $ 2,339,062
- --------------------------------------------------------------
Integrated Measurement Systems, Inc.(a) 125,000 1,765,625
- --------------------------------------------------------------
ISS Group, Inc.(a) 35,000 2,489,375
- --------------------------------------------------------------
Kronos, Inc.(a) 40,000 2,400,000
- --------------------------------------------------------------
Macromedia, Inc.(a) 10,000 731,250
- --------------------------------------------------------------
Mediaplex, Inc.(a) 100,000 6,275,000
- --------------------------------------------------------------
Micromuse, Inc.(a) 10,000 1,700,000
- --------------------------------------------------------------
MTI Technology Corp.(a) 75,000 2,765,625
- --------------------------------------------------------------
Natural MicroSystems Corp.(a) 100,000 4,681,250
- --------------------------------------------------------------
NEON Systems, Inc.(a) 60,000 2,355,000
- --------------------------------------------------------------
Netegrity, Inc.(a) 50,000 2,846,875
- --------------------------------------------------------------
nFront, Inc.(a) 50,000 1,000,000
- --------------------------------------------------------------
Open TV Corp.(a) 70,000 5,617,500
- --------------------------------------------------------------
pcOrder.com, Inc.(a) 40,000 2,040,000
- --------------------------------------------------------------
QRS Corp.(a) 30,000 3,150,000
- --------------------------------------------------------------
Radiant Systems, Inc.(a) 155,000 6,229,062
- --------------------------------------------------------------
RadiSys Corp.(a) 75,000 3,825,000
- --------------------------------------------------------------
Rare Medium Group, Inc.(a) 150,000 5,118,750
- --------------------------------------------------------------
ScanSource, Inc.(a) 85,000 3,447,812
- --------------------------------------------------------------
Scientific Learning Corp.(a) 23,100 843,150
- --------------------------------------------------------------
Spyglass, Inc.(a) 35,000 1,327,266
- --------------------------------------------------------------
Talk City, Inc.(a) 150,000 3,918,750
- --------------------------------------------------------------
Transaction Systems Architects,
Inc.-Class A(a) 85,000 2,380,000
- --------------------------------------------------------------
TSI International Software Ltd.(a) 25,000 1,415,625
- --------------------------------------------------------------
Xpedior Inc.(a) 49,000 1,408,750
- --------------------------------------------------------------
120,872,882
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.19%
Fossil, Inc.(a) 60,000 1,387,500
- --------------------------------------------------------------
CONSUMER FINANCE-0.24%
AmeriCredit Corp.(a) 30,000 555,000
- --------------------------------------------------------------
Federal Agricultural Mortgage
Corp.-Class C(a) 57,000 1,150,687
- --------------------------------------------------------------
1,705,687
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.32%
Accredo Health, Inc.(a) 75,000 2,306,250
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-5.36%
Cree Research, Inc.(a) 70,000 5,976,250
- --------------------------------------------------------------
Crossroads Systems, Inc.(a) 15,000 1,267,500
- --------------------------------------------------------------
Helix Technology Corp. 80,000 3,585,000
- --------------------------------------------------------------
Kemet Corp.(a) 85,000 3,830,312
- --------------------------------------------------------------
LaserSight, Inc.(a) 75,000 750,000
- --------------------------------------------------------------
Optimal Robotics Corp.(a) 85,000 3,166,250
- --------------------------------------------------------------
Pinnacle Systems, Inc.(a) 100,000 4,068,750
- --------------------------------------------------------------
Rayovac Corp.(a) 45,000 849,375
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
Sawtek, Inc.(a) 100,000 $ 6,656,250
- --------------------------------------------------------------
Three-Five Systems, Inc.(a) 166,666 6,833,306
- --------------------------------------------------------------
Veeco Instruments Inc.(a) 30,000 1,404,375
- --------------------------------------------------------------
38,387,368
- --------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-2.19%
C-COR.net Corp.(a) 100,000 7,662,500
- --------------------------------------------------------------
Kent Electronics Corp.(a) 70,000 1,592,500
- --------------------------------------------------------------
Power-One, Inc.(a) 140,000 6,413,750
- --------------------------------------------------------------
15,668,750
- --------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.71%
Aeroflex, Inc.(a) 100,000 1,037,500
- --------------------------------------------------------------
Anaren Microwave, Inc.(a) 75,000 4,059,375
- --------------------------------------------------------------
5,096,875
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-2.45%
Alpha Industries, Inc.(a) 80,000 4,585,000
- --------------------------------------------------------------
Methode Electronics, Inc.-Class A 100,000 3,212,500
- --------------------------------------------------------------
Photon Dynamics, Inc.(a) 65,000 2,518,750
- --------------------------------------------------------------
Tektronix, Inc. 65,000 2,526,875
- --------------------------------------------------------------
Varian Inc.(a) 210,000 4,725,000
- --------------------------------------------------------------
17,568,125
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-3.83%
ANADIGICS, Inc.(a) 100,000 4,718,750
- --------------------------------------------------------------
Applied Micro Circuits Corp.(a) 20,000 2,545,000
- --------------------------------------------------------------
Elantec Semiconductor, Inc.(a) 150,000 4,950,000
- --------------------------------------------------------------
GlobeSpan, Inc.(a) 50,000 3,256,250
- --------------------------------------------------------------
MIPS Technologies, Inc.(a) 50,000 2,600,000
- --------------------------------------------------------------
PLX Technology, Inc.(a) 40,000 757,500
- --------------------------------------------------------------
S3, Inc.(a) 75,000 867,187
- --------------------------------------------------------------
TranSwitch Corp.(a) 30,050 2,180,503
- --------------------------------------------------------------
Zoran Corp.(a) 100,000 5,575,000
- --------------------------------------------------------------
27,450,190
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.20%
Advanced Energy Industries, Inc.(a) 50,000 2,462,500
- --------------------------------------------------------------
Asyst Technologies, Inc.(a) 100,000 6,556,250
- --------------------------------------------------------------
Brooks Automation, Inc.(a) 75,000 2,442,188
- --------------------------------------------------------------
Credence Systems Corp.(a) 25,000 2,162,500
- --------------------------------------------------------------
Kulicke & Soffa Industries, Inc.(a) 50,000 2,128,125
- --------------------------------------------------------------
15,751,563
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.18%
Advanta Corp.-Class B 90,000 1,265,625
- --------------------------------------------------------------
FOODS-0.70%
Ben & Jerry's Homemade, Inc.-Class
A(a) 45,000 1,119,375
- --------------------------------------------------------------
</TABLE>
FS-13
<PAGE> 116
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOODS-(CONTINUED)
Hain Food Group, Inc. (The)(a) 75,000 $ 1,678,125
- --------------------------------------------------------------
Horizon Organic Holding Corp.(a) 100,000 750,000
- --------------------------------------------------------------
United Natural Foods, Inc.(a) 120,000 1,440,000
- --------------------------------------------------------------
4,987,500
- --------------------------------------------------------------
FOOTWEAR-0.15%
Saucony, Inc.(a) 75,000 1,106,250
- --------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.71%
Hollywood Park, Inc.(a) 150,000 3,365,625
- --------------------------------------------------------------
Station Casinos, Inc.(a) 75,000 1,682,813
- --------------------------------------------------------------
5,048,438
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-2.50%
Anesta Corp.(a) 215,000 3,695,313
- --------------------------------------------------------------
Barr Laboratories, Inc.(a) 11,800 370,225
- --------------------------------------------------------------
Jones Pharma, Inc. 28,200 1,224,938
- --------------------------------------------------------------
Maxygen Inc.(a) 50,000 3,550,000
- --------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class
A(a) 75,000 3,192,188
- --------------------------------------------------------------
Metricom, Inc.(a) 50,000 3,931,250
- --------------------------------------------------------------
Penwest Pharmaceuticals Co.(a) 125,000 1,906,250
- --------------------------------------------------------------
17,870,164
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.82%
LifePoint Hospitals, Inc.(a) 275,000 3,248,438
- --------------------------------------------------------------
Triad Hospitals Holdings Inc.(a) 175,000 2,646,875
- --------------------------------------------------------------
5,895,313
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.67%
Biosite Diagnostics, Inc.(a) 100,000 1,600,000
- --------------------------------------------------------------
EndoSonics Corp.(a) 300,000 1,350,000
- --------------------------------------------------------------
Mentor Corp. 65,000 1,677,813
- --------------------------------------------------------------
PolyMedica Corp.(a) 90,000 2,081,250
- --------------------------------------------------------------
ResMed, Inc.(a) 35,000 1,461,250
- --------------------------------------------------------------
Zoll Medical Corp.(a) 100,000 3,818,750
- --------------------------------------------------------------
11,989,063
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-1.76%
Advance Paradigm, Inc.(a) 40,000 862,500
- --------------------------------------------------------------
Capital Senior Living Corp.(a) 150,000 759,375
- --------------------------------------------------------------
CareInsite, Inc.(a) 35,000 2,817,500
- --------------------------------------------------------------
Hooper Holmes, Inc. 24,400 628,300
- --------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 50,000 596,875
- --------------------------------------------------------------
Priority Healthcare Corp.(a) 50,000 1,446,875
- --------------------------------------------------------------
Techne Corp.(a) 100,000 5,506,250
- --------------------------------------------------------------
12,617,675
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.05%
Annuity and Life Reassurance, Ltd.
(Bermuda) 13,000 339,625
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE
(PROPERTY-CASUALTY)-0.14%
Medical Assurance, Inc. 48,350 $ 1,024,416
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.35%
Charles River Associates, Inc.(a) 75,000 2,512,500
- --------------------------------------------------------------
IRON & STEEL-0.21%
Gibraltar Steel Corp. 65,000 1,519,375
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-2.16%
JAKKS Pacific, Inc.(a) 90,000 1,681,875
- --------------------------------------------------------------
Meade Instruments Corp.(a) 120,000 3,420,000
- --------------------------------------------------------------
Monaco Coach Corp.(a) 75,000 1,917,188
- --------------------------------------------------------------
National R.V. Holdings, Inc.(a) 85,000 1,636,250
- --------------------------------------------------------------
THQ Inc.(a) 97,500 2,260,781
- --------------------------------------------------------------
Zomax Optical Media, Inc.(a) 100,000 4,525,000
- --------------------------------------------------------------
15,441,094
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.29%
Terex Corp.(a) 75,000 2,081,250
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.14%
Kopin Corp.(a) 140,000 5,880,000
- --------------------------------------------------------------
Spartech Corp. 70,000 2,257,500
- --------------------------------------------------------------
8,137,500
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.91%
Applied Science and Technology,
Inc.(a) 125,000 4,154,297
- --------------------------------------------------------------
Dril-Quip, Inc.(a) 40,000 1,215,000
- --------------------------------------------------------------
Summa Industries(a) 100,000 1,156,250
- --------------------------------------------------------------
6,525,547
- --------------------------------------------------------------
METAL FABRICATORS-0.27%
Shaw Group, Inc.(a) 75,000 1,898,438
- --------------------------------------------------------------
NATURAL GAS-0.25%
Kinder Morgan, Inc. 90,000 1,816,875
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.32%
Miami Computer Supply Corp.(a)(b) 60,800 2,257,200
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-2.90%
Cal Dive International, Inc.(a) 50,000 1,656,250
- --------------------------------------------------------------
CARBO Ceramics, Inc. 55,000 1,203,125
- --------------------------------------------------------------
Core Laboratories N.V.
(Netherlands)(a) 60,000 1,203,750
- --------------------------------------------------------------
Gulfmark Offshore, Inc.(a) 50,000 731,250
- --------------------------------------------------------------
Hanover Compressor Co.(a) 50,000 1,887,500
- --------------------------------------------------------------
Key Energy Group, Inc.(a) 250,000 1,296,875
- --------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 150,000 3,365,625
- --------------------------------------------------------------
Maverick Tube Corp.(a) 100,000 2,468,750
- --------------------------------------------------------------
Pride International, Inc.(a) 200,000 2,925,000
- --------------------------------------------------------------
</TABLE>
FS-14
<PAGE> 117
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
UTI Energy Corp.(a) 175,000 $ 4,035,938
- --------------------------------------------------------------
20,774,063
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.21%
Cabot Oil & Gas Corp.-Class A 55,000 883,438
- --------------------------------------------------------------
Evergreen Resources, Inc.(a) 95,000 1,876,250
- --------------------------------------------------------------
Louis Dreyfus Natural Gas Corp.(a) 110,000 1,993,750
- --------------------------------------------------------------
Newfield Exploration Co.(a) 125,000 3,343,750
- --------------------------------------------------------------
Stone Energy Corp.(a) 15,000 534,375
- --------------------------------------------------------------
8,631,563
- --------------------------------------------------------------
PERSONAL CARE-0.07%
Steiner Leisure Ltd.(a) 28,400 473,925
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-0.03%
Correctional Properties Trust 20,000 245,000
- --------------------------------------------------------------
RESTAURANTS-1.72%
P.F. Chang's China Bistro, Inc.(a) 125,000 3,109,375
- --------------------------------------------------------------
PJ America, Inc.(a) 100,000 1,550,000
- --------------------------------------------------------------
Rare Hospitality International,
Inc.(a) 110,000 2,380,469
- --------------------------------------------------------------
Rubio's Restaurants, Inc.(a) 125,000 1,000,000
- --------------------------------------------------------------
Sonic Corp.(a) 115,000 3,277,500
- --------------------------------------------------------------
Taco Cabana-Class A(a) 125,000 1,015,625
- --------------------------------------------------------------
12,332,969
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.31%
Tweeter Home Entertainment Group,
Inc.(a) 170,000 6,035,000
- --------------------------------------------------------------
Ultimate Electronics, Inc.(a) 135,000 3,341,250
- --------------------------------------------------------------
9,376,250
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.24%
99 Cents Only Stores(a) 45,000 1,721,250
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.26%
Wild Oats Markets, Inc.(a) 82,500 1,830,469
- --------------------------------------------------------------
RETAIL (SPECIALTY)-1.45%
BOWLIN Outdoor Advertising &
Travel Centers Inc.(a) 50,000 262,500
- --------------------------------------------------------------
Coldwater Creek, Inc.(a) 100,000 2,050,000
- --------------------------------------------------------------
CSK Auto Corp.(a) 80,000 1,400,000
- --------------------------------------------------------------
Hollywood Entertainment Corp.(a) 220,000 3,190,000
- --------------------------------------------------------------
Rent-Way, Inc.(a) 65,000 1,214,688
- --------------------------------------------------------------
Sunglass Hut International, Inc.(a) 200,000 2,250,000
- --------------------------------------------------------------
10,367,188
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-2.20%
Braun's Fashions Corp.(a) 127,500 2,677,500
- --------------------------------------------------------------
Chico's Fas, Inc.(a) 70,000 2,633,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
Children's Place Retail Stores,
Inc. (The)(a) 90,000 $ 1,479,375
- --------------------------------------------------------------
Deb Shops, Inc. 112,500 2,081,250
- --------------------------------------------------------------
Factory 2-U Stores, Inc.(a) 75,000 2,128,125
- --------------------------------------------------------------
Too Inc.(a) 275,000 4,743,750
- --------------------------------------------------------------
15,743,750
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.23%
Bay View Capital Corp. 70,000 993,125
- --------------------------------------------------------------
Queens County Bancorp, Inc. 25,000 678,125
- --------------------------------------------------------------
1,671,250
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.24%
Lamar Advertising Co.(a) 8,600 520,838
- --------------------------------------------------------------
Professional Detailing, Inc.(a) 40,000 1,197,500
- --------------------------------------------------------------
1,718,338
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.96%
Avis Rent A Car, Inc.(a) 100,000 2,556,250
- --------------------------------------------------------------
Cerner Corp.(a) 30,000 590,625
- --------------------------------------------------------------
Championship Auto Racing Teams, Inc.(a) 70,000 1,610,000
- --------------------------------------------------------------
Copart, Inc.(a) 80,000 3,480,000
- --------------------------------------------------------------
F.Y.I., Inc.(a) 80,000 2,720,000
- --------------------------------------------------------------
Iron Mountain Inc.(a) 59,150 2,325,334
- --------------------------------------------------------------
Provant, Inc.(a) 150,000 3,787,500
- --------------------------------------------------------------
Vialink Co. (The)(a) 100,000 3,637,500
- --------------------------------------------------------------
Wilmar Industries, Inc.(a) 30,000 521,250
- --------------------------------------------------------------
21,228,459
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.25%
Brocade Communications Systems,
Inc.(a) 30,000 5,310,000
- --------------------------------------------------------------
Insight Enterprises, Inc.(a) 89,875 3,651,172
- --------------------------------------------------------------
8,961,172
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.44%
CheckFree Holdings Corp.(a) 20,000 2,090,000
- --------------------------------------------------------------
Mecon, Inc.(a) 100,000 1,081,250
- --------------------------------------------------------------
3,171,250
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.56%
AirGate PCS Inc.(a) 50,000 2,637,500
- --------------------------------------------------------------
Phone.com, Inc.(a) 18,000 2,086,875
- --------------------------------------------------------------
Powerwave Technologies, Inc.(a) 110,000 6,421,250
- --------------------------------------------------------------
11,145,625
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.67%
Primus Telecommunications Group,
Inc.(a) 125,000 4,781,250
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.31%
Cutter & Buck, Inc.(a) 45,000 680,625
- --------------------------------------------------------------
</TABLE>
FS-15
<PAGE> 118
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TEXTILES (APPAREL)-(CONTINUED)
Quicksilver, Inc.(a) 100,000 $ 1,550,000
- --------------------------------------------------------------
2,230,625
- --------------------------------------------------------------
TRUCKS & PARTS-0.44%
Mobile Mini, Inc.(a) 145,000 3,117,500
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$392,751,939) 624,838,522
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES-0.09%
U.S. TREASURY BILLS-0.09%(C)
5.37%, 03/23/00 (Cost $632,318) $ 640,000(d) 632,896
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-11.68%
STIC Liquid Assets Portfolio(e) 41,838,104 $ 41,838,104
- --------------------------------------------------------------
STIC Prime Portfolio(e) 41,838,104 41,838,104
- --------------------------------------------------------------
Total Money Market Funds (Cost
$83,676,208) 83,676,208
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.03%
(Cost $477,060,465) 709,147,626
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.97% 6,913,197
- --------------------------------------------------------------
NET ASSETS-100.00% $716,060,823
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security fair valued in accordance with procedures established by the Board
of Trustees.
(c) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(d) Principal balance was pledged as collateral to cover margin requirements for
open futures contracts. See Note 7.
(e) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-16
<PAGE> 119
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$477,060,465) $709,147,626
- ---------------------------------------------------------
Receivables for:
Investments sold 299,618
- ---------------------------------------------------------
Fund shares sold 8,630,278
- ---------------------------------------------------------
Dividends and interest 443,497
- ---------------------------------------------------------
Due from Advisor 14,220
- ---------------------------------------------------------
Variation margin 240,000
- ---------------------------------------------------------
Other assets 67,487
- ---------------------------------------------------------
Total assets 718,842,726
- ---------------------------------------------------------
LIABILITIES:
Payable for Fund shares reacquired 1,293,978
- ---------------------------------------------------------
Accrued advisory fees 410,194
- ---------------------------------------------------------
Accrued distribution fees 577,916
- ---------------------------------------------------------
Accrued accounting service fees 13,775
- ---------------------------------------------------------
Accrued transfer agent fees 155,808
- ---------------------------------------------------------
Accrued operating expenses 330,232
- ---------------------------------------------------------
Total liabilities 2,781,903
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $716,060,823
=========================================================
NET ASSETS:
Class A $428,378,374
=========================================================
Class B $240,149,578
=========================================================
Class C $ 40,530,279
=========================================================
Advisor Class $ 7,002,592
- ---------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 13,440,458
=========================================================
Class B 7,766,450
=========================================================
Class C 1,311,422
=========================================================
Advisor Class 216,588
=========================================================
Class A:
Net asset value and redemption price per
share $ 31.87
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $31.87 / 94.50%) $ 33.72
=========================================================
Class B:
Net asset value and offering price per
share $ 30.92
=========================================================
Class C:
Net asset value and offering price per
share $ 30.91
=========================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 32.33
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 1,254,596
- ---------------------------------------------------------
Interest 1,456,258
- ---------------------------------------------------------
Securities lending income 279,432
- ---------------------------------------------------------
Total investment income 2,990,286
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 1,875,802
- ---------------------------------------------------------
Accounting service fees 71,480
- ---------------------------------------------------------
Custodian fees 76,751
- ---------------------------------------------------------
Distribution fees -- Class A 539,031
- ---------------------------------------------------------
Distribution fees -- Class B 917,864
- ---------------------------------------------------------
Distribution fees -- Class C 102,966
- ---------------------------------------------------------
Transfer agent fees 618,873
- ---------------------------------------------------------
Trustees' fees 5,133
- ---------------------------------------------------------
Other 446,018
- ---------------------------------------------------------
Total expenses 4,653,918
- ---------------------------------------------------------
Less: Expenses paid indirectly (6,951)
- ---------------------------------------------------------
Fees reimbursed by advisor (14,220)
- ---------------------------------------------------------
Net expenses 4,632,747
- ---------------------------------------------------------
Net investment income (loss) (1,642,461)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM
INVESTMENT SECURITIES AND FUTURES
CONTRACTS:
Net realized gain from:
Investment securities 12,628,738
- ---------------------------------------------------------
Futures contracts 494,525
- ---------------------------------------------------------
13,123,263
- ---------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 222,453,296
- ---------------------------------------------------------
Futures contracts 818,250
- ---------------------------------------------------------
223,271,546
- ---------------------------------------------------------
Net gain from investment securities and
futures contracts 236,394,809
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $234,752,348
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-17
<PAGE> 120
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,642,461) $ (555,353)
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities and futures
contracts 13,123,263 988,423
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and futures contracts 223,271,546 8,890,666
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 234,752,348 9,323,736
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES:
Class A (6,938,952) (576,954)
- --------------------------------------------------------------------------------------------
Class B (4,091,568) (733,412)
- --------------------------------------------------------------------------------------------
Class C (691,265) --
- --------------------------------------------------------------------------------------------
Advisor Class (114,504) (30,675)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A 270,390,201 9,846,073
- --------------------------------------------------------------------------------------------
Class B 136,647,909 1,291,586
- --------------------------------------------------------------------------------------------
Class C 30,105,480 --
- --------------------------------------------------------------------------------------------
Advisor Class 3,770,311 (600,234)
- --------------------------------------------------------------------------------------------
Net increase in net assets 663,829,960 18,520,120
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 52,230,863 33,710,743
- --------------------------------------------------------------------------------------------
End of period $716,060,823 $52,230,863
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $483,809,241 $42,095,396
- --------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,324) --
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (losses) from investment
securities and futures contracts (805,505) 348,602
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 233,058,411 9,786,865
- --------------------------------------------------------------------------------------------
$716,060,823 $52,230,863
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-18
<PAGE> 121
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Small Cap Growth Fund (the "Fund") is a separate series of AIM Growth Series
(the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares are sold
without a sales charge. Effective November 8, 1999, the Fund discontinued sales
of its shares to new investors. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objective is long-term growth of capital. The Fund
invests substantially all of its investable assets in Small Cap Portfolio (the
"Portfolio"). The Portfolio is organized as a Delaware business trust which is
registered under the 1940 Act as an open-end management investment company.
The Portfolio has investment objectives, policies and limitations
substantially identical to those of the Fund. Therefore, the financial
statements of the Fund and Portfolio have been presented on a consolidated
basis, and represent all activities of both the Fund and Portfolio. Through
December 31, 1999, all of the shares of beneficial interest of the Portfolio
were owned by either the Fund or INVESCO, Inc., which has a nominal ($100)
investment in the Portfolio.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Fund and the Portfolio in the preparation of their financial
statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
and Portfolio's officers in a manner specifically authorized by the Boards
of Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of trading of the New
York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Boards of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded
on the accrual basis. Dividend income is recorded on the ex-dividend date.
On December 31, 1999, undistributed net investment income was increased by
$1,641,137, undistributed net realized gains decreased by $2,441,081 and
paid-in capital increased by $799,944 as a result of differing book/tax
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to
FS-19
<PAGE> 122
shareholders. Therefore, no provision for federal income taxes is recorded
in the financial statements.
E. Futures Contracts -- The Portfolio may purchase or sell futures contracts as
a hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Portfolio's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Portfolio recognizes a realized gain or loss equal to the
difference between the proceeds from, or cost of, the closing transaction
and the Portfolio's basis in the contract. Risks include the possibility of
an illiquid market and that a change in value of the contracts may not
correlate with changes in the value of the securities being hedged.
F. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's and the Portfolio's investment
manager and administrator. The Fund pays AIM administration fees at an annual
rate of 0.25% of the Fund's average daily net assets. The Portfolio pays AIM
investment management and administration fees at an annual rate of 0.475% on the
first $500 million of the Portfolio's average daily net assets, plus 0.45% on
the next $500 million of the Portfolio's average daily net assets, plus 0.425%
on the next $500 million of the Portfolio's average daily net assets, plus 0.40%
on the Portfolio's average daily net assets exceeding $1.5 billion. AIM has
contractually agreed to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the maximum annual
rate of 1.75%, 2.40%, 2.40% and 1.40% of the average daily net assets of the
Fund's Class A, Class B, Class C and Advisor Class shares, respectively. During
the year ended December 31, 1999, AIM reimbursed expenses of $14,220.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund and the Portfolio. Prior to July 1,
1999, AIM was the pricing and accounting agent for the Fund and the Portfolio.
The monthly fee for these services paid to AIM was a percentage, not to exceed
0.03% annually, of a Fund's average daily net assets. The annual fee rate was
derived based on the aggregate net assets of the funds which comprised the
following investment companies: AIM Growth Series, AIM Investment Funds, AIM
Series Trust, G.T. Global Variable Investment Series and G.T. Global Variable
Investment Trust. The fee was calculated at the rate of 0.03% of the first $5
billion of assets and 0.02% to the assets in excess of $5 billion. An amount was
allocated to and paid by each such fund based on its relative average daily net
assets. For the year ended December 31, 1999, AIM was paid $71,480 for such
services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $376,880 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $539,031, $917,864 and
$102,966, respectively, as compensation under the Plans.
AIM Distributors received commissions of $445,188 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $6,567 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $6,951 an under expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of $6,951
during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may
FS-20
<PAGE> 123
borrow on a first come, first served basis. During the year ended December 31,
1999, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period. Prior to
May 28, 1999, the Fund, along with certain other funds advised and/or
administered by AIM, had a line of credit with BankBoston and State Street Bank
& Trust Company. The arrangements with the banks allowed 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 was limited to borrowing up to 33 1/3% of the
Fund's total assets.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, securities with an aggregate value of $45,086,775 were on
loan to brokers. The loans were secured by cash collateral of $45,988,734
received by the Portfolio. For the year ended December 31, 1999, the Portfolio
received fees of $279,432 for securities lending.
For international securities, cash collateral is received by the Portfolio
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. The 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 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Portfolio during the year ended December 31, 1999 was
$469,445,449 and $122,073,002, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $246,144,254
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (14,348,086)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $231,796,168
=========================================================
Cost of investments for tax purposes is $477,351,458.
</TABLE>
NOTE 7-FUTURES CONTRACTS
On December 31, 1999, $640,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
VALUE OF
NO. OF MONTH/ OPEN FUTURES UNREALIZED
CONTRACT CONTRACTS COMMITMENT CONTRACTS APPRECIATION
-------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Russell 2000 Index 50 Mar-00/Buy $12,748,750 $971,250
===========================================================================
</TABLE>
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 15,474,167 $344,003,621 2,808,949 $ 42,444,424
- -------------------------------------------------------------------------------------------------------------------
Class B 7,141,182 155,840,300 1,807,272 26,359,785
- -------------------------------------------------------------------------------------------------------------------
Class C* 1,410,849 32,179,389 -- --
- -------------------------------------------------------------------------------------------------------------------
Advisor Class 212,227 5,059,330 63,569 992,118
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 228,165 6,579,456 35,278 549,813
- -------------------------------------------------------------------------------------------------------------------
Class B 140,437 3,930,835 45,364 690,497
- -------------------------------------------------------------------------------------------------------------------
Class C* 22,964 642,307 -- --
- -------------------------------------------------------------------------------------------------------------------
Advisor Class 3,551 103,864 1,482 23,320
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (3,714,103) (80,192,876) (2,155,365) (33,148,164)
- -------------------------------------------------------------------------------------------------------------------
Class B (1,104,856) (23,123,226) (1,772,161) (25,758,696)
- -------------------------------------------------------------------------------------------------------------------
Class C* (122,391) (2,716,216) -- --
- -------------------------------------------------------------------------------------------------------------------
Advisor Class (59,938) (1,392,883) (114,990) (1,615,672)
- -------------------------------------------------------------------------------------------------------------------
19,632,254 $440,913,901 719,398 $ 10,537,425
===================================================================================================================
</TABLE>
* Class C Shares commenced sales on May 3, 1999.
FS-21
<PAGE> 124
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A, Class B, and
Advisor Class outstanding during each of the years in the four-year period ended
December 31, 1999 and the period October 18, 1995 (date operations commenced)
through December 31, 1995 and for a share of Class C outstanding during the
period May 3, 1999 (date sales commenced) through December 31, 1999.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.03 $ 14.27 $ 12.52 $11.80 $11.43
- ------------------------------------------------------------------- ------- ------- ------ ------
Income from investment operations:
Net investment income (loss) (0.09) (0.19) (0.18) (0.05) 0.04
- ------------------------------------------------------------------- ------- ------- ------ ------
Net gains on securities (both realized and unrealized) 15.47 3.45 2.20 1.69 0.33
- ------------------------------------------------------------------- ------- ------- ------ ------
Total from investment operations 15.38 3.26 2.02 1.64 0.37
- ------------------------------------------------------------------- ------- ------- ------ ------
Less distributions from net realized gains (0.54) (0.50) (0.27) (0.92) --
- ------------------------------------------------------------------- ------- ------- ------ ------
Net asset value, end of period $ 31.87 $ 17.03 $ 14.27 $12.52 $11.80
============================================================ ======== ======= ======= ======= =======
Total return(b) 90.64% 23.15% 16.23% 13.81% 3.24%
============================================================ ======== ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $428,378 $24,737 $10,896 $8,448 $1,931
============================================================ ======== ======= ======= ======= =======
Ratio of expenses to average net assets:
With fee waivers and/or reimbursements 1.54%(c) 1.76% 1.92% 2.00% 2.00%(d)
- ------------------------------------------------------------------- ------- ------- ------ ------
Without fee waivers and/or reimbursements 1.54%(c) 2.20% 2.52% 3.09% 24.20%(d)
============================================================ ======== ======= ======= ======= =======
Ratio of net investment income (loss) to average net assets:
With fee waivers and/or reimbursements (0.38)%(c) (1.29)% (1.40)% (0.38)% 1.68%(d)
- ------------------------------------------------------------------- ------- ------- ------ ------
Without fee waivers and/or reimbursements (0.38)%(c) (1.73)% (2.00)% (1.47)% (20.52)%(d)
============================================================ ======== ======= ======= ======= =======
Portfolio turnover rate 56% 190% 233% 150% --
============================================================ ======== ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $154,008,731.
(d) Annualized.
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------ --------------------
MAY 3, 1999
THROUGH
1999(a) 1998(a) 1997(a) 1996(a) 1995(a) DECEMBER 31, 1999(a)
-------- ------- ------- ------- ------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.64 $14.06 $12.42 $11.78 $11.43 $ 19.03
- ---------------------------------------- -------- ------- ------- ------- ------ -------
Income from investment operations:
Net investment income (loss) (0.24) (0.29) (0.26) (0.14) 0.02 (0.17)
- ---------------------------------------- -------- ------- ------- ------- ------ -------
Net gains on securities (both realized
and unrealized) 15.06 3.37 2.17 1.70 0.33 12.59
- ---------------------------------------- -------- ------- ------- ------- ------ -------
Total from investment operations 14.82 3.08 1.91 1.56 0.35 12.42
- ---------------------------------------- -------- ------- ------- ------- ------ -------
Less distributions from net realized
gains (0.54) (0.50) (0.27) (0.92) -- (0.54)
- ---------------------------------------- -------- ------- ------- ------- ------ -------
Net asset value, end of period $ 30.92 $16.64 $14.06 $12.42 $11.78 $ 30.91
======================================== ======== ======= ======= ======= ====== =======
Total return(b) 89.40% 22.22% 15.47% 13.14% 3.06% 65.56%
======================================== ======== ======= ======= ======= ====== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $240,150 $26,448 $21,222 $10,694 $2,024 $40,530
======================================== ======== ======= ======= ======= ====== =======
Ratio of expenses to average net assets:
With fee waivers and/or reimbursements 2.19%(c) 2.40% 2.57% 2.65% 2.65%(e) 2.19%(d)
======================================== ======== ======= ======= ======= ====== =======
Without fee waivers and/or
reimbursements 2.19%(c) 2.85% 3.17% 3.74% 24.85%(e) 2.19%(d)
======================================== ======== ======= ======= ======= ====== =======
Ratio of net investment income (loss) to
average net assets:
With fee waivers and/or reimbursements (1.03)%(c)(1.96)% (2.05)% (1.03)% 1.03%(e) (1.03)%(d)
======================================== ======== ======= ======= ======= ====== =======
Without fee waivers and/or
reimbursements (1.03)%(c)(2.40)% (2.65)% (2.12)% (21.17)%(e) (1.03)%(d)
======================================== ======== ======= ======= ======= ====== =======
Portfolio turnover rate 56% 190% 233% 150% -- 56%
======================================== ======== ======= ======= ======= ====== =======
<CAPTION>
ADVISOR CLASS
-----------------------------------------------
1999(a) 1998(a) 1997(a) 1996 1995(a)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.21 $14.39 $12.58 $11.81 $ 11.43
- ---------------------------------------- ------ ------ ------ ------ -------
Income from investment operations:
Net investment income (loss) (0.01) (0.14) (0.14) 0.00 0.05
- ---------------------------------------- ------ ------ ------ ------ -------
Net gains on securities (both realized
and unrealized) 15.67 3.46 2.22 1.69 0.33
- ---------------------------------------- ------ ------ ------ ------ -------
Total from investment operations 15.66 3.32 2.08 1.69 0.38
- ---------------------------------------- ------ ------ ------ ------ -------
Less distributions from net realized
gains (0.54) (0.50) (0.27) (0.92) --
- ---------------------------------------- ------ ------ ------ ------ -------
Net asset value, end of period $32.33 $17.21 $14.39 $12.58 $ 11.81
======================================== ====== ====== ====== ====== =======
Total return(b) 91.32% 23.38% 16.63% 14.22% 3.32%
======================================== ====== ====== ====== ====== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,003 $1,045 $1,592 $ 435 $ 52
======================================== ====== ====== ====== ====== =======
Ratio of expenses to average net assets:
With fee waivers and/or reimbursements 1.19%(c) 1.40% 1.57% 1.65% 1.65%(e)
======================================== ====== ====== ====== ====== =======
Without fee waivers and/or
reimbursements 1.19%(c) 1.84% 2.17% 2.74% 23.85%(e)
======================================== ====== ====== ====== ====== =======
Ratio of net investment income (loss) to
average net assets:
With fee waivers and/or reimbursements (0.03)%(c) (0.95)% (1.05)% (0.03)% 2.03%(e)
======================================== ====== ====== ====== ====== =======
Without fee waivers and/or
reimbursements (0.03)%(c) (1.39)% (1.65)% (1.12)% (20.17)%(e)
======================================== ====== ====== ====== ====== =======
Portfolio turnover rate 56% 190% 233% 150% --
======================================== ====== ====== ====== ====== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $91,786,448 for Class B and
$2,639,553 for Advisor Class.
(d) Ratios are annualized and based on average net assets of $15,466,094.
(e) Annualized.
NOTE 10-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-22
<PAGE> 125
AIM EUROLAND GROWTH FUND
------------------------------------------------------------------------
AIM Euroland Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 126
------------------------
AIM EUROLAND GROWTH FUND
------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE
FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM
Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 127
------------------------
AIM EUROLAND GROWTH FUND
------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing normally, at least 65% of
its total assets in equity securities of issuers domiciled in countries that are
members of the European Economic and Monetary Union (EMU). These countries are
designated as the fund's primary investment area. The fund typically considers a
company to be domiciled in a particular country if it (1) is organized under the
laws of a particular country or has its principal office in a particular
country; or (2) derives 50% or more of its total revenues from business in that
country, provided that, in the view of the portfolio manager, the value of the
issuer's securities tends to reflect such country's development to a greater
extent than developments elsewhere.
The fund will normally invest at least 65% of its total assets in equity
securities of large capitalization companies. These securities may include
common stocks, convertible bonds, convertible preferred stocks and warrants of
companies with market capitalizations within the range of the market
capitalizations of companies in the top 50% of the Morgan Stanley Capital
International Europe Index at the time of purchase.
The fund may invest up to 35% of its total assets in equity securities of
issuers domiciled in developed countries outside of its primary investment area
or in U.S. and foreign investment-grade debt securities, or securities deemed by
the portfolio managers to be of comparable quality.
In selecting investments, the portfolio managers seek to identify those
countries and industries where political and economic factors, including
currency movements, are likely to produce above-average growth rates. The
portfolio managers then balance the potential benefits with the risks of
investing in those countries and industries. The portfolio managers allocate
investments among fixed-income securities based on his views as to the best
values then available in the marketplace. The portfolio managers consider
whether to sell a particular security when any of those factors materially
changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash (U.S. dollars, foreign currencies or
multinational currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. In anticipation of or in
response to adverse market conditions or for defensive purposes, the fund may
temporarily invest up to 100% of its total assets in the securities of U.S.
issuers and denominated in U.S. dollars. As a result, the fund may not achieve
its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
Because the fund focuses its investments in member countries of EMU, the value
of your shares may rise and fall more than the value of shares of a fund that
invests in a broader geographic region.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's investments may be
adversely affected by political and social instability in their home countries
and by changes in economic or taxation policies.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 128
------------------------
AIM EUROLAND GROWTH FUND
------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ....................................... -14.72%
1991 ....................................... 4.33%
1992 ....................................... -11.26%
1993 ....................................... 28.32%
1994 ....................................... -5.80%
1995 ....................................... 9.86%
1996 ....................................... 19.61%
1997 ....................................... 11.20%
1998 ....................................... 16.63%
1999 ....................................... 35.14%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
41.45% (quarter ended December 31, 1999) and the lowest quarterly return was
- -21.04% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 27.72% 16.83% 7.58% 14.01% 7/19/85
Class B 29.19 17.17 -- 14.63 4/1/93
Class C -- -- -- 38.95 5/3/99
MSCI Europe Index(1) 15.89 22.12 14.05 18.12 7/31/85(3)
MSCI AC Europe Index(2) 15.22 19.82 11.50 12.71(3) 12/31/87(3)
- -----------------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International Europe Index is an unmanaged index
that is designed to represent the performance of stock markets of developed
countries in Europe. The fund has elected to use the MSCI Europe Index as
its primary index rather than the MSCI AC Europe Index since the MSCI Europe
Index more closely reflects the securities in which the fund may invest.
(2) The Morgan Stanley Capital International All Country Europe Index is an
unmanaged index that is designed to represent the performance of stock
markets in Europe, including both developed and emerging markets.
(3) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 129
------------------------
AIM EUROLAND GROWTH FUND
------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- ---------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- ---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- ---------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.97% 0.97% 0.97%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses:
Other 0.50 0.50 0.50
Interest 0.01 0.01 0.01
Total Other Expenses 0.51 0.51 0.51
Total Annual Fund
Operating Expenses 1.83 2.48 2.48
- ---------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $726 $1,094 $1,486 $2,580
Class B 751 1,073 1,521 2,656
Class C 351 773 1,321 2,816
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $726 $1,094 $1,486 $2,580
Class B 251 773 1,321 2,656
Class C 251 773 1,321 2,816
- ----------------------------------------------
</TABLE>
3
<PAGE> 130
------------------------
AIM EUROLAND GROWTH FUND
------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor.
INVESCO Asset Management Ltd. (the subadvisor) an affiliate of the advisor, is
the fund's subadvisor and is responsible for its day-to-day management. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The subadvisor is located at 11 Devonshire Square, London EC2M 4YR, England. The
advisors supervise all aspects of the fund's operations and provide investment
advisory services to the fund, including obtaining and evaluating economic,
statistical and financial information to formulate and implement investment
programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976
and the subadvisor has acted as an investment advisor since its organization in
1967. Today, the advisor, together with its subsidiaries, advises or manages
over 120 investment portfolios, including the fund, encompassing a broad range
of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.97% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Steven Chamberlain, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1989.
- - Anand Sunderji, Portfolio Manager, who has been responsible for the fund since
2000 and has been associated with the advisor and/or its affiliates since
1993.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Euroland Growth Fund are subject to the
maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
4
<PAGE> 131
------------------------
AIM EUROLAND GROWTH FUND
------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.67 $ 14.32 $ 12.89 $ 10.88 $ 10.03
Income from investment operations:
Net investment income (loss) (0.09) (0.03) (0.04) (0.03) 0.04
Net realized and unrealized gain on
investments 5.45 2.35 1.48 2.16 0.95
Net increase from investment operations 5.36 2.32 1.44 2.13 0.99
Distributions to shareholders:
From net investment income -- -- -- -- (0.10)
From net realized gains (1.39) (0.97) (0.01) (0.12) (0.04)
Total distributions (1.39) (0.97) (0.01) (0.12) (0.14)
Net asset value, end of period $ 19.64 $ 15.67 $ 14.32 $ 12.89 $ 10.88
Total investment return(b) 35.22% 16.63% 11.20% 19.61% 9.86%
- --------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $446,065 $415,066 $407,004 $453,792 $483,375
Ratio of net investment income (loss) to average
net assets (0.55)%(d) (0.20)% (0.29)% (0.26)% 0.38%
Ratio of expenses to average net assets,
including interest expense:
With expense reductions 1.83%(d) 2.02% 1.75% 1.82% 1.83%
Without expense reductions 1.83%(d) 2.02% 1.89% 1.88% 1.89%
Ratio of expenses to average net assets,
excluding interest expense:
With expense reductions(c) 1.82%(d) 1.75% 1.75% 1.82% 1.83%
Without expense reductions 1.82%(d) 1.75% 1.89% 1.88% 1.89%
Ratio of interest expense to average net assets 0.01%(d) 0.27% N/A N/A N/A
Portfolio turnover rate 71% 97% 107% 123% 108%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Prior to the period ended December 31, 1999, ratios include expense
reductions.
(d) Ratios are based on average net assets of $377,588,984.
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.26 $ 14.06 $ 12.73 $ 10.81 $ 9.97
Income from investment operations:
Net investment income (loss) (0.18) (0.14) (0.13) (0.11) (0.03)
Net realized and unrealized gain on
investments 5.24 2.31 1.47 2.15 0.94
Net increases from investment operations 5.06 2.17 1.34 2.04 0.91
Distributions to shareholders:
From net investment income -- -- -- -- (0.03)
From net realized gains (1.39) (0.97) (0.01) (0.12) (0.04)
Total distributions (1.39) (0.97) (0.01) (0.12) (0.07)
Net asset value, end of period $ 18.93 $ 15.26 $ 14.06 $ 12.73 $ 10.81
Total investment return(b) 34.19% 15.80% 10.55% 18.79% 9.20%
- ---------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $93,404 $99,943 $81,011 $87,092 $73,025
Ratio of net investment income (loss) to average
net assets (1.19)%(d) (0.85)% (0.94)% (0.91)% (0.27)%
Ratio of expenses to average net assets,
including interest expense:
With expense reductions 2.48%(d) 2.67% 2.40% 2.47% 2.48%
Without expense reductions 2.48%(d) 2.67% 2.54% 2.58% 2.54%
Ratio of expenses to average net assets,
excluding interest expense:
With expense reductions(c) 2.47%(d) 2.40% 2.40% 2.47% 2.48%
Without expense reductions 2.47%(d) 2.40% 2.54% 2.53% 2.54%
Ratio of interest expense to average net assets 0.01%(d) 0.27% N/A N/A N/A
Portfolio turnover rate 71% 97% 107% 123% 108%
- ---------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Prior to the period ended December 31, 1999, ratios include expense
reductions.
(d) Ratios are based on average net assets of $83,090,114.
5
<PAGE> 132
------------------------
AIM EUROLAND GROWTH FUND
------------------------
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
- ------------------------------------------------------------------------------------------------------------------------
CLASS C
------------------------------
MAY 3,
1999
THROUGH
DECEMBER 31,
1999(a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 14.64
Income from investment operations:
Net investment income (loss) (0.19)
Net realized and unrealized gain on
investments 5.88
Net increases from investment operations 5.69
Distributions to shareholders:
From net investment income --
From net realized gains (1.39)
Total distributions (1.39)
Net asset value, end of period $ 18.94
Total investment return(b) 39.95%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $ 349
Ratio of net investment income (loss) to average
net assets (1.19)%(d)
Ratio of expenses to average net assets,
including interest expense:
With expense reductions 2.48%(d)
Without expense reductions 2.48%(d)
Ratio of expenses to average net assets,
excluding interest expense:
With expense reductions(c) 2.47%(d)
Without expense reductions 2.47%(d)
Ratio of interest expense to average net assets 0.01%(d)
Portfolio turnover rate 71%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Prior to the period ended December 31, 1999, ratios include expense
reductions.
(d) Ratios are annualized and based on average net assets of $179,556.
6
<PAGE> 133
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 134
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 135
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THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 136
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THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 137
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 138
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 139
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 140
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 141
------------------------
AIM EUROLAND GROWTH FUND
------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds-- Registered Trademark -- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, report and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Euroland Growth Fund
SEC 1940 Act file number: 811-2699
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com ERG-PRO-1 INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 142
AIM JAPAN GROWTH FUND
--------------------------------------------------------------------------
AIM Japan Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 143
---------------------
AIM JAPAN GROWTH FUND
---------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM Internet
Connect and AIM Investor are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 144
---------------------
AIM JAPAN GROWTH FUND
---------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in equity securities of issuers domiciled in Japan. The fund
typically considers a company to be domiciled in Japan if it (1) is organized
under the laws of, or has its principal office in, Japan; or (2) normally
derives 50% or more of its total revenues from business in Japan, provided that,
in the view of the portfolio managers, the value of the issuer's securities tend
to reflect Japan's development to a greater extent than developments elsewhere.
The fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of Japan. The fund may also invest up to 35% of its
total assets in U.S. and foreign investment-grade debt securities, or securities
deemed by the portfolio manager to be of comparable quality.
The fund may also invest in securities of issuers located in developing
countries, i.e., those that are in the initial stages of their industrial
cycles.
In selecting investments, the portfolio managers seek to identify industries
that, in view of political and economic considerations, including currency
movements, are likely to produce above-average growth rates. The portfolio
managers then balance the potential benefits with the risks of investing in
those industries. The portfolio managers allocate investments among fixed-income
securities based on their views as to the best values then available in the
marketplace. The portfolio managers consider whether to sell a particular
security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash (U.S. dollars, foreign currencies or
multinational currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. As a result, the fund may
not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
Because the fund focuses its investments in Japan, the value of your shares
may rise and fall more than the value of shares of a fund that invests in a
broader geographic region. Additionally, the market prices of Japanese
securities may be distorted to serve political or other purposes, and
shareholders' rights are not always equally enforced.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the rates between the dollar and the currencies
in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than the U.S. securities.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 145
---------------------
AIM JAPAN GROWTH FUND
---------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ........................................... -28.73%
1991 ........................................... -2.79%
1992 ........................................... -21.51%
1993 ........................................... 33.45%
1994 ........................................... 6.56%
1995 ........................................... 1.94%
1996 ........................................... -7.43%
1997 ........................................... -7.99%
1998 ........................................... -0.54%
1999 ........................................... 130.79%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
41.27% (quarter ended December 31, 1999) and the lowest quarterly return was
- -28.63% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 118.05% 13.49% 3.83% 16.13% 7/19/85
Class B 124.47 13.83 -- 13.85 4/1/93
Class C -- -- -- 88.93 5/3/99
MSCI Japan Index(1) 61.53 1.96 (0.85) 11.04(2) 7/31/85(2)
- -------------------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International Japan Index measures the
performance of 310 securities listed on the Japanese stock exchanges.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 146
---------------------
AIM JAPAN GROWTH FUND
---------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -----------------------------------------------------------
(fees paid directly from
your investment CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases (as a
percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -----------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -----------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.98% 0.98% 0.98%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 0.54 0.54 0.54
Total Annual Fund
Operating Expenses 1.87 2.52 2.52
- -----------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the fund's gross operating expenses remain the same. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $729 $1,105 $1,505 $2,620
Class B 755 1,085 1,540 2,697
Class C 355 785 1,340 2,856
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $729 $1,105 $1,505 $2,620
Class B 255 785 1,340 2,697
Class C 255 785 1,340 2,856
- ----------------------------------------------
</TABLE>
3
<PAGE> 147
---------------------
AIM JAPAN GROWTH FUND
---------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor.
INVESCO Asset Management (Japan) Limited (the subadvisor), an affiliate of the
advisor, is the fund's subadvisor and is responsible for its day-to-day
management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173. The subadvisor is located at Imperial Tower, 1-1-1
Uchisaiwai-cho, Chiyoda-Ku, Tokyo, 100-0011. The advisors supervise all aspects
of the fund's operations and provide investment advisory services to the fund,
including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976
and the subadvisor has acted as an investment advisor since its organization in
1990. Today, the advisor, together with its subsidiaries, advises or manages
over 120 investment portfolios, including the fund, encompassing a broad range
of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.98% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Andrew Callender, Portfolio Manager, who has been responsible for the fund
since 1997 and has been associated with the advisor and/or its affiliates
since 1990.
- - Sanae Sakai, Portfolio Manager, who has been responsible for the fund since
2000 and has been associated with the advisor and/or its affiliates since
1999. From 1997 to 1999 she was a graduate student at the London Business
School. From 1994 to 1996 she worked for Salomon Brothers as an Equity
Analyst.
- - Ikuo Suzuki, Portfolio Manager, who has been responsible for the fund since
2000 and has been associated with the advisor and/or its affiliates since
1991.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Japan Growth Fund are subject to the maximum
5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales
Charges" in the "Shareholder Information--Choosing a Share Class" section of
this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
4
<PAGE> 148
---------------------
AIM JAPAN GROWTH FUND
---------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.90 $ 8.96 $ 9.76 $ 11.00 $ 12.15
Income from investment operations:
Net investment income (loss) (0.14) (0.02)(b) (0.08) (0.04) (0.04)
Net realized and unrealized gain (loss) on
investments 11.78 (0.03) (0.70) (0.77) 0.26
Net increase (decrease) from investment
operations 11.64 (0.05) (0.78) (0.81) 0.22
Less distributions from net realized gains -- (0.01) (0.02) (0.43) (1.37)
Net asset value, end of period $ 20.54 $ 8.90 $ 8.96 $ 9.76 $ 11.00
Total investment return(c) 130.79% (0.54)% (7.99)% (7.43)% 1.94%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $161,527 $37,608 $44,583 $63,585 $111,105
Ratio of net investment income (loss) to average
net assets (1.03)%(d) (0.19)% (0.61)% (0.40)% (0.40)%
Ratio of expenses to average net assets:
With expense reductions(e) 1.87%(d) 1.96% 1.99% 1.84% 1.99%
Without expense reductions 1.87%(d) 2.33% 2.06% 1.94% 2.14%
Portfolio turnover rate 43% 67% 58% 31% 67%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Includes reimbursement of Fund operating expenses per share of $0.03.
(c) Does not deduct sales charges.
(d) Ratios are based on average net assets of $77,943,175.
(e) Prior to the period ended December 31, 1999, ratios include expense
reductions.
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.55 $ 8.67 $ 9.49 $ 10.78 $ 12.02
Income from investment operations:
Net investment income (loss) (0.21) (0.07)(b) (0.14) (0.11) (0.12)
Net realized and unrealized gain (loss) on
investments 11.28 (0.04) (0.66) (0.75) 0.25
Net increase (decrease) from investment
operations 11.07 (0.11) (0.80) (0.86) 0.13
Less distributions from net realized gains -- (0.01) (0.02) (0.43) (1.37)
Net asset value, end of period $ 19.62 $ 8.55 $ 8.67 $ 9.49 $ 10.78
Total investment return(c) 129.47% (1.25)% (8.42)% (8.05)% 1.20%
- -----------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $117,953 $22,815 $24,250 $32,116 $41,274
Ratio of net investment income (loss) to average
net assets (1.68)%(d) (0.84)% (1.26)% (1.05)% (1.05)%
Ratio of expenses to average net assets:
With expense reductions(e) 2.52%(d) 2.61% 2.64% 2.49% 2.64%
Without expense reductions 2.52%(d) 2.98% 2.71% 2.59% 2.79%
Portfolio turnover rate 43% 67% 58% 31% 67%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Includes reimbursement of Fund operating expenses per share of $0.03.
(c) Does not deduct sales charges.
(d) Ratios are based on average net assets of $53,594,156.
(e) Prior to the period ended December 31, 1999, ratios include expense
reductions.
5
<PAGE> 149
---------------------
AIM JAPAN GROWTH FUND
---------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
------------------------
MAY 3, 1999
THROUGH
DECEMBER 31,
1999(a)
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 10.33
Income from investment operations:
Net investment income (loss) (0.17)
Net realized and unrealized gain (loss) on
investments 9.46
Net increase (decrease) from investment
operations 9.29
Less distributions from net realized gains --
Net asset value, end of period $ 19.62
Total investment return(b) 89.93%
- --------------------------------------------------------------------------------
Ratios/supplemental data:
- --------------------------------------------------------------------------------
Net assets, end of period (in 000s) $14,891
Ratio of net investment income (loss) to average
net assets (1.68)%(c)
Ratio of expenses to average net assets:
With expense reductions(d) 2.52%(c)
Without expense reductions 2.52%(c)
Portfolio turnover rate 43%
- --------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $4,824,104.
(d) Prior to the period ended December 31, 1999, ratios include expense
reductions.
6
<PAGE> 150
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 151
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 152
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 153
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THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
<PAGE> 154
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
<PAGE> 155
--------------
THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 156
--------------
THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 157
--------------
THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 158
---------------------
AIM JAPAN GROWTH FUND
---------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information
about the Public Reference Room.
- -----------------------------------
AIM Japan Growth Fund
SEC 1940 Act file number: 811-2699
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com JPG-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 159
AIM MID CAP EQUITY FUND
--------------------------------------------------------------------------
AIM Mid Cap Equity Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 160
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM Internet
Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 161
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in equity securities of U.S. issuers that have market
capitalizations within the range of market capitalizations of companies included
in the Russell Midcap(TM) Index.
The fund may invest up to 35% of its total assets in equity securities of
other U.S. issuers or in investment-grade debt securities of U.S. issuers. The
Fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those
companies that are, in their view, undervalued relative to current or projected
earnings, or the current market value of assets owned by the company. The
primary emphasis of the portfolio managers' 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 value of the
companies' equity securities; and (4) companies whose equity securities are
selling at prices that do not yet reflect the current market value of their
assets. The portfolio managers consider whether to sell a particular security
when any of these factors materially change.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash (U.S. dollars, foreign currencies or
multi-national currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. As a result, the fund may
not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
Foreign securities have additional risks, including exchange rate changes,
political and economic upheaval, the relative lack of information about these
companies, relatively low market liquidity, and the potential lack of strict
financial and accounting controls and standards.
The fund currently participates in the initial public offering (IPO) market,
and a significant portion of the fund's returns currently are attributable to
its investment in IPOs, which have a magnified impact due to the fund's small
asset base. As the fund's assets grow, it is probable that the effect of the
fund's investment in IPOs on its total returns will decline, which may reduce
the fund's total returns.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 162
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ........................................... -7.40%
1991 ........................................... 19.29%
1992 ........................................... 31.74%
1993 ........................................... 8.34%
1994 ........................................... 15.69%
1995 ........................................... 23.23%
1996 ........................................... 15.65%
1997 ........................................... 14.05%
1998 ........................................... -4.71%
1999 ........................................... 37.13%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
28.40% (quarter ended December 31, 1999) and the lowest quarterly return was
- -25.00% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 29.62% 14.95% 13.86% 14.35% 6/9/87
Class B 31.25 15.25 -- 16.12 4/1/93
Class C -- -- -- 28.98 5/3/99
Russell Midcap(TM) Index(1) 18.23 21.86 15.92 14.75(2) 5/31/87(2)
- -------------------------------------------------------------------------------------
</TABLE>
(1) The Russell Midcap(TM) Index measures the performance of the smallest 800
companies in the Russell 1000 Index--Registered Trademark--. These
companies are considered representative of medium-sized companies.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 163
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- -------------------------------------------------------
(fees paid directly
from your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge
(Load) Imposed on
Purchases (as a
percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- -------------------------------------------------------
(expenses that are
deducted from
fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.73% 0.73% 0.73%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 0.38 0.38 0.38
Total Annual Fund
Operating Expenses 1.46 2.11 2.11
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $690 $986 $1,304 $2,200
Class B 714 961 1,334 2,276
Class C 314 661 1,134 2,441
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $690 $986 $1,304 $2,200
Class B 214 661 1,134 2,276
Class C 214 661 1,134 2,441
- ----------------------------------------------
</TABLE>
3
<PAGE> 164
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.73% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert A. Shelton, Portfolio Manager, who has been responsible for the fund
since 1998 and has been associated with the advisor and/or its affiliates
since 1995. Prior to 1995, he was a financial analyst for CS First Boston.
- - Ronald S. Sloan, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1998. From 1993 to 1998, he was President of Verissimo Research &
Management, Inc.
- - Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Mid Cap Equity Fund are subject to the
maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
4
<PAGE> 165
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.97 $ 21.01 $ 20.77 $ 19.07 $ 17.69
Income from investment operations:
Net investment income (loss) (0.01) (0.24) (0.20) 0.03 0.24
Net gains (losses) on securities (both
realized and unrealized) 6.88 (0.81) 3.00 2.96 3.93
Total from investment operations 6.87 (1.05) 2.80 2.99 4.17
Less distributions:
Dividends from net investment income -- -- -- -- (0.21)
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58)
Total distributions (2.36) (0.99) (2.56) (1.29) (2.79)
Net asset value, end of period $ 23.48 $ 18.97 $ 21.01 $ 20.77 $ 19.07
Total return(b) 37.13% (4.71)% 14.05% 15.65% 23.23%
- -------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $178,550 $180,258 $255,674 $343,427 $396,291
Ratio of expenses to average net assets:
With expense reductions 1.46%(c) 1.56% 1.37% 1.36% 1.46%
Without expense reductions 1.46%(c) 1.57% 1.48% 1.41% --
Ratio of net investment income (loss) to average
net assets:
With expense reductions (0.07)%(c) (1.09)% (0.90)% 0.12% 1.24%
Without expense reductions (0.07)%( (1.10)% (1.01)% 0.07% --
Portfolio turnover rate 90% 168% 190% 253% 71%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $154,640,295.
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.16 $ 20.31 $ 20.28 $ 18.77 $ 17.50
Income from investment operations:
Net investment income (loss) (0.14) (0.38) (0.34) (0.11) 0.10
Net gains (losses) on securities (both
realized and unrealized) 6.55 (0.78) 2.93 2.91 3.87
Total from investment operations 6.41 (1.16) 2.59 2.80 3.97
Less distributions:
Dividends for net investment income -- -- -- -- (0.12)
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58)
Total distributions (2.36) (0.99) (2.56) (1.29) (2.70)
Net asset value, end of period $ 22.21 $ 18.16 $ 20.31 $ 20.28 $ 18.77
Total return(b) 36.25% (5.41)% 13.35% 14.82% 22.42%
- -------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $151,392 $165,447 $255,468 $334,590 $348,435
Ratio of expenses to average net assets:
With expense reductions 2.11%(c) 2.21% 2.02% 2.01% 2.11%
Without expense reductions 2.11%(c) 2.22% 2.13% 2.06% --
Ratio of net investment income (loss) to average
net assets:
With expense reductions (0.72)%(c) (1.74)% (1.55)% (0.53)% 0.59%
Without expense reductions (0.72)%(c) (1.75)% (1.66)% (0.58)% --
Portfolio turnover rate 90% 168% 190% 253% 71%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $134,827,348.
5
<PAGE> 166
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
<TABLE>
<CAPTION>
CLASS C
------------
MAY 3, 1999
THROUGH
DECEMBER 31,
FINANCIAL HIGHLIGHTS (continued) 1999(a)
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 19.02
Income from investment operations:
Net investment income (loss) (0.10)
Net gains (losses) on securities (both
realized and unrealized) 5.63
Total from investment operations 5.53
Less distributions:
Dividends for net investment income --
Distributions from net realized gains (2.36)
Total distributions (2.36)
Net asset value, end of period $ 22.19
Total return(b) 29.98%
- ----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $ 1,564
Ratio of expenses to average net assets:
With expense reductions 2.11%(c)(d)
Without expense reductions 2.11%(c)(d)
Ratio of net investment income (loss) to average
net assets:
With expense reductions (0.72)%(c)(d)
Without expense reductions (0.72)%(c)(d)
Portfolio turnover rate 90%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $470,111.
(d) Annualized.
6
<PAGE> 167
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 168
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 169
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--03/00
<PAGE> 170
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--03/00 A-4
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THE AIM FUNDS
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HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--03/00
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REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 173
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THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
<PAGE> 174
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THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 175
-----------------------
AIM MID CAP EQUITY FUND
-----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ----------------------------------
AIM Mid Cap Equity Fund
SEC 1940 Act file number: 811-2699
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com MCE-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 176
AIM NEW PACIFIC
GROWTH FUND
--------------------------------------------------------------------------
AIM New Pacific Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
MAY 1, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
The fund has been closed to new
investors since April 28, 2000.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
The Board of Trustees voted to
request shareholder approval of
certain items. For further
information on these items, see
Reorganization of the Fund in this
prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 177
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AIM NEW PACIFIC GROWTH FUND
---------------------------
TABLE OF CONTENTS
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<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
Reorganization of the Fund 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with
Discipline are registered service marks and AIM Bank Connection and AIM
Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 178
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AIM NEW PACIFIC GROWTH FUND
---------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in equity securities of issuers domiciled in twelve countries,
other than Japan, located in the Pacific region, including developing countries,
i.e., those that are in the initial stages of their industrial cycles. These
countries are designated as the fund's primary investment area, and the list of
countries may be revised with the approval of the fund's Board of Trustees. The
fund typically considers a company to be domiciled in a particular country if it
(1) is organized under the laws of a particular country or has a principal
office in a particular country; or (2) derives 50% or more of its total revenues
from business in that country, provided that, in the view of the portfolio
managers, the value of the issuers' securities tend to reflect such country's
development to a greater extent than developments elsewhere.
The fund may invest up to 35% of its total assets in equity securities of
issuers domiciled outside of its primary investment area, including developing
countries. The fund may also invest up to 35% of its total assets in U.S. and
foreign investment-grade debt securities, or securities deemed by the portfolio
managers to be of comparable quality. The fund may invest in securities of
issuers located in developing countries, i.e., those that are in the initial
stages of their industrial cycle.
In selecting investments, the portfolio managers seek to identify those
countries and industries where political and economic factors, including
currency movements, are likely to produce above-average growth rates. The
portfolio managers then balance the potential benefits with the risks of
investing in those countries and industries. The portfolio managers allocate
investments among fixed-income securities based on their views as to the best
values then available in the marketplace. The portfolio managers consider
whether to sell a particular security when any of those factors materially
changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash (U.S. dollars, foreign currencies or
multinational currency units), money market instruments, or high-quality debt
securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions, and market liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting
Pacific region countries, such as substantial economic or regulatory changes.
Because the fund focuses its investments in Pacific region countries, the value
of your shares may rise and fall more than the value of shares of a fund that
invests more broadly.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The fund currently participates in the initial public offering (IPO) market, and
a significant portion of the fund's returns currently are attributable to its
investment in IPOs, which have a magnified impact due to the fund's small asset
base. As the fund's assets grow, it is probable that the effect of the fund's
investment in IPOs on its total returns will decline, which may reduce the
fund's total returns.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 179
---------------------------
AIM NEW PACIFIC GROWTH FUND
---------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1990 ........................................... -10.96%
1991 ........................................... 13.07%
1992 ........................................... -7.96%
1993 ........................................... 60.60%
1994 ........................................... -19.73%
1995 ........................................... 7.45%
1996 ........................................... 20.04%
1997 ........................................... -44.25%
1998 ........................................... -19.09%
1999 ........................................... 45.42%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
25.58% (quarter ended December 31, 1999) and the lowest quarterly return was
- -31.51% (quarter ended December 31, 1997).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -----------------------------------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A 37.48% (4.37)% (0.45)% 9.55% 1/19/77
Class B 39.59 (4.22) -- (0.70) 4/1/93
Class C -- -- -- 21.51 5/3/99
MSCI AC Pacific Free ex-Japan Index(1) 46.89 2.27 8.81 11.49(2) 12/31/87(2)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International All Country Pacific Free ex-Japan
Index measures the performance of 11 developed and emerging countries in the
Pacific rim, excluding Japan. The index excludes shares that are not readily
purchased by non-local investors.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest history.
2
<PAGE> 180
---------------------------
AIM NEW PACIFIC GROWTH FUND
---------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- ----------------------------------------------------------
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- ----------------------------------------------------------
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.98% 0.98% 0.98%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other 0.90 0.90 0.90
Interest 0.06 0.06 0.06
Total Other Expenses 0.96 0.96 0.96
Total Annual Fund
Operating Expenses 2.29 2.94 2.94
Expense
Reimbursement(2) 0.23 0.23 0.23
Net Expenses 2.06 2.71 2.71
- ----------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to limit Total Annual Fund
Operating Expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) on Class A, Class B and Class C shares to 2.00%,
2.65% and 2.65%, respectively.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $769 $1,226 $1,708 $3,031
Class B 797 1,210 1,748 3,109
Class C 397 910 1,548 3,261
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $769 $1,226 $1,708 $3,031
Class B 297 910 1,548 3,109
Class C 297 910 1,548 3,261
- ----------------------------------------------
</TABLE>
3
<PAGE> 181
---------------------------
AIM NEW PACIFIC GROWTH FUND
---------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provides
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1999, the advisor received
compensation of 0.98% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Shuxin Cao, Portfolio Manager, who has been responsible for the fund since
2000 and has been associated with the advisor and/or its affiliates since
1997. Prior to 1997, Mr. Cao was an international equity analyst for Boatmen's
Trust Company.
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since 2000 and has been associated with the advisor and/or its
affiliates since 1989.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since 2000 and has been associated with the advisor and/or its affiliates
since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM New Pacific Growth Fund are subject to the
maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
REORGANIZATION OF THE FUND
The Board of Trustees of AIM Growth Series unanimously approved, on March 22,
2000, a plan of reorganization pursuant to which the fund would transfer
substantially all of its assets to AIM Asian Growth Fund (Asian Growth), a
series of AIM International Funds, Inc. As a result of the transaction,
shareholders of the fund would receive shares of Asian Growth in exchange for
their shares of the fund and the fund would cease operations. AIM New Pacific
Growth Fund and Asian Growth have the same investment objective. The
investment objective of each fund is to provide long-term growth of capital.
The plan requires the approval of fund shareholders and will be submitted to
the shareholders for their consideration at a meeting to be held on or about May
31, 2000. If the plan is approved by shareholders of the fund and certain
conditions required by the plan are satisfied, the transaction is expected to
become effective shortly thereafter.
4
<PAGE> 182
---------------------------
AIM NEW PACIFIC GROWTH FUND
---------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 5.19 $ 6.48 $ 13.12 $ 12.47 $ 12.10
Income from investment operations:
Net investment income (loss) (0.01) 0.06 0.05 0.02 0.11
Net realized and unrealized gain (loss) on
investments 2.37 (1.30) (5.84) 2.44 0.79
Net increase (decrease) from investment
operations 2.36 (1.24) (5.79) 2.46 0.90
Distributions to shareholders:
In excess of net investment income (0.01) (0.05) (0.03) -- (0.10)
From net realized gains -- -- (0.82) (1.81) (0.43)
Total distributions (0.01) (0.05) (0.85) (1.81) (0.53)
Net asset value, end of period $ 7.54 $ 5.19 $ 6.48 $ 13.12 $ 12.47
Total investment return(b) 45.42% (19.09)% (44.24)% 20.04% 7.45%
- -------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $99,155 $80,824 $135,807 $361,244 $383,722
Ratio of net investment income (loss) to average
net assets (0.08)%(c) 1.30% 0.41% 0.17% 0.91%
Ratio of expenses to average net assets, including
interest expense:
With expense reductions and/or reimbursement 2.06%(c) 2.00% 1.66% 1.86% 1.89%
Without expense reductions and/or
reimbursement 2.29%(c) 2.40% 1.93% 1.99% 1.94%
Ratio of expense to average net assets,
excluding interest:
With expense reductions 2.00%(c) 2.00% 1.66% 1.86% 1.89%
Without expense reductions 2.23%(c) 2.40% 1.93% 1.99% 1.94%
Ratio of interest expense to average net assets: 0.06%(c)
Portfolio turnover rate 98% 96% 80% 93% 63%
- -------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $88,265,497.
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 5.04 $ 6.28 $ 12.80 $ 12.29 $ 11.96
Income from investment operations:
Net investment income (loss) (0.04) 0.03 (0.03) (0.06) 0.03
Net realized and unrealized gain (loss) on
investments 2.29 (1.26) (5.67) 2.38 0.75
Net increase (decrease) from investment
operations 2.25 (1.23) (5.70) 2.32 0.78
Distributions to shareholders:
In excess of net investment income (0.01) (0.01) -- -- (0.02)
From net realized gains -- -- (0.82) (1.81) (0.43)
Total distributions (0.01) (0.01) (0.82) (1.81) (0.45)
Net asset value, end of period $ 7.28 $ 5.04 $ 6.28 $ 12.80 $ 12.29
Total investment return(b) 44.59% (19.55)% (44.65)% 19.28% 6.54%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $38,584 $31,837 $55,820 $151,805 $130,887
Ratio of net investment income (loss) to average
net assets (0.73)%(c) 0.65% (0.24)% (0.48)% 0.26%
Ratio of expenses to average net assets, including
interest expense:
With expense reductions and/or reimbursement 2.71%(c) 2.65% 2.31% 2.51% 2.54%
Without expense reductions and/or
reimbursement 2.94%(c) 3.05% 2.58% 2.64% 2.59%
Ratio of expense to average net assets,
excluding interest:
With expense reductions 2.65%(c) 2.65% 2.31% 2.51% 2.54%
Without expense reductions 2.88%(c) 3.05% 2.58% 2.64% 2.59%
Ratio of interest expense to average net assets 0.06%(c)
Portfolio turnover rate 98% 96% 80% 93% 63%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $34,388,350.
5
<PAGE> 183
---------------------------
AIM NEW PACIFIC GROWTH FUND
---------------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
------------
MAY 3, 1999
THROUGH
DECEMBER 31,
1999(a)
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 5.94
Income from investment operations:
Net investment income (loss) (0.03)
Net realized and unrealized gain (loss) on
investments 1.37
Net increase (decrease) from investment
operations 1.34
Distributions to shareholders:
In excess of net investment income (0.01)
From net realized gains --
Total distributions (0.01)
Net asset value, end of period $ 7.27
Total investment return(b) 22.51%
- -------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $ 496
Ratio of net investment income (loss) to average
net assets (0.73)%(c)
Ratio of expenses to average net assets,
including interest expense:
With expense reductions and/or reimbursement 2.71%(c)
Without expense reductions and/or
reimbursement 2.94%(c)
Ratio of expenses to average net assets,
excluding interest:
With expense reductions 2.65%(c)
Without expense reductions 2.88%(c)
Ratio of Interest expense to average net assets 0.06%(c)
Portfolio turnover rate 98%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $280,562.
6
<PAGE> 184
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
eight years after the end of shares
the month in which shares
were purchased along with a
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and
continue to hold them, those shares will convert to Class A shares of
that fund seven years after the end of the month in which shares were
purchased. If you exchange those shares for Class B shares of another
AIM Fund, the shares into which you exchanged will not convert to
Class A shares until eight years after the end of the month in which
you purchased your original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12B-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--03/00
<PAGE> 185
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- ------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- -------------------------------------------------------------
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--03/00 A-2
<PAGE> 186
--------------
THE AIM FUNDS
--------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted
to establish a retirement plan. You may use AIM Funds-sponsored retirement
plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k)
plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing
plans, or another sponsor's retirement plan. The plan custodian of the
AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10.
Contact your financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
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HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet
Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet.
The transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- -------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
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THE AIM FUNDS
--------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited Maturity Treasury Fund and AIM
Tax-Free Intermediate Fund), but only if you acquired the original
shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
MCF--03/00 A-6
<PAGE> 190
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THE AIM FUNDS
--------------
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- -------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
------------------------------------------------------------------------------
A-7 MCF--03/00
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THE AIM FUNDS
--------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. AIM Money Market Fund also determines
its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open
for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--03/00 A-8
<PAGE> 192
---------------------------
AIM NEW PACIFIC GROWTH FUND
---------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports only)
</TABLE>
- --------------------------------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ----------------------------------
AIM New Pacific Growth Fund
SEC 1940 Act file number: 811-2699
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com NPG-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 193
STATEMENT OF
ADDITIONAL INFORMATION
CLASS A, CLASS B AND CLASS C SHARES OF
AIM EUROLAND GROWTH FUND
AIM JAPAN GROWTH FUND
AIM MID CAP EQUITY FUND
AIM NEW PACIFIC 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
MAY 1, 2000 RELATING TO THE AIM EUROLAND GROWTH
FUND PROSPECTUS, THE AIM JAPAN
GROWTH FUND PROSPECTUS, THE AIM MID CAP EQUITY FUND PROSPECTUS
AND THE AIM NEW PACIFIC GROWTH FUND PROSPECTUS
EACH DATED MAY 1, 2000
<PAGE> 194
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUNDS...............................................................................1
The Trust and Its Shares.................................................................................1
INVESTMENT POLICIES...............................................................................................2
Selection of Investments.................................................................................3
Equity-Linked Derivatives................................................................................4
Investments in Other Investment Companies................................................................4
Samurai and Yankee Bonds.................................................................................5
Depositary Receipts......................................................................................5
Warrants or Rights.......................................................................................6
Lending of Portfolio Securities..........................................................................6
Commercial Bank Obligations..............................................................................6
Privatizations...........................................................................................6
Repurchase Agreements....................................................................................7
Borrowing, Reverse Repurchase Agreements and "Roll" Transactions.........................................7
When-Issued or Forward Commitment Securities.............................................................8
Temporary Defensive Strategies...........................................................................8
OPTIONS, FUTURES AND CURRENCY STRATEGIES..........................................................................8
Special Risks of Options, Futures and Currency Strategies................................................8
Writing Call Options.....................................................................................9
Writing Put Options.....................................................................................10
Purchasing Put Options..................................................................................11
Purchasing Call Options.................................................................................11
Index Options...........................................................................................12
Interest Rate, Currency and Stock Index Futures Contracts...............................................13
Options on Futures Contracts............................................................................15
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................16
Forward Contracts.......................................................................................16
Foreign Currency Strategies--Special Considerations.....................................................17
Cover...................................................................................................18
RISK FACTORS.....................................................................................................18
Concentration...........................................................................................18
Illiquid Securities.....................................................................................18
Foreign Securities......................................................................................19
Debt Securities.........................................................................................24
Equity Securities.......................................................................................25
INVESTMENT LIMITATIONS...........................................................................................25
Allocation of Initial Public Offering ("IPO") Securities Transactions (Mid Cap Fund and
Pacific Fund Only)......................................................................................27
EXECUTION OF PORTFOLIO TRANSACTIONS..............................................................................27
Portfolio Trading and Turnover..........................................................................29
MANAGEMENT.......................................................................................................29
Trustees and Executive Officers.........................................................................29
Investment Management and Administration Services.......................................................31
Expenses of the Funds...................................................................................34
</TABLE>
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<PAGE> 195
<TABLE>
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THE DISTRIBUTION PLANS...........................................................................................34
The Class A and C Plan..................................................................................34
The Class B Plan........................................................................................35
Both Plans..............................................................................................35
THE DISTRIBUTOR..................................................................................................39
SALES CHARGES AND DEALER CONCESSIONS.............................................................................41
REDUCTIONS IN INITIAL SALES CHARGES..............................................................................44
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS......................................................................47
HOW TO PURCHASE AND REDEEM SHARES................................................................................49
Backup Withholding......................................................................................50
NET ASSET VALUE DETERMINATION....................................................................................51
DIVIDEND ORDER...................................................................................................52
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................52
Reinvestment of Dividends and Distributions.............................................................52
Tax Matters.............................................................................................53
General.................................................................................................53
Exchange and Reinstatement Privileges and Wash Sales....................................................53
Foreign Taxes...........................................................................................54
Passive Foreign Investment Companies....................................................................54
Non-U.S. Shareholders...................................................................................55
Options, Futures and Foreign Currency Transactions......................................................55
SHAREHOLDER INFORMATION..........................................................................................56
MISCELLANEOUS INFORMATION........................................................................................59
Charges for Certain Account Information.................................................................59
Custodian...............................................................................................59
Transfer Agency Services................................................................................59
Independent Accountants.................................................................................59
Legal Matters...........................................................................................59
Shareholder Liability...................................................................................59
Names...................................................................................................60
Control Persons and Principal Holders of Securities.....................................................60
INVESTMENT RESULTS...............................................................................................62
Total Return Quotations.................................................................................62
Performance Information.................................................................................66
APPENDIX........................................................................................................A-1
Description of Bond Ratings............................................................................A-1
Description of Commercial Paper Ratings................................................................A-2
Absence of Rating......................................................................................A-2
FINANCIAL STATEMENTS.............................................................................................FS
</TABLE>
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INTRODUCTION
This Statement of Additional Information relates to the Class A, Class
B and Class C shares of AIM New Pacific Growth Fund ("Pacific Fund"), AIM
Euroland Growth Fund (formerly AIM Europe Growth Fund) ("Euroland 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.
AIM Advisors, Inc. ("AIM") serves as the investment manager of and
administrator for Pacific Fund, Euroland Fund, Mid Cap Fund and Japan Fund.
INVESCO Asset Management (Japan) Limited ("INVESCO Japan") serves as the
investment sub-advisor of Japan Fund. INVESCO Asset Management Ltd. ("INVESCO
AML") serves as the investment sub-advisor of Euroland Fund. INVESCO Japan and
INVESCO AML may be referred to collectively as the "Sub-advisors."
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 Pacific Fund is
included in a separate Prospectus dated May 1, 2000, for Euroland Fund is
included in a separate Prospectus dated May 1, 2000, for Mid Cap Fund is
included in a separate Prospectus dated May 1, 2000, and for Japan Fund is
included in a separate Prospectus dated May 1, 2000. 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 GT 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
four Funds, AIM Small Cap Growth Fund, formerly known 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 Class C shares.
The Board of Trustees is authorized to establish additional series of shares, or
additional classes of shares of any fund, at any time. 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 GT Global Growth Series.
The term "majority of the outstanding shares" of the Trust, a
particular Fund or 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.
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Class A, Class B and Class C 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 (the "Board") 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.
Other than the automatic conversion of Class B shares to Class A shares, there
are no conversion rights.
Shareholders of the Funds and of the Trust's other series do not have
cumulative voting rights, and therefore the holders of more than 50% of the
outstanding shares of all Funds and of the Trust's other series voting together
for election of trustees may elect all of the members of the Trust's Board. In
such event, the remaining holders cannot elect any trustees of the Trust.
On any matter submitted to a vote of shareholders, shares of a 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
a Fund may vote on matters affecting only that class. The shares of a 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 for any of the
Funds in any year, except as required under the Investment Company Act of 1940,
as amended (the "1940 Act"). 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 of each Fund. Each share of a 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 a Fund is equal in earnings, assets and
voting privileges except that each class normally has exclusive voting rights
with respect to its distribution plan and bears the expenses, if any, related to
the distribution of its shares.
INVESTMENT POLICIES
In addition to the primary investment policies set forth in the
Prospectuses, each Fund may engage in other types of investments, as described
below. Unless specifically noted, the Fund's investment policies described in
this Statement of Additional Information are not fundamental policies and may be
changed by vote of the Trust's Board of Trustees, without shareholder approval.
Pacific Fund's primary investment area includes: Australia, Hong Kong,
India, Indonesia, Malaysia, New Zealand, Pakistan, the Philippines, Singapore,
South Korea, Taiwan and Thailand. Euroland Fund's primary investment area
includes countries that are members of the European Economic and Monetary Union
(the "EMU"). As of June 30, 1999, the members of the EMU were Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal
and Spain.
Each of Pacific Fund and Japan 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
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to benefit from political or economic events in the primary investment area.
Euroland Fund may invest up to 35% of its total assets in the equity securities
of issuers domiciled in developed countries outside of its primary investment
area. Accordingly, Pacific Fund and Japan Fund are regional funds for investors
interested in more geographically concentrated investments but, in the case of
Pacific Fund and Euroland Fund, still desiring to diversify across multiple
markets.
For purposes of the Prospectuses and this Statement of Additional
Information, an issuer typically is considered to be 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 view of AIM and/or
the Sub-advisors, 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 AIM and/or the Sub-advisors 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.
Pacific Fund, Euroland Fund and Japan Fund each 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 a Fund. Each 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 AIM and/or the Sub-advisors to be of
equivalent quality.
Mid Cap Fund. The Fund may invest up to 35% of its total assets in the
equity securities of 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 Midcap Index(TM).
In addition, the Fund may invest up to 35% of its total assets in investment
grade debt securities of United States issuers including U.S. government and
corporate debt securities.
The Fund may invest up to 25% of its total assets in the securities of
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. Foreign securities may include foreign government securities
and corporate debt securities, Samurai and Yankee bonds, Euro bonds and
Depositary Receipts.
As of [December 31, 1999], the market capitalizations of companies
comprising the Russell Midcap Index(TM) ranged from approximately [$1.4] to
[$10.3] billion. 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.
There is no assurance that the Funds will achieve their investment
objectives.
SELECTION OF INVESTMENTS
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 a Fund's primary investment area as set forth in the Fund's
Prospectus.
In determining the appropriate distribution of investments among
various countries and geographic regions for the Funds, AIM and/or the
Sub-advisors 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.
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In analyzing companies for investment by each Fund, AIM and/or the
Sub-advisors 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.
AIM and/or the Sub-advisors allocate 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, a Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
Equity securities in which the Funds may invest include common stocks,
preferred stocks, convertible debt securities and warrants to acquire such
securities.
At this time, AIM and/or the Sub-advisors 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
Prospectuses 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-advisors 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.
EQUITY-LINKED DERIVATIVES
The Funds may invest in equity-linked derivative products designed to
replicate the composition and performance of particular indices. Examples of
such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark
Series (WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial
Average Instruments ("DIAMONDS") and Optimised Portfolios as Listed Securities
("OPALS"). Investments in equity-linked derivatives involve the same risks
associated with a direct investment in the types of securities included in the
indices such products are designed to track. There can be no assurance that the
trading price of the equity-linked derivatives will equal the underlying value
of the basket of securities purchased to replicate a particular index or that
such basket will replicate the index. Investments in equity-linked derivatives
may constitute investment in other investment companies. See "Investments in
Other Investment Companies" herein.
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 or its affiliates) 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.
Each Fund may invest in other investment companies to the extent
permitted by the 1940 Act, and the rules and regulations thereunder, and if
applicable, exemptive orders granted by the SEC. The following restrictions
apply to investments in other investment companies other than Affiliated Money
Market Funds (defined below): (i) a Fund may not purchase more than 3% of the
total outstanding voting stock of another
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investment company; (ii) a Fund may not invest more than 5% of its total assets
in securities issued by another investment company; and (iii) a Fund may not
invest more than 10% of its total assets in securities issued by other
investment companies other than Affiliated Money Market Funds. With respect to a
Fund's purchase of shares of another investment company, including Affiliated
Money Market Funds, the Fund will indirectly bear its proportionate share of the
advisory fees and other operating expenses of such investment company. The Funds
have obtained an exemptive order from the SEC allowing them to invest in money
market funds that have AIM or an affiliate of AIM as an investment adviser (the
"Affiliated Money Market Funds"), provided that investments in Affiliated Money
Market Funds do not exceed 25% of the total assets of such Fund.
SAMURAI AND YANKEE BONDS
The Japan Fund and the Pacific Fund may invest in yen-denominated bonds
sold in Japan by non-Japanese issuers ("Samurai bonds"), 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 foreign securities. Such investments may include
American Depositary Receipts ("ADRs"), American Depositary Shares ("ADSs"),
Global Depositary Receipts ("GDRs") and European Depositary Receipts ("EDRs").
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
underlying foreign equity securities.
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.
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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. 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 of 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. 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-advisors to be of good standing and will not be
made unless, in the judgment of AIM and/or the Sub-advisors, 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 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.
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 and/or the Sub-advisors believe 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 a 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.
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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-advisors to present minimal credit risks in accordance
with guidelines approved by the Trust's Board. AIM and/or the Sub-advisors
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 331/3% of its total assets,
i.e., each Fund's total assets 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. Each Fund may not make additional investments if borrowings exceed
5% of its total assets. A Fund may borrow in connection with meeting requests
for the redemption of a Fund's shares. 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
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is required for reverse repurchase agreements with banks. A Fund may borrow
through reverse repurchase agreements and "roll" transactions in connection with
meeting requests for the redemption of a Fund's shares.
WHEN-ISSUED OR FORWARD COMMITMENT SECURITIES
A 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 a 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 a Fund. If a 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 a 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 a Fund may incur a loss.
TEMPORARY DEFENSIVE STRATEGIES
In anticipation of or in response to adverse market conditions, for
cash management purposes, or for defensive purposes, each of the Funds may
temporarily hold all or a portion of its assets in cash (U.S. dollars, foreign
currencies or multinational currency units), money market instruments, or
high-quality debt securities. Each of the Funds may also invest up to 25% of its
total assets in Affiliated Money Market Funds for these purposes.
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 or A-1 by S&P, at the time of investment or, if unrated, deemed by
the Sub-advisors 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-advisors' 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-advisors 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.
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(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-advisors 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) There is no assurance that a liquid secondary market will
exist for any particular option, futures contract or option thereon at
any particular time.
(5) As described below, a Fund might be required to maintain
assets as "cover," maintain segregated accounts or make margin payments
when it takes positions in instruments involving obligations to third
parties (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-advisors, 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 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
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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-advisors 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-advisors 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.
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.
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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
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(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 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-advisors 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
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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. 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
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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 deutschmarks 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 deutschmarks 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 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.
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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 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.
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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 total assets 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.
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.
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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-advisors 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 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.
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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
CONCENTRATION
Mid Cap Fund, Pacific Fund, Euroland Fund, and Japan Fund invest a
significant portion of their assets in a particular region of the world. As a
result, each Fund may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.
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" herein. 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
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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. ("NASD"). 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-advisors in accordance with
procedures approved by the Board. AIM and/or the Sub-advisors 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-advisors 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-advisors 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, confiscatory taxation, or other confiscation by any country, a
Fund could lose its entire investment in any such country. 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.
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
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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. Additionally, certain costs attributable to foreign investing, such
as custody charges, are higher than those attributable to domestic investing.
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-advisors 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.
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. 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.
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
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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-advisors will consider such
difficulties when determining the allocation of each Fund's assets, although AIM
and/or the Sub-advisors 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.
The risk also exists that an emergency situation may arise in one or
more foreign markets as a result of which trading of securities may cease or may
be substantially curtailed and prices for a 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 a
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 a 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.
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" herein.
Special Considerations Affecting Western European Countries. The
countries that are members of the European Economic Community ("Common Market")
(Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, the 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-advisors
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 of these Common Market reforms will be or what their effect 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
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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. Certain
countries, such as India, face serious exchange constraints.
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 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.
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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-advisors 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. Investments in Hong Kong may be subject to expropriation,
nationalization or confiscation, in which case a Fund could lose its entire
investment in Hong Kong.
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 Japan. Japan's economic growth has
declined significantly since 1990. The general government position has
deteriorated as the 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.
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<PAGE> 219
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.
Special Considerations Affecting Emerging Markets. Because of the
special risks associated with investing in emerging markets, an investment in a
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 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.
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. 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.
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
The value of debt securities held by a Fund will fluctuate with changes
in the perceived creditworthiness of the issuers of such securities and interest
rates. Each Fund is permitted to purchase investment grade debt securities. In
selecting debt securities for investment, AIM and/or the Sub-advisors review and
monitor the creditworthiness of each issuer and issue and analyze 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 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
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<PAGE> 220
NRSRO, but that AIM and/or the Sub-advisors 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-advisors 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.
EQUITY 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.
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 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;
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<PAGE> 221
(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.
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<PAGE> 222
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.
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") SECURITIES TRANSACTIONS (MID CAP
FUND AND PACIFIC FUND ONLY)
From time to time, certain of the mutual funds managed by AIM or A I M
Capital Management, Inc. (collectively, "AIM Funds") or accounts may become
interested in participating in security distributions that are available in an
IPO, and occasions may arise when purchases of such securities by one AIM Fund
or accounts may also be considered for purchase by one or more other AIM Funds
or accounts. In such cases, it shall be AIM's practice to specifically combine
or otherwise bunch indications of interest for IPO securities for all AIM Funds
and accounts participating in purchase transactions for that security, and to
allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that
seeks to participate in a particular IPO by reviewing a number of factors,
including suitability of the investment with the AIM Fund's or account's
investment objective, policies and strategies, the liquidity of the AIM Fund or
account if such investment is purchased, and whether the portfolio manager
intends to hold the security as a long-term investment. The allocation of
limited supply securities issued in IPOs will be made to eligible AIM Funds and
accounts in a manner designed to be fair and equitable for the eligible AIM
Funds and accounts, and so that there is equal allocation of IPOs over the
longer term. Where multiple funds or accounts are eligible, rotational
participation may occur, based on the extent to which an AIM Fund or account has
participated in previous IPOs as well as the size of the AIM Fund or account.
Each eligible AIM Fund and account with an asset level of less than $500 million
will be placed in one of three tiers, depending upon its asset level. The AIM
Funds and accounts in the tier containing funds and accounts with the smallest
asset levels will participate first, each receiving a 40 basis point allocation
(rounded to the nearest share round lot that approximates 40 basis points) (the
"Allocation"), based on that AIM Fund's or account's net assets. This process
continues until all of the AIM Funds and accounts in the three tiers receive
their Allocations, or until the shares are all allocated. Should securities
remain after this process, eligible AIM Funds and accounts will receive their
Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts
not receiving a full Allocation, the Allocation may be made only to certain AIM
Funds or accounts so that each may receive close to or exactly 40 basis points.
When any AIM Fund and/or account with substantially identical
investment objectives and policies participates in syndicates, they will do so
in amounts that are substantially proportionate to each other. In these cases,
the net assets of the largest AIM Funds or accounts will be used to determine in
which tier, as described in the paragraph above, such group of AIM Funds or
accounts will be placed. If no AIM Fund is participating, then the net assets of
the largest account will be used to determine tier placement. The price per
share of securities purchased in such syndicate transactions will be the same
for each AIM Fund and account.
EXECUTION OF PORTFOLIO TRANSACTIONS
Subject to policies established by the Trust's Board of Trustees, AIM
and/or the Sub-advisors 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-advisors 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-advisors 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-advisors
may select brokers to execute the Funds' portfolio transactions on the basis of
the research services they provide to AIM and/or the
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<PAGE> 223
Sub-advisors 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). Broker/dealers may communicate such information
electronically, orally, in written form or on computer software. 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-advisors 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-advisors 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-advisors 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-advisors 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-advisors 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-advisors 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-advisors may
consider a broker/dealer's sale of the shares of the Funds and the other funds
for which AIM or the Sub-advisors 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 any of the Sub-advisors. The Trust's
Board 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.
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<PAGE> 224
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 years ended December 31, 1999 and 1998, 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 1999 1998 1997
- ---- ---- ---- ----
<S> <C> <C> <C>
Euroland Fund $ 1,630,504 $ 1,989,166 $ 2,217,385
Japan Fund 357,340 235,325 218,841
Mid Cap Fund 623,671 1,528,607 2,193,539
Pacific Fund 870,611 930,036 2,767,789
</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-advisors 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-advisors deem portfolio changes appropriate. High portfolio
turnover (over 100%) 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, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
FUND 1999 1998
- ---- ---- ----
<S> <C> <C>
Euroland Fund 71% 97%
Japan Fund 43% 67%
Mid Cap Fund 90% 168%
Pacific Fund 98% 96%
</TABLE>
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the
operation of the Funds. The Board has approved all significant agreements
between the Trust and persons or companies furnishing services to the Funds
including the investment management and administration agreement with AIM, the
investment sub-advisory agreement between AIM and the Sub-advisors, the
agreements with AIM Distributors regarding distribution of the Funds' shares,
the custody agreement and the transfer agency agreement. The day-to-day
operations of the Funds are delegated to the officers of the Trust, subject
always to the investment objectives and policies of the Funds and to the general
supervision of the Trust's Board. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc., the parent corporation of
AIM.
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.
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<PAGE> 225
<TABLE>
<CAPTION>
POSITIONS
HELD WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE REGISTRANT DURING PAST 5 YEARS
--------------------- ---------- -------------------
<S> <C> <C>
*ROBERT H. GRAHAM (53) Trustee, Director, President and Chief Executive Officer,
Chairman and A I M Management Group Inc.; Director and
President President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and
Director and Chief Executive Officer, Managed
Products, AMVESCAP PLC.
C. DEREK ANDERSON (58) Trustee Senior Managing Partner, Plantagenet Capital
456 Montgomery St. Management, LLC (an investment partnership);
Suite 200 Chief Executive Officer, Plantagenet Holdings,
San Francisco, CA 94104 Ltd. (an investment banking firm); Director,
Premium Wear, Inc. (formerly Munsingwear, Inc.)
(a casual apparel company), "R" Homes, Inc., Big
Online, Inc., Champagne Albert Le Brun and
various other privately owned companies.
FRANK S. BAYLEY (60) Trustee Partner, law firm of Baker & McKenzie; Trustee,
Two Embarcadero Center The Badgley Funds (public, no loads mutual
Suite 2400 funds); and Director and Chairman, Stimson
San Francisco, CA 94111 Marina Inc., a subsidiary of C.D. Stimson
Company (a private investment company).
RUTH H. QUIGLEY (65) Trustee Private investor; and President, Quigley
1055 California Street Friedlander & Co., Inc. (a financial advisory
San Francisco, CA 94108 services firm) from 1984 to 1986.
SAMUEL D. SIRKO (40) Vice President Vice President, Assistant General Counsel and
and Secretary Assistant Secretary, A I M Advisors, Inc.; and
Assistant General Counsel and Assistant
Secretary, 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.
MELVILLE B. COX (56) Vice President Vice President and Chief Compliance Officer,
A I M Advisors, Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company.
GARY T. CRUM (52) Vice President Director and President, A I M Capital
Management, Inc.; Director and Executive Vice
President, A I M Management Group Inc.; Director
and Senior Vice President, A I M Advisors, Inc.;
and Director, A I M Distributors, Inc. and
AMVESCAP PLC.
</TABLE>
- -----------------
* A trustee who is an "interested person" of the Trust and A I M
Advisors, Inc. as defined in the 1940 Act.
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<PAGE> 226
<TABLE>
<CAPTION>
POSITIONS
HELD WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE REGISTRANT DURING PAST 5 YEARS
- ------------------------------ --------------- ------------------------------------------------
<S> <C> <C>
CAROL F. RELIHAN (45) Vice President Director, Senior Vice President, General Counsel
and Secretary, A I M Advisors, Inc.; Senior Vice
President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
Vice President and General Counsel, A I M Fund
Services, Inc.; and Vice President, A I M
Capital Management, Inc. and A I M Distributors,
Inc.
DANA R. SUTTON (41) Vice President Vice President and Fund Controller, A I M
and Treasurer Advisors, Inc.; and Assistant Vice President and
Assistant Treasurer, Fund Management Company.
</TABLE>
The Board of Trustees has a Nominating and Audit Committee, comprised
of Miss Quigley (Chairman) and Messrs. Anderson and Bayley, 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 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-advisors or any affiliated
company is paid an annual retainer component plus a per-meeting fee component,
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, 1999, the Trust paid Mr.
Anderson, Mr. Bayley, Mr. Arthur Patterson (a Trustee until September 27, 1999,
when he retired) and Miss Quigley, who are not directors, officers or employees
of AIM and/or the Sub-advisors or any affiliated company, total compensation of
$22,943, $23,357, $15,634 and $23,357, respectively, for their services as
Trustees. For the year ended December 31, 1999, Mr. Anderson, Mr. Bayley, Mr.
Patterson and Miss Quigley, who are not directors, officers or employees of AIM
and/or the Sub-advisors or any other affiliated company, received total
compensation of $106,500, $108,500, $80,000 and $108,500, respectively, from the
investment companies managed or administered by AIM and sub-advised or
sub-administered by the Sub-advisors 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.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, was organized
in 1976 and, together with its subsidiaries, manages or advises approximately
120 investment portfolios encompassing a broad range of investment objectives.
INVESCO Asset Management Limited, 11 Devonshire Square, London, EC2M 4YR,
England, has provided investment management and/or administrative services to
pension funds, insurance funds, index funds, unit trusts, offshore funds and a
variety of institutional accounts since 1967. INVESCO Asset Management (Japan)
Limited, Imperial Tower, 1-1-1 Uchisaiwai-cho, Chiyoda-Ku, Tokyo, 100-0011, has
provided investment management services since 1990. AIM, the Sub-advisors and
their world-wide asset management affiliates provide investment management
and/or administrative services to institutional, corporate and individual
clients around the world.
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<PAGE> 227
AIM is a direct, wholly owned subsidiary of AIM Management Group Inc.
("AIM Management"), a holding company that has been engaged in the financial
services business since 1976. AIM is also the sole shareholder of the Funds'
principal underwriter, AIM Distributors.
AIM Management, AIM and the Sub-Advisors are indirect wholly owned
subsidiaries of AMVESCAP PLC, 11 Devonshire Square, London, EC2M 4YR, England.
AMVESCAP PLC and its subsidiaries are an independent 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.
Certain of the directors and officers of AIM are also executive officers of the
Trust and their affiliations are shown under "Management" herein.
In addition to the investment resources of their Houston and London
offices, AIM and the Sub-advisors draw upon the expertise, personnel, data and
systems of other offices in Atlanta, Boston, Dallas, Denver, Louisville, Miami,
New York, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore, Sydney,
Tokyo and Toronto. In managing the Funds and the Portfolio, the Sub-advisors
employ a team approach, taking advantage of its investment resources around the
world.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics; (b) file reports
regarding such transactions; (c) refrain from personally engaging in (i)
short-term trading of a security, (ii) transactions involving a security within
seven days of an AIM Fund transaction involving the same security (subject to a
de minimis exception), and (iii) transactions involving securities being
considered for investment by an AIM Fund (subject to the de minimis exception);
and (d) abide by certain other provisions of the Code of Ethics. The de minimis
exception under the Code of Ethics covers situations where there is no material
conflict of interest because of the large market capitalization of a security
and the relatively small number of shares involved in a personal transaction.
The Code of Ethics also generally prohibits AIM employees who are registered
with the NASD from purchasing securities in initial public offerings. Personal
trading reports are periodically reviewed by AIM, and the Board of Directors
reviews quarterly and annual reports (which summarize any significant violations
of the Code of Ethics). Sanctions for violating the Code of Ethics may include
censure, monetary penalties, suspension or termination of employment.
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. AIM became investment manager and
administrator to the Funds effective June 1, 1998. Prior to that date,
Chancellor LGT Asset Management, Inc. served as investment manager and
administrator. As investment managers and administrators, AIM and/or the
Sub-advisors make all investment decisions for each Fund and administer each
Fund's affairs. Among other things, AIM and/or the Sub-advisors 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.
For these services, each Fund (other than Mid Cap 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 the amounts thereafter. Mid Cap 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. Out of the aggregate fees payable by Euroland Fund
and Japan Fund, AIM pays each Sub-advisor, sub-advisory fees equal to 40% of
the aggregate fees AIM receives from Euroland Fund and Japan Fund. The
investment management and administration fees paid by the Funds are higher than
those paid by most mutual funds. The Funds pay all expenses not assumed by AIM,
the Sub-advisors, AIM Distributors or other agents. AIM has undertaken to limit
expenses of each of Euroland Fund, Japan Fund and Pacific Fund (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the annual
rate of 2.00%, 2.65% and 2.65% of the average daily net assets of each Fund's
Class A, Class B and Class C shares, respectively, and has undertaken to limit
expenses of Mid Cap Fund to the annual rate of
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<PAGE> 228
1.75%, 2.40% and 2.40% of the average daily net assets of Class A, Class B and
Class C shares, respectively, until June 30, 2000.
AIM may from time to time waive or reduce its fee. Voluntary fee
waivers or reductions may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Tables in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM and the Fund.
For the fiscal years ended December 31, 1999, 1998 and 1997, each Fund
paid AIM and the prior manager and administrator the following investment
management and administration fees net of any expense limitations (fee waivers):
<TABLE>
<CAPTION>
FUND 1999 1998 1997
- ---- ---- ---- ----
<S> <C> <C> <C>
Euroland Fund $ 4,507,101 $ 5,643,072 $ 5,228,246
Japan Fund 1,356,654 740,164 1,017,788
Mid Cap Fund 2,111,743 3,140,938 3,999,732
Pacific Fund 930,085 949,747 2,979,705
</TABLE>
INVESCO Japan serves as the sub-advisor to Japan Fund under a
Sub-advisory Contract between AIM and INVESCO Japan ("Sub-Management Contract").
INVESCO AML serves as the sub-advisor to Euroland Fund under a Sub-advisory
Contract between AIM and INVESCO AML ("Sub-Management Contract"). The
Sub-Management Contracts together with the Management Contract may be referred
to hereafter as the "Management Contracts." AIM pays each Sub-advisor
sub-advisory fees, computed weekly and paid monthly, based on such Fund's
average daily net assets, at the annualized rate of 0.39% of the first $500
million, 0.38% on the next $500 million, 0.37% on the next $500 million, and
0.36% on the amounts thereafter.
INVESCO Asia Limited ("INVESCO Asia") served as the sub-advisor to
Pacific Fund under a sub-advisory contract between AIM and INVESCO Asia that was
terminated on March 22, 2000. Under the sub-advisory contract, AIM paid INVESCO
Asia sub-advisory fees, computed weekly and paid monthly based on Pacific Fund's
average daily net assets, at the annualized rate of 0.39% of the first $500
million, 0.38% on the next $500 million, 0.37% on next $500 million, and 0.36%
on the amounts thereafter.
For the fiscal years ended December 31, 1999, 1998 and 1997, AIM and
the former investment manager and administrator paid the respective sub-advisors
the following sub-advisory fees:
<TABLE>
<CAPTION>
FUND 1999 1998 1997
- ---- ---- ---- ----
<S> <C> <C> <C>
Euroland Fund $1,802,840.40 $2,257,288.80 $2,091,298.40
Japan Fund 542,661.60 296,065.60 407,115.20
Pacific Fund 483,318.00 579,064.40 1,494,505.60
</TABLE>
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-advisors 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).
Under a master accounting services agreement AIM serves as the Funds'
pricing and accounting agent. For these services, the Funds pay AIM such fees as
are determined in accordance with methodologies established, from time to time,
by the Trust's Board of Trustees.
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<PAGE> 229
For the fiscal years ended December 31, 1999, 1998 and 1997, each Fund
paid AIM and the former investment manager and administrator the following
accounting services fees:
<TABLE>
<CAPTION>
FUND 1999 1998 1997
- ---- ---- ---- ----
<S> <C> <C> <C>
Euroland Fund $128,346 $158,561 $138,072
Japan Fund 38,219 20,629 26,210
Mid Cap Fund 86,264 118,894 142,274
Pacific Fund 42,925 40,387 99,321
</TABLE>
In placing securities for a Fund's portfolio transactions, AIM and/or
the Sub-advisors seek to obtain the best net results. Consistent with its
obligation to obtain the best net results, AIM and/or the Sub-advisors 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 may be executed through affiliates of AIM or the Sub-advisors.
EXPENSES OF THE FUNDS
Each Fund pays all expenses not assumed by AIM, the Sub-advisors, AIM
Distributors and other agents. These expenses include, in addition to the
advisory and administrative, 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, other than Mid Cap Fund, 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.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1
under the 1940 Act relating to the Class A and Class C shares of the Funds (the
"Class A and C Plan"). The Class A and C Plan provides that the Class A shares
pay 0.35% per annum of their average daily net assets attributable to Class A
shares as compensation to AIM Distributors for the purpose of financing any
activity which is primarily intended to result in the sale of Class A shares.
Under the Class A and C Plan, Class C shares of each Fund pay compensation to
AIM Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class C shares. The Class A and C Plan is designed to compensate
AIM Distributors, on a quarterly basis, for certain promotional and other
sales-related costs, and to implement a dealer incentive program which provides
for periodic payments to selected dealers who furnish continuing personal
shareholder services to their customers who purchase and own Class A or Class C
shares of a Fund. Payments can also be directed by AIM Distributors to selected
institutions who have entered into service agreements with respect to Class A
and Class C shares of each Fund and who provide continuing personal services to
their customers who own Class A and Class C shares of the Funds. 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. 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
34
<PAGE> 230
shareholders; overhead; preparation and distribution of advertising material and
sales literature; expenses of organizing and conducting sales seminars;
supplemental payments to dealers and other institutions such as asset-based
sales charges or as payments of service fees under shareholder service
arrangements; and costs of administering the Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average daily net assets of the Fund
attributable to the customers of such dealers or financial institutions are
characterized as a service fee, and payments to dealers and other financial
institutions in excess of such amount and payments to AIM Distributors would be
characterized as an asset-based sales charge pursuant to the Class A and C Plan.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the NASD. The Class A and C Plan 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 a Fund.
THE CLASS B PLAN
The Trust has also adopted a Master Distribution Plan pursuant to Rule
12b-1 under the 1940 Act relating to Class B shares of the Funds (the "Class B
Plan", and collectively with the Class A and C Plan, the "Plans"). Under the
Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate
of 1.00% of the average daily net assets attributable to Class B shares. Of such
amount, each Fund pays a service fee of 0.25% of the average daily net assets
attributable to Class B shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who purchase
and own Class B shares. 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.
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
35
<PAGE> 231
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 such Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the NASD. The Plans conform to rules of the NASD
by limiting payments made to dealers and other financial institutions who
provide continuing personal shareholder services to their customers who purchase
and own shares of the Funds to no more than 0.25% per annum of the average daily
net assets of the Funds attributable to the customers of such dealers or
financial institutions, and by imposing a cap on the total sales charges,
including asset based sales charges, that may be paid by the Funds and their
respective classes.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for Class A and Class C shares. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM Distributors will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Funds on an agency basis, may
receive payments from the Funds pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Funds, in
making dealer incentive and shareholder servicing payments under the Plans.
These payments are an obligation of the Funds and not of AIM Distributors.
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreements relating to Class B shares in order
to finance distribution expenditures in respect of Class B shares.
For the fiscal year ended December 31, 1999, each Fund paid the
following amounts under the current Plan:
<TABLE>
<CAPTION>
% OF CLASS
AVERAGE DAILY
NET ASSETS
-------------------------------
CLASS A CLASS B CLASS C* CLASS A CLASS B CLASS C
---------- ----------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Euroland Fund $1,321,561 $ 830,901 $ 1,122 0.35% 1.00% 1.00%
Japan Fund 272,801 535,942 32,117 0.35% 1.00% 1.00%
Mid Cap Fund 541,241 1,348,273 3,130 0.35% 1.00% 1.00%
Pacific Fund 308,929 343,884 1,868 0.35% 1.00% 1.00%
</TABLE>
* Class C shares commenced operations on May 3, 1999.
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<PAGE> 232
Actual fees by category paid by each Fund with regard to the Class A
shares during the year ended December 31, 1999 follows:
<TABLE>
<CAPTION>
EUROLAND JAPAN MID CAP PACIFIC
FUND FUND FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Advertising $ 153,877 $ 36,272 $ 85,341 $ 34,464
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) 15,328 3,232 7,652 3,651
Seminars 43,131 7,632 21,256 12,239
Compensation to Underwriters to
partially offset other
marketing expenses 0 0 0 0
Compensation to Dealers including
finder's fees 1,109,226 225,665 426,992 258,576
Compensation to Sales Personnel 0 0 0 0
Annual Report Total $ 1,321,562 $ 272,801 $ 541,241 $ 308,930
</TABLE>
Actual fees by category paid by each Fund with regard to the Class B
shares during the year ended December 31, 1999 as follows:
<TABLE>
<CAPTION>
EUROLAND JAPAN MID CAP PACIFIC
FUND FUND FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS B
Advertising $ 6,704 $ 21,448 $ 7,490 $ 2,914
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) 628 1,920 690 253
Seminars 1,746 4,572 1,789 704
Compensation to Underwriters to
partially offset other
marketing expenses 623,176 401,956 1,011,205 257,913
Compensation to Dealers 198,647 106,045 327,099 82,100
Compensation to Sales Personnel 0 0 0 0
Annual Report Total $ 830,901 $ 535,941 $1,348,273 $ 343,884
</TABLE>
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<PAGE> 233
Actual fees by category paid by each Fund with regard to the Class C
shares during the year ended December 31, 1999 as follows:
<TABLE>
<CAPTION>
EUROLAND JAPAN MID CAP PACIFIC
FUND FUND FUND FUND
-------- -------- -------- -------
<S> <C> <C> <C> <C>
CLASS C
Advertising $ 247 $ 3,655 $ 81 $ 5,172
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) 0 362 0 0
Seminars 0 402 0 0
Compensation to Underwriters to
partially offset other
marketing expenses 841 24,087 2,117 1,401
Compensation to Dealers 34 3,610 932 324
Compensation to Sales Personnel 0 0 0 0
Annual Report Total $ 1,122 $ 32,116 $ 3,130 $ 1,868
</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 from year to year as long as such continuance is specifically
approved at least annually by the Board of Trustees, including a majority of the
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 and C Plan is amended in a manner
which the Board of Trustees determines would materially increase the charges
paid under the Class A and C 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
38
<PAGE> 234
into such new class of shares no later than the date the Class B shares were
scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C 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 Class B Plan (as defined in such Plan)
and (iii) the Class B Plan expressly authorizes AIM Distributors to assign,
transfer or pledge its rights to payments pursuant to the Class B Plan.
THE DISTRIBUTOR
The Trust has entered into distribution arrangements with AIM
Distributors, P.O. Box 4739, Houston, Texas 77210-4739, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor of
Class A, Class B and Class C shares of the Funds. Certain Trustees and officers
of the Trust are affiliated with AIM Distributors. A Master Distribution
Agreement with AIM Distributors relating to the Class B shares of the Funds was
approved by the Board of Trustees on May 7, 1998 and a Master Distribution
Agreement with AIM Distributors relating to the Class A shares and Class C
shares was approved by the Board of Trustees on December 10, 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.
The Distribution Agreements provide AIM Distributors with the exclusive
right to distribute shares of the Funds directly and through institutions with
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares of the Funds 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 each Fund's average daily net
assets attributable to Class B shares attributable to the sales efforts of AIM
Distributors.
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.
39
<PAGE> 235
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record.
The Trust (on behalf of any class of any Fund) or AIM Distributors may
terminate the Distribution Agreements on sixty (60) days' written notice without
penalty. The Distribution Agreements will terminate automatically in the event
of their assignment. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
distribution fees in respect of the outstanding Class B shares attributable to
the distribution efforts of AIM Distributors 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 former distributor prior to June 1, 1998, for the
period January 1, 1998 to May 31, 1998 and the fiscal year ended December 31,
1997.
<TABLE>
<CAPTION>
JANUARY 1, 1998 TO
MAY 31, 1998 1997
---------------------------- --------------------------
SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Euroland Fund $ 47,671 $ 789 $ 70,428 $ 4,461
Japan Fund 16,618 8,184 62,977 23,200
Mid Cap Fund 56,587 17,303 170,104 38,700
Pacific Fund 27,917 0 145,896 21,605
</TABLE>
Each Fund pays AIM Distributors sales charges on sales of Class A
shares of the Funds, retains certain amounts of such charges and reallows other
amounts of such charges to brokers/dealers who sell shares.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of each Fund and the amount retained by AIM
Distributors for the fiscal year ended December 31, 1999 and the period of June
1, 1998 to December 31, 1998.
<TABLE>
<CAPTION>
JUNE 1, 1998 TO
1999 DECEMBER 31, 1998
------------------------------ -------------------------
SALES AMOUNT SALES AMOUNT
CHARGES RETAINED CHARGES RETAINED
------------ ---------- --------- --------
<S> <C> <C> <C> <C>
Euroland Fund $ 281,121 $ 32,554 $ 55,808 $ 55,381
Japan Fund 1,157,480 180,711 20,307 18,903
Mid Cap Fund 243,450 40,399 10,378 4,819
Pacific Fund 173,009 41,906 25,540 23,466
</TABLE>
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<PAGE> 236
The following chart reflects the contingent deferred sales charges paid
by Class A, Class B and Class C* shareholders for the fiscal years ended
December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Euroland Fund $ 7,813 $ 407,129 $ 516,795
Japan Fund 1,972 181,703 284,394
Mid Cap Fund 684 962,327 2,340,777
Pacific Fund 1,977 236,944 665,740
</TABLE>
* Class C shares commenced operations on May 3, 1999.
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge
ranging from 5.50% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund,
AIM Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM
Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund,
AIM European Development Fund, AIM Euroland Growth Fund, AIM Global Utilities
Fund, AIM Global Growth & Income Fund, AIM International Equity Fund, AIM Japan
Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM
Large Cap Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund,
AIM Mid Cap Opportunities Fund, AIM New Pacific Growth Fund, AIM Select Growth
Fund, AIM Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value
Fund and AIM Weingarten Fund.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
------------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
------------------------ --------------- -------------- ---------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- ------------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real
Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging
Markets Debt Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer
Products and Services Fund, AIM Global Financial Services Fund, AIM Global
Government Income Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM
Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund,
AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM
High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM
Income Fund, AIM Intermediate
41
<PAGE> 237
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>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge ----------
------------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------------ --------------- -------------- ---------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $ 1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more of Category
I, II or III funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. At the option of the dealer, such
incentives may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representatives
and their families to places within or outside the United States. The total
amount of such additional bonus payments or other consideration shall not exceed
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
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<PAGE> 238
use sales of the AIM Funds' shares to qualify for any incentives to the extent
that such incentives may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class B shares of the AIM Funds at the time of such sales. Payments
with respect to Class B shares will equal 4.00% of the purchase price of the
Class B shares sold by the dealer or institution, and will consist of a sales
commission equal to 3.75% of the purchase price of the Class B shares sold plus
an advance of the first year service fee of 0.25% with respect to such shares.
The portion of the payments to AIM Distributors under the Class B Plan which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of such sales commissions plus financing
costs.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. These
commissions are not paid on sales to investors exempt from the CDSC, including
shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who
purchase additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class
B shares or Class C shares are considered sales of such Class B shares or Class
C shares for purposes of the sales charges and dealer concessions discussed
above.
AIM Distributors may pay investment dealers or other financial service
firms for share purchases (measured on an annual basis) of Class A Shares of all
AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate
Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit
plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the
next $1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity
Treasury Fund sold at net asset value to an employee benefit plan in accordance
with this paragraph.
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<PAGE> 239
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including
any trust established exclusively for the benefit of any such
person; or a pension, profit-sharing, or other benefit plan
established exclusively for the benefit of any such person,
such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual
participant in a 403(b) Plan (unless such 403(b) plan
qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an
organization described under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for
all participating employees in a single contribution
transmittal (i.e., the Funds will not accept
contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single
check or wire transfer; and
c. all new participants must be added to the 403(b) plan
by submitting an application on behalf of each new
participant with the contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate
or single fiduciary account (including a pension,
profit-sharing or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Code)
and 457 plans, although more than one beneficiary or
participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and
other Elective Simplified Employee Pension account (SAR-SEP)
or a Savings Incentive Match Plans for Employees IRA (SIMPLE
IRA), where the employer has notified the distributor in
writing that all of its related employee SEP, SAR-SEP or
SIMPLE IRA accounts should be linked; or
o any other organized group of persons, whether incorporated or
not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase
at a discount of redeemable securities of a registered
investment company.
Investors or dealers seeking to qualify orders for a reduced initial
sales charge must identify such orders and, if necessary, support their
qualification for the reduced charge. AIM Distributors reserves the right to
determine whether any purchaser is entitled, by virtue of the foregoing
definition, to the reduced sales charge. No person or entity may distribute
shares of the AIM Funds without payment of the applicable sales charge other
than to persons or entities who qualify for a reduction in the sales charge as
provided herein.
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay
reduced initial sales charges by completing the appropriate section of the
account application and by fulfilling a Letter of Intent ("LOI"). The LOI
privilege is also available to holders of the Connecticut General Guaranteed
Account, established for tax qualified group annuities, for contracts purchased
on or before June 30, 1992. The LOI confirms such purchaser's intention as to
the total investment to be made in shares of the AIM Funds (except for (i) Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market
44
<PAGE> 240
Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM
Floating Rate Fund) within the following 13 consecutive months. By marking the
LOI section on the account application and by signing the account application,
the purchaser indicates that he understands and agrees to the terms of the LOI
and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales
charge made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all shares, to make up
such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes
to cancel the agreement, he must give written notice to AIM Distributors. If at
any time before completing the LOI Program the purchaser requests the Transfer
Agent to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may
also qualify for reduced initial sales charges based upon such purchaser's
existing investment in shares of any of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares
of AIM Floating Rate Fund) at the time of the proposed purchase. Rights of
Accumulation are also available to holders of the Connecticut General Guaranteed
Account, established for tax-qualified group annuities, for contracts purchased
on or before June 30, 1992. To determine whether or not a reduced initial sales
charge applies to a proposed purchase, AIM Distributors takes into account not
only the money which is invested upon such proposed purchase, but also the value
of all shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt
Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and
Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund)
owned by such purchaser, calculated at their then current public offering price.
If a purchaser so qualifies for a reduced sales charge, the reduced sales charge
applies to the total amount of money then being invested by such purchaser and
not just to the
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<PAGE> 241
portion that exceeds the breakpoint above which a reduced sales charge applies.
For example, if a purchaser already owns qualifying shares of any AIM Fund with
a value of $20,000 and wishes to invest an additional $20,000 in a fund, with a
maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25%
will apply to the full $20,000 purchase and not just to the $15,000 in excess of
the $25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at net
asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a
fund; (b) exchanges of shares of certain funds; (c) use of the reinstatement
privilege; or (d) a merger, consolidation or acquisition of assets of a fund.
The following purchasers will not pay initial sales charges on
purchases of Class A shares because there is a reduced sales effort involved in
sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and
members of their immediate family) of AIM Management, its
affiliates or The AIM Family of Funds--Registered Trademark--,
and any foundation, trust or employee benefit plan established
exclusively for the benefit of, or by, such persons;
o Any current or retired officer, director, or employee (and
members of their immediate family), of CIGNA Corporation or
its affiliates, or of First Data Investor Services Group; and
any deferred compensation plan for directors of investment
companies sponsored by CIGNA Investments, Inc. or its
affiliates;
o Sales representatives and employees (and members of their
immediate family) of selling group members or financial
institutions that have arrangements with such selling group
members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined
above, and non-qualified plans offered in conjunction
therewith, provided the initial investment in the plan(s) is
at least $1 million; the sponsor signs a $1 million LOI; the
employer-sponsored plan(s) has at least 100 eligible
employees; or all plan transactions are executed through a
single omnibus account per Fund and the financial institution
or service organization has entered into the appropriate
agreements with the distributor. Section 403(b) plans
sponsored by public educational institutions are not eligible
for a sales charge exception based on the aggregate investment
made by the plan or the number of eligible employees.
Purchases of AIM Small Cap Opportunities Fund by such plans
are subject to initial sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or
AIM Constellation Fund on September 8, 1986, or of AIM Charter
Fund on November 17, 1986, who have continuously owned shares
having a market value of at least $500 and who purchase
additional shares of the same Fund;
o Shareholders of record of Advisor Class shares of AIM
International Growth Fund or AIM Worldwide Growth Fund on
February 12, 1999 who have continuously owned shares of the
AIM Funds;
o Unitholders of G/SET series unit investment trusts investing
proceeds from such trusts in shares of AIM Weingarten Fund or
AIM Constellation Fund; provided, however, prior to the
termination date of the trusts, a unitholder may invest
proceeds from the redemption or
46
<PAGE> 242
repurchase of his units only when the investment in shares
of AIM Weingarten Fund and AIM Constellation Fund is
effected within 30 days of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an
AIM Fund or that sells its assets to an AIM Fund in exchange
for shares of an AIM Fund;
o Shareholders of the GT Global funds as of April 30, 1987 who
since that date continually have owned shares of one or more
of these funds;
o Certain former AMA Investment Advisers' shareholders who
became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the GT
Global funds since that time; and
o Shareholders of record of Advisor Class shares of an AIM Fund
on February 11, 2000 who have continuously owned shares of
that AIM Fund, and who purchase additional shares of that AIM
Fund.
As used above, immediate family includes an individual and
his or her spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in the former GT Global
funds, which are permitted to be made without penalty pursuant to the Code,
other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global funds; (6) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (7) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (8) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code; (10) redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in Section 401(k) of the
Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code
upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Former GT Global funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption in addition to the waivers provided for
redemptions of currently issued Class B shares as described in a 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 the
former GT Global funds, which are permitted to be made without penalty pursuant
to the Code, other than tax-free rollovers or transfers of assets, and the
proceeds of which are reinvested in the former GT
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<PAGE> 243
Global funds; (4) redemptions made in connection with participant-directed
exchanges between options in an employer-sponsored benefit plan; (5) redemptions
made for the purpose of providing cash to fund a loan to a participant in a
tax-qualified retirement plan; (6) redemptions made in connection with a
distribution from any retirement plan or account that is permitted in accordance
with the provisions of Section 72(t)(2) of the Code, and the regulations
promulgated thereunder; (7) redemptions made in connection with a distribution
from a qualified profit-sharing or stock bonus plan described in Section 401(k)
of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of
the Code upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (8) redemptions made by or for the
benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large
Cap Value Fund and AIM Advisor Real Estate Fund by
shareholders of record on April 30, 1995, of these Funds,
except that shareholders whose broker-dealers maintain a
single omnibus account with AFS on behalf of those
shareholders, perform sub-accounting functions with respect to
those shareholders, and are unable to segregate shareholders
of record prior to April 30, 1995, from shareholders whose
accounts were opened after that date will be subject to a CDSC
on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of
(1) any registered shareholders on an account or (2) a settlor
of a living trust, of shares held in the account at the time
of death or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts,
Section 403(b) retirement plans, Section 457 deferred
compensation plans and Section 401 qualified plans, where
redemptions result from (i) required minimum distributions to
plan participants or beneficiaries who are age 70-1/2 or
older, and only with respect to that portion of such
distributions that does not exceed 12% annually of the
participant's or beneficiary's account value in a particular
AIM Fund; (ii) in kind transfers of assets where the
participant or beneficiary notifies the distributor of the
transfer no later than the time the transfer occurs; (iii)
tax-free rollovers or transfers of assets to another plan of
the type described above invested in Class B or Class C shares
of one or more of the AIM Funds; (iv) tax-free returns of
excess contributions or returns of excess deferral amounts;
and (v) distributions on the death or disability (as defined
in the Internal Revenue Code of 1986, as amended) of the
participant or beneficiary;
o Amounts from a Systematic Withdrawal Plan of up to an annual
amount of 12% of the account value on a per fund basis, at the
time the withdrawal plan is established, provided the investor
reinvests his dividends;
o Liquidation by the Fund when the account value falls below the
minimum required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies
the distributor prior to the time of investment that the
dealer waives the payment otherwise payable to him.
Upon the redemption of shares of funds in sales charge Categories I and
II (see "Sales Charges and Dealer Concessions") purchased in amounts of $1
million or more, no CDSC will be applied in the following situations:
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o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as
qualified purchasers, as defined above, where the redemptions
are in connection with employee terminations or withdrawals,
provided the total amount invested in the plan is at least
$1,000,000; the sponsor signs a $1 million LOI; or the
employer-sponsored plan has at least 100 eligible employees;
provided, however, that 403(b) plans sponsored by public
educational institutions shall qualify for the CDSC waiver on
the basis of the value of each plan participant's aggregate
investment in the AIM Funds, and not on the aggregate
investment made by the plan or on the number of eligible
employees;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's
dealer waives the amounts otherwise payable to it by the
distributor and notifies the distributor prior to the time of
investment; and
o Shares acquired by exchange from Class A shares of funds in
sales charge Categories I and II unless the shares acquired by
exchange are redeemed within 18 months of the original
purchase of the Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner in which shares of the Funds may
be purchased appears in the Funds' Prospectuses under the heading "Purchasing
Shares - How to Purchase Shares."
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), 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 under the caption "Reductions
in Initial Sales Charges--Purchases At Net Asset Value."
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 "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in
the Prospectuses under the heading "Redeeming Shares." Shares of the AIM Funds
may be redeemed directly through AIM Distributors or through any dealer who has
entered into an agreement with AIM Distributors. In addition to the Funds'
obligation to redeem shares, AIM Distributors may also repurchase shares as an
accommodation to shareholders. To effect a repurchase, those dealers who have
executed Selected Dealer Agreements with AIM Distributors must phone orders to
the order desk of the Funds at (800) 959-4246 and guarantee delivery of all
required documents in good order. A repurchase is effected at the net asset
value per share of the applicable Fund next determined after the repurchase
order is received. Such an arrangement is subject to
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timely receipt by AIM 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. AIM intends
to redeem all shares of the Funds in cash.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the 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.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations,
withhold 31% of redemption payments and reportable dividends (whether paid or
accrued) in the case of any shareholder who fails to provide the Fund with a
taxpayer identification number ("TIN") and a certification that he is not
subject to backup withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an
incorrect TIN, or
(3) the investor or the Fund is notified by the IRS that the
investor is subject to backup withholding because the investor
failed to report all of the interest and dividends on such
investor's tax return (for reportable interest and dividends
only), or
(4) the investor fails to certify to the Fund that the investor is
not subject to backup withholding under (3) above (for
reportable interest and dividend accounts opened after 1983
only), or
(5) the investor does not certify his TIN. This applies only to
non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all
five situations discussed above. Redemption proceeds and long-term gain
distributions are subject to backup withholding only if (1) (2) or (5) above
applies.
Certain payees and payments are exempt from backup withholding and
information reporting. A complete listing of such exempt entities appears in the
Instructions for the Requester of Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
o a corporation
o an organization exempt from tax under Section 501(a), an
individual retirement plan (IRA), or a custodial account under
Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United
States, or any of their political subdivisions or
instrumentalities
o a foreign government or any of its political subdivisions,
agencies or instrumentalities
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o an international organization or any of its agencies or
instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in
the U.S. or a possession of the U.S.
o a futures commission merchant registered with the Commodity
Futures Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under
the 1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society
of Corporate Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in
Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a
correct TIN will be subject to a $50 penalty imposed by the IRS unless such
failure is due to reasonable cause and not willful neglect. If an investor
falsifies information on this form or makes any other false statement resulting
in no backup withholding on an account which should be subject to backup
withholding, such investor may be subject to a $500 penalty imposed by the IRS
and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign
entities are not subject to the backup withholding previously discussed, but
must certify their foreign status by attaching IRS Form W-8 to their
application. Form W-8 remains in effect for three calendar years beginning with
the calendar year in which it is received by the Fund. Such shareholders may,
however, be subject to federal income tax withholding at a 30% rate on ordinary
income dividends and distributions and return of capital distributions. Under
applicable treaty law, residents of treaty countries may qualify for a reduced
rate of withholding or a withholding exemption.
NET ASSET VALUE DETERMINATION
The net asset value per share of each Fund is normally determined once
daily as of the close of the customary trading session of the New York Stock
Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each business day of the
Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern time)
on a particular day, the net asset value of a Fund share is determined as of the
close of the NYSE on such day. Net asset value per share is determined by
dividing the value of the equity 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.
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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 the customary trading
session 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 customary trading session of
the NYSE. The values of such securities used in computing the net asset value of
each Fund's shares are determined at such times. Foreign currency exchange rates
are also generally determined prior to the close of the customary trading
session of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which such
values are determined and the close of the customary trading session of the NYSE
which will not be reflected in the computation of a Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Trustees of the Fund.
Fund securities primarily traded in foreign markets may be traded in
such markets on days which are not business days of the Funds. Because the net
asset value per share of each Fund is determined only on business days of the
Fund, the net asset value per share of a fund may be significantly affected on
days when an investor cannot exchange or redeem shares of a Fund.
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 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 AIM Fund Services, Inc., P.O. Box 4739, Houston, Texas
77210-4739, or by calling toll free (800) 959-4246.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of each Fund unless the
shareholder has requested in writing to receive such dividends and distributions
in cash or that they be invested in shares of another AIM Fund, subject to the
terms and conditions set forth herein under the caption "Shareholder
Information." If a shareholder's account does not have any shares in it on a
dividend or capital gains distribution payment date, the dividend or
distribution will be paid in cash whether or not the shareholder has elected to
have such dividends or distributions reinvested.
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TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Funds and their shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning.
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 Fund must diversify its
holdings so that, at the end of each fiscal quarter: (i) at least 50% of the
market value of the Fund's assets is represented by cash, U.S. Government
securities and other securities, with such other securities limited, with
respect to any one issuer, to an amount not greater than 5% of the Fund's assets
and not more than 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities) (the "Diversification
Requirement").
By qualifying for treatment as a RIC, each Fund (but not its
shareholders) will be relieved of federal income tax on the part of its
investment company taxable income and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) that it distributes to
its shareholders. If a Fund failed to qualify for treatment as a RIC for any
taxable year, (1) it would be taxed as an ordinary corporation on the full
amount of its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) the shareholders would treat
all those distributions, including distributions of net capital gain, as
dividends (that is, ordinary income) to the extent of the Fund's earnings and
profits. In addition, the Fund could be required to recognize unrealized gains,
pay substantial taxes and interest and make substantial distributions before
requalifying for RIC treatment.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in December will be deemed to have been paid
by the Fund and received by the shareholders on December 31 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.
EXCHANGE AND REINSTATEMENT PRIVILEGES AND WASH SALES
If a shareholder disposes of a Fund's shares ("original shares") within
90 days after purchase thereof and subsequently reacquires shares of that Fund
or acquires shares of another AIM Fund on which a sales charge normally is
imposed ("replacement shares"), without paying the sales charge (or paying a
reduced charge) due to an exchange privilege or a reinstatement privilege, then
(1) any gain on the disposition of the
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original shares will be increased, or the loss thereon decreased, by the amount
of the sales charge paid when those shares were acquired and (2) that amount
will increase the adjusted basis of the replacement shares that were
subsequently acquired. In addition, if a shareholder purchases shares of a Fund
(whether pursuant to the reinstatement privilege or otherwise) within 30 days
before or after redeeming at a loss other shares of that Fund (regardless of
class), all or part of that loss will not be deductible and instead will
increase the basis of the newly purchased shares.
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 IRS 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.
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 foreign tax credit limitation and will be able to claim a foreign tax
credit without having to file the 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 any foreign
corporation(with certain exceptions) 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
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and deductions taken thereunder. Regulations proposed in 1992 provided a similar
election with respect to the stock of certain PFICs.
NON-U.S. SHAREHOLDERS
Ordinary dividends and return of capital distributions 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 distribution 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 foreign currency contracts that are subject to Section 1256
of the Code (other than those that are part of a "mixed straddle" with respect
to which a Fund has elected not to have the following rules apply) ("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. These
rules may operate to increase the amount that a Fund must distribute to satisfy
the Distribution Requirement (i.e., with respect to the portion treated as
short-term capital gain), which will be taxable to the shareholders as ordinary
income, and to increase the net capital gain a Fund recognizes, without in
either case increasing the cash available to the Fund.
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.
Code Section 1092 (dealing with straddles) also may affect the taxation
of certain hedging instruments in which a Fund may invest. That section defines
a "straddle" as offsetting positions with respect to actively traded personal
property; for these purposes, options, Futures and Forward Contracts are
personal property. Under that section, any loss from the disposition of a
position in a straddle generally may be deducted only to the extent the loss
exceeds the unrealized gain on the offsetting position(s) of the straddle. In
addition, these rules may postpone the recognition of loss that otherwise would
be recognized under the mark-to-market rules discussed above. The regulations
under Section 1092 also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting position is
acquired within a prescribed period, and "short sale" rules applicable to
straddles. If a Fund makes certain elections, the amount, character and timing
of recognition of gains and losses from the affected straddle positions would be
determined under rules that vary according to the elections made. Because only a
few of the regulations
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implementing the straddle rules have been promulgated, the tax consequences to a
Fund of straddle transactions are not entirely clear.
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 position, the Fund
will be treated as having made an actual sale thereof, with the result that gain
will be recognized at that time unless the completed transaction exception
applies. 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 identical
property. In addition, if the appreciated financial position is itself a short
sale or such a contract, acquisition of the underlying property or substantially
identical 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.
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus
under the title "Shareholder Information."
TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. If a check used to purchase
shares does not clear, or if any investment order must be canceled due to
nonpayment, the investor will be responsible for any resulting loss to an AIM
Fund or to AIM Distributors.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to
demand or require the Trust to issue share certificates, although the Trust in
its sole discretion may issue them.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all
shares are to be held by the Transfer Agent and all dividends and distributions
are reinvested in shares of the 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 AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
TERMS AND CONDITIONS OF EXCHANGE. Normally, shares of an AIM Fund to be
acquired by exchange are purchased at their net asset value or applicable
offering price, as the case may be, determined on the date that such request is
received, but under unusual market conditions such purchases may be delayed for
up to five business days if it is determined that a fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into a fund paying daily dividends, and the release of
the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day
after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with
certain dealers and investment advisory firms to accept telephone instructions
to exchange shares between any of the AIM Funds.
56
<PAGE> 252
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
the close of the customary trading session of the NYSE. The Transfer Agent and
AIM Distributors may in certain cases be liable for losses due to unauthorized
or fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
By signing an account application form, an investor appoints 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 transactions. The Transfer Agent reserves the
right to modify or terminate the telephone exchange privilege at any time
without notice. An investor may elect not to have this privilege by marking the
appropriate box on the application. Then any exchanges must be effected in
writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints 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 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 redemption
privilege at any time without notice. An investor may elect not to have this
privilege by marking the appropriate box on the application. Then any
redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of each Fund's prospectus, signature
guarantees are required in the following situations: (1) requests to transfer
the registration of shares to another owner; (2) telephone exchange and
telephone redemption authorization forms; (3) changes in previously designated
wiring or electronic funds transfer instructions; and (4) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
57
<PAGE> 253
amount is under $50,000 or the proceeds are to be sent to the address of record.
AIM Funds may waive or modify any signature guarantee requirements at any time.
Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the SEC, and
further provided that such guarantor institution is listed in one of the
reference guides contained in 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.
TRANSACTIONS BY INTERNET. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that the Transfer Agent and AIM Distributors will not be liable for any loss,
expense or cost arising out of any internet transaction effected in accordance
with the instructions set forth in the forms if they reasonably believe such
request to be genuine. Procedures for verification of internet transactions
include requests for confirmation of the shareholder's personal identification
number and mailing of confirmations promptly after the transactions. The
investor also acknowledges that (1) if he no longer wants the AIM Internet
Connect option, he will notify the Transfer Agent in writing, and (2) the AIM
Internet Connect option may be terminated at any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital
gains, if any, available for distribution, net capital gains are offset against
available net capital losses, if any, carried forward from previous fiscal
periods.
For funds that do not declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to 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.
58
<PAGE> 254
MISCELLANEOUS INFORMATION
CHARGES FOR CERTAIN ACCOUNT INFORMATION
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.
CUSTODIAN
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. The Custodian attends to the collection of principal and income, pays
and collects all monies for securities bought and sold by the Funds and performs
certain other ministerial duties. The Custodian 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
AIM Funds Services, Inc., a wholly owned subsidiary of AIM, acts as
transfer agent and dividend disbursing agent for the Funds. The Transfer Agency
and Service Agreement between the Trust and AFS 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.
Pursuant to the Transfer Agency and Service Agreement, INVESCO (NY),
Inc., as Sub-Advisor, also serves as pricing and accounting agent for the Funds
and received accounting services fees as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Euroland Fund* $ 128,346 $ 156,561 $ 138,072
Japan Fund 38,219 20,629 26,210
Mid Cap Fund 86,264 118,894 142,274
Pacific Fund 42,925 40,387 99,321
</TABLE>
* INVESCO AML became the Fund's Sub-Advisor on December 14, 1998. The
fees reflected represent fees received by both Sub-Advisors.
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.
LEGAL MATTERS
The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue
N.W., Washington, DC 20036-1800, acts as counsel to the Trust and the Funds.
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
59
<PAGE> 255
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 GT Global New Pacific Growth Fund; AIM Euroland 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; and AIM Mid Cap Growth Fund operated under
the name of GT Global America Mid Cap Growth Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 2000 the trustees and officers of the Trust as a group
owned beneficially less than 1% of all classes of outstanding shares 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 March 31, 2000, 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>
Euroland Fund-- MLPF&S for the Sole Benefit of Its 13.06% -0-
Class A Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Euroland Fund-- MLPF&S for the Sole Benefit of Its 9.34% -0-
Class B Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Euroland Fund-- MLPF&S for the Sole Benefit of Its 22.33% -0-
Class C Customers
4800 Deer Lake Drive, East 2nd Floor
Jacksonville, FL 32246-6484
DB Alex Brown LLC 6.23% -0-
P. O. Box 1346
Baltimore, MD 21203
Salomon Smith Barney Inc. 5.74% -0-
333 West 34th Street, 3rd Floor
New York, NY 10001
</TABLE>
- --------------------------
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record are also owned beneficially.
60
<PAGE> 256
<TABLE>
<S> <C> <C> <C>
Japan Growth Fund-- MLPF&S for the Sole Benefit of Its 14.97% -0-
Class A Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Japan Growth Fund-- MLPF&S for the Sole Benefit of Its 19.47% -0-
Class B Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Japan Growth Fund-- MLPF&S for the Sole Benefit of Its 20.86% -0-
Class C Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Mid Cap Equity Fund-- MLPF&S for the Sole Benefit of its 9.88% -0-
Class A Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Mid Cap Equity Fund-- MLPF&S for the Sole Benefit of its 9.63% -0-
Class B Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED OF
OWNED OF RECORD AND
FUND NAME AND ADDRESS OF OWNER RECORD* BENEFICIALLY
- ---- ------------------------- ------- ------------
<S> <C> <C> <C>
Mid Cap Equity Fund-- MLPF&S for the Sole Benefit of its 9.85% -0-
Class C Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Samuel D. Garretson and 7.65% -0-
Delphine E Garretson JTTENS
1665 Chevron Way
Atlanta, GA 30350-4431
Pacific Fund-- MLPF&S for the Sole Benefit of its 5.40% -0-
Class A Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Pacific Fund-- MLPF&S for the Sole Benefit of its 5.95% -0-
Class B Customers
4800 Deer Lake Drive East, 2nd Floor
Jacksonville, FL 32246-6484
Pacific Fund-- MLPF&S for the Sole Benefit of its 34.83% -0-
Class C Customers
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.
61
<PAGE> 257
<TABLE>
<S> <C> <C> <C>
Donaldson Lufkin Jenrette 17.40% -0-
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Daniel W. Figert and Barbara D. Figert 6.89% -0-
JT TEN WROS
Unit 17104
2200 South Rock Creek Parkway
Superior, CO 80027
</TABLE>
INVESTMENT RESULTS
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return is as follows:
n
P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the
applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods
(or fractional portion of such period).
The standardized returns for the Class A and Class B shares of the
Euroland Fund, stated as average annualized total returns for the periods shown,
were:
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Euroland Fund Class A 27.72% 16.83% 7.58% 14.01%
Euroland Fund Class B 29.19% 17.17% N/A 14.63%
</TABLE>
* The inception dates for Class A and Class B shares of Euroland Fund are
07/19/85 and 04/01/93, respectively.
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Japan Fund Class A 118.05% 13.49% 3.83% 16.13%
Japan Fund Class B 124.47% 13.83% N/A 13.85%
</TABLE>
* The inception dates for Class A and Class B shares of Japan Fund are
07/19/85 and 04/01/93, respectively.
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:
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<PAGE> 258
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Mid Cap Fund Class A 29.62% 14.95% 13.86% 14.35%
Mid Cap Fund Class B 31.25% 15.25% N/A 16.12%
</TABLE>
* The inception dates for Class A and Class B shares of Mid Cap Fund are
06/09/87 and 04/01/93, respectively.
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Pacific Fund Class A 37.48% -4.37% -0.45% 9.55%
Pacific Fund Class B 39.59% -4.22% N/A -0.70%
</TABLE>
* The inception dates for Class A and Class B shares of Pacific Fund are
01/19/77 and 04/01/93, respectively.
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of
only a stated portion of, or none of, the applicable
maximum sales load at the beginning of the stated
period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
The average annual non-standardized returns for the Class A and Class B
shares of the Euroland Fund, stated as average annualized total returns for the
periods shown, were:
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Euroland Fund Class A 35.14% 18.15% 8.19% 14.46%
Euroland Fund Class B 34.19% 17.38% N/A 14.63%
</TABLE>
* The inception dates for Class A and Class B shares of Euroland Fund are
07/19/85 and 04/01/93, respectively.
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Japan Fund Class A 130.79% 14.79% 4.42% 16.58%
Japan Fund Class B 129.47% 14.07% N/A 13.85%
</TABLE>
* The inception dates for Class A and Class B shares of Japan Fund are
07/19/85 and 04/01/93, respectively.
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<PAGE> 259
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Mid Cap Fund Class A 37.13% 16.26% 14.50% 14.87%
Mid Cap Fund Class B 36.25% 15.48% N/A 16.12%
</TABLE>
* The inception dates for Class A and Class B shares of Mid Cap Fund are
06/09/87 and 04/01/93, respectively.
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Pacific Fund Class A 45.42% -3.29% 0.11% 9.82%
Pacific Fund Class B 44.59% -3.94% N/A -0.70%
</TABLE>
* The inception dates for Class A and Class B shares of Pacific Fund are
01/19/77 and 04/01/93, respectively.
Cumulative total return across a stated period may be calculated as
follows:
n
P(1+V) =ERV
Where P = a hypothetical initial payment of $1,000.
V = 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 aggregate non-standardized returns (not taking sales charges into
account) for the Class A and Class B shares of the Euroland Fund, stated as
aggregate total returns for the periods shown, were:
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Euroland Fund Class A 35.14% 130.28% 119.77% 604.10%
Euroland Fund Class B 34.19% 122.84% N/A 151.39%
Euroland Fund Class C N/A N/A N/A 39.95%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Euroland
Fund are 07/19/85, 04/01/93 and 05/03/99, respectively.
64
<PAGE> 260
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Japan Fund Class A 130.79% 99.32% 54.13% 818.44%
Japan Fund Class B 129.47% 93.12% N/A 140.01%
Japan Fund Class C N/A N/A N/A 89.93%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Japan
Fund are 07/19/85, 04/01/93 and 05/03/99, respectively.
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Mid Cap Fund Class A 37.13% 112.40% 287.42% 470.44%
Mid Cap Fund Class B 36.25% 105.34% N/A 174.25%
Mid Cap Fund Class C N/A N/A N/A 29.98%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Mid Cap
Fund are 06/09/87, 04/01/93 and 05/03/99, respectively.
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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Pacific Fund Class A 45.42% -15.38% 1.09% 758.80%
Pacific Fund Class B 44.59% -18.19% N/A -4.61%
Pacific Fund Class C N/A N/A N/A 22.51%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Pacific
Fund are 01/19/77, 04/01/93 and 05/03/99, respectively.
The aggregate standardized returns (taking sales charges into account)
for the Class A and Class B shares of the Euroland Fund, stated as aggregate
total returns for the periods shown, were:
<TABLE>
<CAPTION>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Euroland Fund Class A 27.72% 117.69% 107.62% 565.50%
Euroland Fund Class B 29.19% 120.84% N/A 151.39%
Euroland Fund Class C N/A N/A N/A 38.95%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Euroland
Fund are 07/19/85, 04/01/93 and 05/03/99, respectively.
65
<PAGE> 261
The aggregate 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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Japan Fund Class A 118.05% 88.31% 45.69% 768.10%
Japan Fund Class B 124.47% 91.12% N/A 140.01%
Japan Fund Class C N/A N/A N/A 88.93%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Japan
Fund are 07/19/85, 04/01/93 and 05/03/99, respectively.
The aggregate 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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Mid Cap Fund Class A 29.62% 100.71% 266.04% 439.16%
Mid Cap Fund Class B 31.25% 103.34% N/A 174.25%
Mid Cap Fund Class C N/A N/A N/A 28.98%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Mid Cap
Fund are 06/09/87, 04/01/93 and 05/03/99, respectively.
The aggregate 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>
ONE FIVE TEN SINCE
YEAR YEARS YEARS INCEPTION*
---- ----- ----- ----------
<S> <C> <C> <C> <C>
Pacific Fund Class A 37.48% -20.01% -4.45% 711.72%
Pacific Fund Class B 39.59% -19.41% N/A -4.61%
Pacific Fund Class C N/A N/A N/A 21.51%
</TABLE>
* The inception dates for Class A, Class B and Class C shares of Pacific
Fund are 01/19/77, 04/01/93 and 05/03/99, respectively.
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
All advertisements of a 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. 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.
66
<PAGE> 262
A 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, AIM or its affiliates may waive all or a portion of
their fees and/or assume certain expenses of any Fund. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM and the Fund. Fee waivers or
reductions or commitments to reduce expenses will have the effect of increasing
that Fund's yield and total return.
The performance of each Fund will vary from time to time and past
results are not necessarily indicative of future results. A Fund's performance
is a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in any Fund.
The Mid Cap Fund may participate in the IPO market, and a significant
portion of the Fund's returns may be attributable to its investment in IPOs,
which have a magnified impact due to the Fund's small asset base. There is no
guarantee that as the Fund's assets grow, it will continue to invest to the same
degree in IPOs or that it will experience substantially similar performance.
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 Financial Services Week
Barron's Financial World
Best's Review Forbes
Broker World Fortune
Business Week Global Finance
Changing Times Hartford Courant Inc.
Christian Science Monitor Institutional Investor
Consumer Reports Insurance Forum
Economist Insurance Week
EuroMoney Investor's Daily
FACS of the Week Journal of the American
Financial Planning Society of CLU & ChFC
Financial Product News
67
<PAGE> 263
Kiplinger Letter Smart Money
Money USA Today
Mutual Fund Forecaster U.S. News & World Report
Mutual Fund Magazine Wall Street Journal
Nation's Business Washington Post
New York Times CNN
Pension World CNBC
Pensions & Investments PBS
Personal Investor
Philadelphia Inquirer
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:
<TABLE>
<S> <C>
Bank Rate National Monitor Index Morgan Stanley Capital International All Country
Bear Stearns Foreign Bond Index (AC) World Index
Bond Buyer Index
CDA/Wiesenberger Investment Company Morgan Stanley Capital International World
Services (data and mutual fund rankings and Indices
comparisons) Morningstar, Inc. (data and mutual fund rankings
CNBC/Financial News Composite Index and comparisons)
COFI Nasdaq
Consumer Price Index Organization for Economic Cooperation and
Datastream Development (publications)
Donoghue's Salomon Brothers Global Telecommunications
Dow Jones Industrial Average Index
EAFE Index Salomon Brothers World Government Bond
First Boston High Yield Index Index - Non-U.S.
Fitch IBCA, Inc. (publications)
Ibbotson Associates International Bond Index Salomon Brothers World Government Bond
International Bank for Reconstruction and Index
Development (publications) Standard & Poor's (publications)
International Finance Corporation Emerging Standard & Poor's 500 Composite Stock Price
Markets Database Index
International Financial Statistics Stangar
Lehman Bond Indices Wilshire Associates
Lipper, Inc. (data and mutual fund rankings and World Bank (publications and reports)
comparisons) The World Bank Publication of Trends in
Micropal, Inc. (data and mutual fund rankings Developing Countries
and comparisons) Worldscope
Moody's Investors Service (publications)
</TABLE>
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.
68
<PAGE> 264
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.
69
<PAGE> 265
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
A-1
<PAGE> 266
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 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.
A-2
<PAGE> 267
FINANCIAL STATEMENTS
FS
<PAGE> 268
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series and Shareholders
of AIM Euroland Growth Fund
(formerly AIM Europe Growth Fund):
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Euroland Growth Fund (hereafter referred to as the
"Fund") at December 31, 1999, the results of its
operations, the changes in its net assets and the
financial highlights for each of the periods indicated
therein, in conformity with accounting principles
generally accepted in the United States. These financial
statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express
an opinion on these financial statements based on our
audits. We conducted our audits of these financial
statements in accordance with auditing standards
generally accepted in the United States which require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made
by management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-1
<PAGE> 269
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-95.56%
BELGIUM-0.71%
Mobistar S.A.
(Telecommunications-Cellular/
Wireless)(a) 66,688 $ 3,815,666
- --------------------------------------------------------------
DENMARK-0.69%
Vestas Wind Systems A/S
(Manufacturing- Specialized)(a) 21,000 3,719,830
- --------------------------------------------------------------
FINLAND-6.91%
Helsingin Puhelin Oyj (Helsinki
Telephone Corp.-HPY)
(Telecommunications-Cellular/
Wireless) 132,600 11,036,751
- --------------------------------------------------------------
Nokia Oyj (Communications Equipment) 127,064 23,019,041
- --------------------------------------------------------------
Tietoenator Oyj (Computers-Software
& Services) 53,328 3,327,662
- --------------------------------------------------------------
37,383,454
- --------------------------------------------------------------
FRANCE-20.70%
Altran Technologies S.A.
(Services-Commercial & Consumer) 30,384 18,347,986
- --------------------------------------------------------------
AXA (Insurance-Multi-Line) 47,862 6,666,826
- --------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 75,000 6,914,311
- --------------------------------------------------------------
Canal Plus (Broadcasting-Television,
Radio & Cable) 25,000 3,635,801
- --------------------------------------------------------------
Cap Gemini S.A. (Computers-Software
& Services) 35,000 8,876,889
- --------------------------------------------------------------
Carrefour S.A. (Retail-Food Chains) 62,000 11,425,422
- --------------------------------------------------------------
Compagnie de Saint-Gobain
(Manufacturing- Diversified)(a) 22,000 4,133,893
- --------------------------------------------------------------
Dassault Systemes S.A.
(Computers-Software & Services) 177,694 11,570,956
- --------------------------------------------------------------
France Telecom S.A. (Telephone) 45,000 5,946,610
- --------------------------------------------------------------
L'Oreal S.A. (Personal Care) 6,500 5,210,643
- --------------------------------------------------------------
Lagardere S.C.A.
(Manufacturing-Diversified) 50,000 2,717,415
- --------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 17,100 4,509,097
- --------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health
Care-Drugs- Generic & Other) 70,000 2,912,465
- --------------------------------------------------------------
Sidel S.A. (Machinery-Diversified) 78,500 8,098,148
- --------------------------------------------------------------
Total Fina S.A.-Class B (Oil &
Gas-Refining & Marketing) 83,074 11,078,302
- --------------------------------------------------------------
112,044,764
- --------------------------------------------------------------
GERMANY-21.55%
Aixtron A.G.
(Equipment-Semiconductor)(a) 45,000 6,331,577
- --------------------------------------------------------------
Bayerisch Motoren Werke A.G.
(Automobiles) 200,000 6,099,087
- --------------------------------------------------------------
Consors Discount Broker A.G.
(Investment Banking & Brokerage)(a) 30,000 2,506,060
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
D. Logistics A.G.
(Services-Commercial & Consumer)(a) 25,000 $ 2,629,351
- --------------------------------------------------------------
Deutsche Telekom A.G. (Telephone)(a) 95,000 6,759,821
- --------------------------------------------------------------
EM.TV & Merchandising A.G.
(Broadcasting- Television, Radio &
Cable) 251,575 16,204,650
- --------------------------------------------------------------
Epcos A.G. (Electronics-Component
Distributors)(a) 20,800 1,559,595
- --------------------------------------------------------------
Intershop Communications A.G.
(Computers- Software & Services)(a) 60,000 16,908,360
- --------------------------------------------------------------
Kamps A.G. (Retail-Food Chains) 127,200 8,648,163
- --------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 74,250 17,897,575
- --------------------------------------------------------------
Marschollek, Lautenschlaegerund
Partner A.G. (Services-Commercial
& Consumer) 25,000 7,548,375
- --------------------------------------------------------------
Medion A.G. (Electronics-Component
Distributors) 92,000 8,240,813
- --------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 2,841 7,777,363
- --------------------------------------------------------------
SAP A.G.-Pfd. (Computers-Software &
Services) 10,000 6,018,571
- --------------------------------------------------------------
Software A.G. (Computers-Software &
Services)(a) 25,000 1,522,256
- --------------------------------------------------------------
116,651,617
- --------------------------------------------------------------
IRELAND-1.80%
Esat Telecom Group PLC-ADR
(Telecommunications-Long
Distance)(a) 106,600 9,753,900
- --------------------------------------------------------------
ITALY-4.47%
Banca Fideuram S.p.A. (Investment
Management) 300,000 3,550,756
- --------------------------------------------------------------
Mediolanum S.p.A.
(Insurance-Life/Health) 725,230 9,488,800
- --------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 1,000,000 11,161,530
- --------------------------------------------------------------
24,201,086
- --------------------------------------------------------------
NETHERLANDS-13.20%
ABN AMRO Holding N.V. (Banks-Major
Regional) 300,000 7,487,988
- --------------------------------------------------------------
Equant N.V. (Computers-Software &
Services)(a) 98,138 11,131,491
- --------------------------------------------------------------
ING Groep N.V.-ADR (Insurance
Brokers) 96,578 5,826,224
- --------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 129,000 4,808,979
- --------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V. (Electrical
Equipment) 85,000 11,549,014
- --------------------------------------------------------------
KPNQWest N.V.
(Telecommunications-Long
Distance)(a) 85,813 5,708,825
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-New York
Shares (Oil-International
Integrated) 110,000 6,736,673
- --------------------------------------------------------------
STMicroelectronics (Electronics-
Semiconductors)(a) 85,000 13,071,773
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 270
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Teleplan International N.V.
(Electronics- Component
Distributors)(a) 25,000 $ 5,132,895
- --------------------------------------------------------------
71,453,862
- --------------------------------------------------------------
NORWAY-0.42%
Tomra Systems A.S.A. (Manufacturing-
Specialized) 135,400 2,297,779
- --------------------------------------------------------------
PORTUGAL-0.84%
BPI-SGPS, S.A. (Banks-Regional) 1,072,810 4,567,256
- --------------------------------------------------------------
SPAIN-9.44%
Banco Santander Central Hispano S.A.
(Banks- Regional) 400,000 4,524,999
- --------------------------------------------------------------
Cortefiel S.A. (Retail-Department
Stores) 75,000 1,962,577
- --------------------------------------------------------------
Sogecable, S.A. (Electric
Companies)(a) 162,650 10,378,522
- --------------------------------------------------------------
Telefonica Publicidad e Informacion
S.A. (Telephone)(a) 350,000 16,996,424
- --------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 546,743 13,646,683
- --------------------------------------------------------------
TelePizza, S.A. (Restaurants)(a) 800,000 3,381,672
- --------------------------------------------------------------
Terra Networks, S.A.
(Computers-Software & Services)(a) 4,259 232,541
- --------------------------------------------------------------
51,123,418
- --------------------------------------------------------------
SWEDEN-6.63%
Assa Abloy A.B.-Class B (Metal
Fabricators) 360,000 5,055,407
- --------------------------------------------------------------
Securitas A.B.-Class B
(Services-Commercial &
Consumer)(a) 290,000 5,248,129
- --------------------------------------------------------------
Skandia Forsakrings A.B. (Insurance
Brokers) 314,494 9,497,980
- --------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-Class B (Communications
Equipment) 250,000 16,069,897
- --------------------------------------------------------------
35,871,413
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-1.24%
Roche Holding A.G. (Health
Care-Drugs-Generic & Other) 565 $ 6,706,337
- --------------------------------------------------------------
UNITED KINGDOM-6.96%
COLT Telecom Group PLC
(Communications Equipment)(a) 180,000 9,210,572
- --------------------------------------------------------------
Energis PLC (Telephone)(a) 92,600 4,446,761
- --------------------------------------------------------------
Glaxo Wellcome PLC (Health
Care-Drugs- Generic & Other) 171,436 4,844,310
- --------------------------------------------------------------
Lloyds TSB Group PLC (Banks-Major
Regional) 375,860 4,700,449
- --------------------------------------------------------------
SmithKline Beecham PLC (Health Care-
Diversified) 333,272 4,251,261
- --------------------------------------------------------------
Unilever PLC (Foods) 246,428 1,812,468
- --------------------------------------------------------------
Vodafone AirTouch PLC
(Telecommunications-
Cellular/Wireless) 1,700,000 8,420,257
- --------------------------------------------------------------
37,686,078
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$321,219,874) 517,276,460
- --------------------------------------------------------------
MONEY MARKET FUNDS-2.14%
STIC Liquid Assets Portfolio(b) 5,782,086 5,782,086
- --------------------------------------------------------------
STIC Prime Portfolio(b) 5,782,086 5,782,086
- --------------------------------------------------------------
Total Money Market Funds (Cost
$11,564,172) 11,564,172
- --------------------------------------------------------------
TOTAL INVESTMENTS-97.70% (Cost
$332,784,046) 528,840,632
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.30% 12,467,560
- --------------------------------------------------------------
NET ASSETS-100.00% $541,308,192
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Pfd. - Preferred
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-3
<PAGE> 271
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$332,784,046) $528,840,632
- ---------------------------------------------------------
Foreign currencies, at value (cost
$13,935,899) 13,840,250
- ---------------------------------------------------------
Receivables for:
Fund shares sold 199,135
- ---------------------------------------------------------
Dividends and interest 164,422
- ---------------------------------------------------------
Tax reclaims 463,935
- ---------------------------------------------------------
Other assets 58,576
- ---------------------------------------------------------
Total assets 543,566,950
- ---------------------------------------------------------
LIABILITIES:
Payable for fund shares reacquired 1,037,528
- ---------------------------------------------------------
Accrued advisory fees 425,660
- ---------------------------------------------------------
Accrued distribution fees 437,305
- ---------------------------------------------------------
Accrued accounting service fees 9,805
- ---------------------------------------------------------
Accrued trustee fees 4,646
- ---------------------------------------------------------
Accrued transfer agent fees 121,792
- ---------------------------------------------------------
Accrued operating expenses 222,022
- ---------------------------------------------------------
Total liabilities 2,258,758
- ---------------------------------------------------------
Net assets applicable to shares outstanding $541,308,192
=========================================================
NET ASSETS:
Class A $446,064,530
=========================================================
Class B $ 93,404,422
=========================================================
Class C $ 348,704
=========================================================
Advisor Class $ 1,490,536
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 22,717,321
=========================================================
Class B 4,933,523
=========================================================
Class C 18,407
=========================================================
Advisor Class 74,891
=========================================================
Class A:
Net asset value price per share $ 19.64
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $19.64 divided by
94.50%) $ 20.78
=========================================================
Class B:
Net asset value and offering price per
share $ 18.93
=========================================================
Class C:
Net asset value and offering price per
share $ 18.94
=========================================================
Advisor Class:
Net asset value and offering price per
share $ 19.90
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $655,833 foreign
withholding tax) $ 5,046,150
- ---------------------------------------------------------
Interest 657,197
- ---------------------------------------------------------
Security lending income 237,633
- ---------------------------------------------------------
Total investment income 5,940,980
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 4,507,101
- ---------------------------------------------------------
Accounting service fees 128,346
- ---------------------------------------------------------
Custodian fees 412,031
- ---------------------------------------------------------
Interest expense 26,850
- ---------------------------------------------------------
Trustees fees 28,882
- ---------------------------------------------------------
Distribution fees -- Class A 1,321,561
- ---------------------------------------------------------
Distribution fees -- Class B 830,901
- ---------------------------------------------------------
Distribution fees -- Class C 1,122
- ---------------------------------------------------------
Transfer agent fees 1,267,517
- ---------------------------------------------------------
Other 481,593
- ---------------------------------------------------------
Total expenses 9,005,904
- ---------------------------------------------------------
Less: Expenses paid indirectly and expense
reductions (28,750)
- ---------------------------------------------------------
Net expenses 8,977,154
- ---------------------------------------------------------
Net investment income (loss) (3,036,174)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 20,314,072
- ---------------------------------------------------------
Foreign currencies (1,472,708)
- ---------------------------------------------------------
18,841,364
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 130,523,281
- ---------------------------------------------------------
Foreign currencies (131,749)
- ---------------------------------------------------------
130,391,532
- ---------------------------------------------------------
Net gain from investment securities and
foreign currencies 149,232,896
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $146,196,722
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 272
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (3,036,174) $ (1,850,722)
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 18,841,364 119,057,197
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 130,391,532 6,407,261
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 146,196,722 123,613,736
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (29,255,944) (28,578,354)
- --------------------------------------------------------------------------------------------
Class B (6,401,190) (6,161,419)
- --------------------------------------------------------------------------------------------
Class C (19,795) --
- --------------------------------------------------------------------------------------------
Advisor Class (98,058) (89,449)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (61,483,581) (70,039,206)
- --------------------------------------------------------------------------------------------
Class B (23,714,961) 9,973,443
- --------------------------------------------------------------------------------------------
Class C 236,516 --
- --------------------------------------------------------------------------------------------
Advisor Class (803,689) (3,320,390)
- --------------------------------------------------------------------------------------------
Net increase in net assets 24,656,020 25,398,361
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 516,652,172 491,253,811
- --------------------------------------------------------------------------------------------
End of period $541,308,192 $516,652,172
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $333,700,808 $364,202,132
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities
and foreign currencies 11,671,019 86,905,207
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 195,936,365 65,544,833
- --------------------------------------------------------------------------------------------
$541,308,192 $516,652,172
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 273
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Euroland Growth Fund (the "Fund"), formerly named AIM Europe Growth Fund, is
a separate series of AIM Growth Series (the "Trust"). The Trust is organized as
a Delaware business trust and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end series management investment
company consisting of six separate series portfolios, each having an unlimited
number of shares of beneficial interest. The Fund consists of four different
classes of shares: Class A shares, Class B shares, Class C shares and Advisor
Class shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Advisor Class shares are sold without a sales charge. Effective March 1, 1999,
the Fund discontinued sales of the Advisor Class to new investors. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$3,036,174, undistributed net realized gains decreased by $58,300,565 and
paid-in capital increased by $55,264,391 as a result of differing book/tax
treatment of foreign currency transactions and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
FS-6
<PAGE> 274
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.975% on the first $500 million of the Fund's average
daily net assets, plus 0.95% on the next $500 million of the Fund's average
daily net assets, plus 0.925% on the next $500 million of the Fund's average
daily net assets, plus 0.90% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 2.00%, 2.65%, 2.65% and 1.65% of the average daily
net assets of the Fund's Class A, Class B, Class C and Advisor Class shares,
respectively.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
December 31, 1999, AIM was paid $128,346 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $1,017,499 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $1,321,561, $830,901 and
$1,122, respectively, as compensation under the Plans.
AIM Distributors received commissions of $32,554 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $7,813 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-EXPENSE REDUCTIONS
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $3,766 under an expense offset arrangement and AIM directed
certain portfolio trades to brokers who then paid $24,984 of the Fund's
expenses. The effect of the above arrangements resulted in a reduction of the
Fund's total expenses of $28,750 during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.09% on the
unused balance of the committed line. The commitment fee is allocated among the
funds based on their respective average net assets for the period. Prior to May
28, 1999, the Fund, along with certain other funds advised and/or administered
by AIM, had a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allowed the Fund and certain
FS-7
<PAGE> 275
other funds to borrow, on a first come, first served basis, an aggregate maximum
amount of $250,000,000.
During the year ended December 31, 1999, the average outstanding daily balance
of bank loans for the Fund was $475,310 with a weighted average interest rate of
5.65%. Interest expense for the Fund for the year ended December 31, 1999 was
$26,850.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, there were no securities on loans to brokers. For the year
ended December 31, 1999, the Fund received fees of $237,633 for securities
lending.
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. The 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 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$321,428,205 and $462,423,448, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $201,600,088
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (7,834,850)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $193,765,238
=========================================================
</TABLE>
Cost of investments for tax purposes is $335,075,394.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 56,134,804 $ 892,147,655 284,179,353 $ 4,678,178,730
- --------------------------------------------------------------------------------------------------------------------------
Class B 4,085,662 62,498,150 29,683,015 488,430,227
- --------------------------------------------------------------------------------------------------------------------------
Class C* 185,264 2,804,901 -- --
- --------------------------------------------------------------------------------------------------------------------------
Advisor Class 741,800 12,185,965 6,484,352 109,346,851
- --------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,493,014 26,287,494 1,565,424 23,371,501
- --------------------------------------------------------------------------------------------------------------------------
Class B 336,013 5,718,720 370,423 5,382,231
- --------------------------------------------------------------------------------------------------------------------------
Class C* 947 16,127 -- --
- --------------------------------------------------------------------------------------------------------------------------
Advisor Class 5,368 95,985 5,605 84,332
- --------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (61,395,542) (979,918,730) (287,680,343) (4,771,589,437)
- --------------------------------------------------------------------------------------------------------------------------
Class B (6,039,505) (91,931,831) (29,265,734) (483,839,015)
- --------------------------------------------------------------------------------------------------------------------------
Class C* (167,804) (2,584,512) -- --
- --------------------------------------------------------------------------------------------------------------------------
Advisor Class (776,145) (13,085,639) (6,610,936) (112,751,573)
- --------------------------------------------------------------------------------------------------------------------------
(5,396,124) $ (85,765,715) (1,268,841) $ (63,386,153)
==========================================================================================================================
</TABLE>
* Class C shares commenced sales on May 3, 1999.
FS-8
<PAGE> 276
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during each of the years in the five-year period ended December 31,
1999, for a share of Class C outstanding during May 3, 1999 (date sales
commenced) through December 31, 1999 and for a share of Advisor Class
outstanding during each of the years in the four-year period ended December 31,
1999 and the period June 1, 1995 (date operations commenced) through December
31, 1995.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.67 $ 14.32 $ 12.89 $ 10.88 $ 10.03
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.09) (0.03) (0.04) (0.03) 0.04
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net realized and unrealized gain on investments 5.45 2.35 1.48 2.16 0.95
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net increase from investment operations 5.36 2.32 1.44 2.13 0.99
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income -- -- -- -- (0.10)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
From net realized gains (1.39) (0.97) (0.01) (0.12) (0.04)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (1.39) (0.97) (0.01) (0.12) (0.14)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 19.64 $ 15.67 $ 14.32 $ 12.89 $ 10.88
============================================================ ======== ======== ======== ======== ========
Total return(b) 35.22% 16.63% 11.20% 19.61% 9.86%
============================================================ ======== ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (000s omitted) $446,065 $415,066 $407,004 $453,792 $483,375
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets, including interest
expense:
With fee waivers 1.83%(d) 2.02% 1.75% 1.82% 1.83%
============================================================ ======== ======== ======== ======== ========
Without fee waivers 1.83%(d) 2.02% 1.89% 1.88% 1.89%
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets, excluding interest
expense:
With fee waivers(c) 1.82%(d) 1.75% 1.75% 1.82% 1.83%
============================================================ ======== ======== ======== ======== ========
Without fee waivers 1.82%(d) 1.75% 1.89% 1.88% 1.89%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net assets (0.55)%(d) (0.20)% (0.29)% (0.26)% 0.38%
============================================================ ======== ======== ======== ======== ========
Ratio of interest expense to average net assets 0.01%(d) 0.27% n/a n/a n/a
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 71% 97% 107% 123% 108%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Prior to the period ended December 31, 1999, ratios include expense
reductions.
(d) Ratios are based on average net assets of $377,588,984.
<TABLE>
<CAPTION>
Class B
---------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.26 $ 14.06 $ 12.73 $ 10.81 $ 9.97
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.18) (0.14) (0.13) (0.11) (0.03)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net realized and unrealized gain on investments 5.24 2.31 1.47 2.15 0.94
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net increase from investment operations 5.06 2.17 1.34 2.04 0.91
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Distributions to shareholders:
From net investment income -- -- -- -- (0.03)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
From net realized gains (1.39) (0.97) (0.01) (0.12) (0.04)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Total distributions (1.39) (0.97) (0.01) (0.12) (0.07)
- ------------------------------------------------------------ ------- ------- ------- ------- -------
Net asset value, end of period $ 18.93 $ 15.26 $ 14.06 $ 12.73 $ 10.81
============================================================ ======= ======= ======= ======= =======
Total return(b) 34.19% 15.80% 10.55% 18.79% 9.20%
============================================================ ======= ======= ======= ======= =======
Ratios and supplemental data
Net assets, end of period (in 000s) $93,404 $99,943 $81,011 $87,092 $73,025
============================================================ ======= ======= ======= ======= =======
Ratio of expenses to average net assets, including interest
expense:
With fee waivers 2.48%(d) 2.67% 2.40% 2.47% 2.48%
============================================================ ======= ======= ======= ======= =======
Without fee waivers 2.48%(d) 2.67% 2.54% 2.58% 2.54%
============================================================ ======= ======= ======= ======= =======
Ratio of expenses to average net assets, excluding interest
expense:
With fee waivers(c) 2.47%(d) 2.40% 2.40% 2.47% 2.48%
============================================================ ======= ======= ======= ======= =======
Without fee waivers() 2.47%(d) 2.40% 2.54% 2.53% 2.54%
============================================================ ======= ======= ======= ======= =======
Ratio of net investment income (loss) to average net assets (1.19)%(d) (0.85%) (0.94%) (0.91%) (0.27%)
============================================================ ======= ======= ======= ======= =======
Ratio of interest expense to average net assets 0.01%(d) 0.27% n/a n/a n/a
============================================================ ======= ======= ======= ======= =======
Portfolio turnover rate 71% 97% 107% 123% 108%
============================================================ ======= ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Prior to the period ended December 31, 1999, ratios include expense
reductions.
(d) Ratios are based on average net assets of $83,090,114.
FS-9
<PAGE> 277
NOTE 8-FINANCIAL HIGHLIGHTS-(CONTINUED)
<TABLE>
<CAPTION>
Class C
------------
May 3,
1999
through Advisor Class
December 31, -----------------------------------------------
1999(a) 1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.64 $15.82 $14.41 $12.92 $10.85 $10.24
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) (0.19) (0.03) 0.02 0.01 0.01 0.08
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
Net realized and unrealized gain on investments 5.88 5.50 2.36 1.49 2.18 0.71
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
Net increase from investment operations 5.69 5.47 2.38 1.50 2.19 0.79
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income -- -- -- -- -- (0.14)
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
From net realized gains (1.39) (1.39) (0.97) (0.01) (0.12) (0.04)
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (1.39) (1.39) (0.97) (0.01) (0.12) (0.18)
- ------------------------------------------------------------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $18.94 $19.90 $15.82 $14.41 $12.92 $10.85
============================================================ ====== ====== ====== ====== ====== ======
Total return(b) 39.95% 35.58% 16.88% 11.64% 20.21% 7.75%
============================================================ ====== ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $349 $1,491 $1,643 $3,239 $1,416 $718
============================================================ ====== ====== ====== ====== ====== ======
Ratio of expenses to average net assets, excluding interest
expense:
With fee waivers 2.48%(d) 1.48%(e) 1.67% 1.40% 1.47% 1.48%(f)
============================================================ ====== ====== ====== ====== ====== ======
Without fee waivers 2.48%(d) 1.48%(e) 1.67% 1.54% 1.53% 1.54%(f)
============================================================ ====== ====== ====== ====== ====== ======
Ratio of expenses to average net assets, excluding interest
expense:
With fee waivers(c) 2.47%(d) 1.47%(e) 1.40% 1.40% 1.47% 1.48%(f)
============================================================ ====== ====== ====== ====== ====== ======
Without fee waivers() 2.47%(d) 1.47%(e) 1.40% 1.54% 1.53% 1.54%(f)
============================================================ ====== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to average net assets (1.19)%(d) (0.19)%(e) 0.15% 0.06% 0.09% 0.73%(f)
============================================================ ====== ====== ====== ====== ====== ======
Ratio of interest expense to average net assets 0.01%(d) 0.01%(e) 0.27% n/a n/a n/a
============================================================ ====== ====== ====== ====== ====== ======
Portfolio turnover rate 71% 71% 97% 107% 123% 108%
============================================================ ====== ====== ====== ====== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Prior to the period ended December 31, 1999, ratios include expense
reductions.
(d) Ratios are annualized and based on average net assets of $179,556.
(e) Ratios are based on average net assets of $1,475,527.
(f) Annualized.
NOTE 9-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-10
<PAGE> 278
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series and Shareholders of
AIM Japan Growth Fund:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Japan Growth Fund (hereafter referred to as the "Fund")
at December 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights
for each of the periods indicated therein, in conformity
with accounting principles generally accepted in the
United States. These financial statements and financial
highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with auditing standards generally accepted in
the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting
principles used and significant estimates made by
management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-11
<PAGE> 279
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS (JAPAN)-93.12%
AUTO PARTS & EQUIPMENT-0.94%
Bridgestone Corp. 130,000 $ 2,864,137
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-3.62%
Fujitsu Support and Service, Inc. 22,500 11,037,944
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-7.31%
Internet Research Institute, Inc.(a) 1 540,612
- --------------------------------------------------------------
Itochu Techno-Science Corp. 3,200 1,995,985
- --------------------------------------------------------------
Softbank Corp.(a) 20,600 19,727,589
- --------------------------------------------------------------
22,264,186
- --------------------------------------------------------------
CONSUMER FINANCE-4.37%
Acom Co., Ltd. 24,000 2,352,411
- --------------------------------------------------------------
Aeon Credit Service Ltd. 55,400 4,567,618
- --------------------------------------------------------------
Aiful Corp. 33,700 4,124,847
- --------------------------------------------------------------
Mycal Card, Inc. 70,800 2,253,121
- --------------------------------------------------------------
13,297,997
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.64%
Nihon Unisys, Ltd. 145,000 4,997,797
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-10.02%
Fujitsu Ltd. 390,000 17,795,838
- --------------------------------------------------------------
TDK Corp. 50,000 6,908,201
- --------------------------------------------------------------
Toshiba Corp. 760,000 5,804,651
- --------------------------------------------------------------
30,508,690
- --------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-19.35%
Minebea Co., Ltd.(a) 386,000 6,625,782
- --------------------------------------------------------------
Matsushita-Kotobuki Electronics
Industries Ltd. 129,000 2,595,790
- --------------------------------------------------------------
Murata Manufacturing Co., Ltd. 69,000 16,215,422
- --------------------------------------------------------------
Omron Corp. 120,000 2,767,197
- --------------------------------------------------------------
Rohm Co., Ltd. 35,000 14,394,125
- --------------------------------------------------------------
Sony Corp. 55,000 16,318,238
- --------------------------------------------------------------
58,916,554
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-1.62%
Tokyo Electron Ltd. 36,000 4,935,129
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-8.16%
Diamond Lease Co., Ltd. 16,000 214,639
- --------------------------------------------------------------
JAFCO Co., Ltd. 55,000 19,657,283
- --------------------------------------------------------------
Shohkoh Fund & Co. 6,550 2,594,345
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Takefuji Corp. 19,000 $ 2,379,535
- --------------------------------------------------------------
24,845,802
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.62%
Takeda Chemical Industries 100,000 4,944,921
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.95%
Paramount Bed Co., Ltd. 24,000 2,890,575
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.41%
Nikko Securities Co., Ltd. (The) 340,000 4,304,725
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-1.96%
Canon, Inc. 150,000 5,963,280
- --------------------------------------------------------------
PERSONAL CARE-1.47%
Kao Corp. 71,000 2,026,585
- --------------------------------------------------------------
Shiseido Co., Ltd. 167,000 2,436,524
- --------------------------------------------------------------
4,463,109
- --------------------------------------------------------------
PUBLISHING-1.65%
Nichii Gakkan Co.(a) 25,650 5,020,744
- --------------------------------------------------------------
RESTAURANTS-0.81%
Yoshinoya D&C Co., Ltd. 140 2,467,564
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-2.86%
Ito-Yokado Co., Ltd. 80,000 8,695,226
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.44%
Paris Miki, Inc. 61,000 4,384,235
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.54%
Tsutsumi Jewelry Co., Ltd. 60,000 1,645,043
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-3.30%
Fast Retailing Co., Ltd. 10,000 4,073,439
- --------------------------------------------------------------
Ryohin Keikaku Co., Ltd. 29,800 5,984,803
- --------------------------------------------------------------
10,058,242
- --------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-2.31%
Secom Co., Ltd. 64,000 7,050,184
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-13.69%
Hikari Tsushin, Inc. 10,500 21,077,111
- --------------------------------------------------------------
NTT Mobile Communications Network,
Inc. 536 20,626,487
- --------------------------------------------------------------
41,703,598
- --------------------------------------------------------------
</TABLE>
FS-12
<PAGE> 280
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-2.08%
Nippon Telegraph & Telephone Corp. 370 $ 6,340,269
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$131,002,538) 283,599,951
- --------------------------------------------------------------
MONEY MARKET FUNDS-6.00%
STIC Liquid Assets Portfolio(b) 9,133,348 9,133,348
- --------------------------------------------------------------
STIC Prime Portfolio(b) 9,133,348 9,133,348
- --------------------------------------------------------------
Total Money Market Funds (Cost
$18,266,696) 18,266,696
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.12% (Cost
$149,269,234) 301,866,647
- --------------------------------------------------------------
OTHER ASSETS IN EXCESS OF
LIABILITIES-0.88% 2,666,600
- --------------------------------------------------------------
NET ASSETS-100.00% $304,533,247
==============================================================
</TABLE>
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-13
<PAGE> 281
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$149,269,234) $301,866,647
- ---------------------------------------------------------
Receivables for:
- ---------------------------------------------------------
Fund shares sold 4,425,060
- ---------------------------------------------------------
Dividends and interest 118,507
- ---------------------------------------------------------
Other assets 34,831
- ---------------------------------------------------------
Total assets 306,445,045
- ---------------------------------------------------------
LIABILITIES:
Payables for:
- ---------------------------------------------------------
Fund shares reacquired 1,254,152
- ---------------------------------------------------------
Accrued advisory fees 217,555
- ---------------------------------------------------------
Accrued distribution fees 242,671
- ---------------------------------------------------------
Accrued transfer agent fees 40,339
- ---------------------------------------------------------
Accrued operating expenses 157,081
- ---------------------------------------------------------
Total liabilities 1,911,798
- ---------------------------------------------------------
Net assets applicable to shares outstanding $304,533,247
=========================================================
NET ASSETS:
Class A $161,527,035
=========================================================
Class B $117,952,870
=========================================================
Class C $ 14,890,971
=========================================================
Advisor Class $ 10,162,371
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 7,864,824
=========================================================
Class B 6,010,977
=========================================================
Class C 759,134
=========================================================
Advisor Class 486,220
=========================================================
Class A:
Net asset value and redemption price per
share $ 20.54
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $20.54 divided
by 94.50%) $ 21.74
=========================================================
Class B:
Net asset value and offering price per
share $ 19.62
=========================================================
Class C:
Net asset value and offering price per
share $ 19.62
=========================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 20.90
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $75,646 foreign
withholding tax) $ 599,691
- ---------------------------------------------------------
Interest 535,118
- ---------------------------------------------------------
Security lending income 27,284
- ---------------------------------------------------------
Total investment income 1,162,093
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 1,356,654
- ---------------------------------------------------------
Accounting service fees 38,219
- ---------------------------------------------------------
Interest expense 1,592
- ---------------------------------------------------------
Distribution fees -- Class A 272,801
- ---------------------------------------------------------
Distribution fees -- Class B 535,942
- ---------------------------------------------------------
Distribution fees -- Class C 32,117
- ---------------------------------------------------------
Transfer agent fees 316,197
- ---------------------------------------------------------
Other 404,619
- ---------------------------------------------------------
Total expenses 2,958,141
- ---------------------------------------------------------
Less: Expenses paid indirectly and expense
reductions (4,027)
- ---------------------------------------------------------
Net expenses 2,954,114
- ---------------------------------------------------------
Net investment income (loss) (1,792,021)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FOREIGN CURRENCY CONTRACTS
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities 3,121,434
- ---------------------------------------------------------
Foreign currencies (503,664)
- ---------------------------------------------------------
Foreign currency contracts (15,026,561)
- ---------------------------------------------------------
Futures contracts 595,294
- ---------------------------------------------------------
(11,813,497)
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 152,599,278
- ---------------------------------------------------------
Foreign currencies (997)
- ---------------------------------------------------------
Foreign currency contracts 3,780,674
- ---------------------------------------------------------
Futures contracts (1,165,922)
- ---------------------------------------------------------
155,213,033
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies, foreign currency
contracts and futures contracts 143,399,536
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $141,607,515
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 282
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,792,021) $ (267,417)
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts and
futures contracts (11,813,497) (14,774,034)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts and futures contracts 155,213,033 16,253,705
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 141,607,515 1,212,254
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A -- (54,799)
- --------------------------------------------------------------------------------------------
Class B -- (31,189)
- --------------------------------------------------------------------------------------------
Advisor Class -- (1,928)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A 44,477,119 (8,445,884)
- --------------------------------------------------------------------------------------------
Class B 41,640,397 (1,105,543)
- --------------------------------------------------------------------------------------------
Class C 10,758,430 --
- --------------------------------------------------------------------------------------------
Advisor Class 3,653,432 (28,360,840)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 242,136,893 (36,787,929)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 62,396,354 99,184,283
- --------------------------------------------------------------------------------------------
End of period $304,533,247 $ 62,396,354
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $185,594,011 $ 85,080,433
- --------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (14,299,977) --
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts and futures contracts (19,358,742) (20,069,001)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies, foreign currency
contracts and futures contracts 152,597,955 (2,615,078)
- --------------------------------------------------------------------------------------------
$304,533,247 $ 62,396,354
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE> 283
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Japan Growth Fund (the "Fund") is a separate series of AIM Growth Series
(the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares are sold
without a sales charge. Effective March 1, 1999, the Fund discontinued sales of
the Advisor Class to new investors. Matters affecting each portfolio or class
will be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was decreased by
$12,507,956, undistributed net realized gains increased by $12,523,756 and
paid-in capital decreased by $15,800 as a result of differing book/tax
treatment of foreign currency transactions and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $18,648,328 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that
FS-16
<PAGE> 284
portion of the results of operations resulting from changes in foreign
exchange rates on investments and the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Futures Contracts -- The Portfolio may purchase or sell futures contracts as
a hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Portfolio's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Portfolio recognizes a realized gain or loss equal to the
difference between the proceeds from, or cost of, the closing transaction
and the Portfolio's basis in the contract. Risks include the possibility of
an illiquid market and that a change in value of the contracts may not
correlate with changes in the value of the securities being hedged.
H. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.975% on the first $500 million of the Fund's average
daily net assets, plus 0.95% on the next $500 million of the Fund's average
daily net assets, plus 0.925% on the next $500 million of the Fund's average
daily net assets, plus 0.90% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 2.00%, 2.65%, 2.65% and 1.65% of the average daily
net assets of the Fund's Class A, Class B, Class C and Advisor Class shares,
respectively.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
December 31, 1999, AIM was paid $38,219 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $256,549 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $272,801, $535,942 and $32,117,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $180,711 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $1,972 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS and AIM Distributors.
FS-17
<PAGE> 285
NOTE 3-EXPENSE REDUCTIONS
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $179 under an expense offset arrangement and AIM directed
certain portfolio trades to brokers who then paid $3,848 of the Fund's expenses.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $4,027 during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.09% on the
unused balance of the committed line. The commitment fee is allocated among the
funds based on their respective average net assets for the period. Prior to May
28, 1999, the Fund, along with certain other funds advised and/or administered
by AIM, had a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allowed the Fund and certain other
funds to borrow, on a first come, first served basis, an aggregate maximum
amount of $250,000,000.
During the year ended December 31, 1999, the average outstanding daily balance
of bank loans for the Fund was $30,556 with a weighted average interest rate of
5.21%. Interest expense for the Fund for the year ended December 31, 1999 was
$1,592.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, there were no securities on loans to brokers. For the year
ended December 31, 1999, the Fund received fees of $27,284 for securities
lending.
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. The 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 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$127,261,637 and $56,216,789, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $135,362,638
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,611,877)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $129,750,761
=========================================================
Cost of investments for tax purposes is
$172,115,886.
</TABLE>
FS-18
<PAGE> 286
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 19,428,484 $ 241,844,051 31,462,291 $ 276,913,744
- -----------------------------------------------------------------------------------------------------------------------
Class B 7,771,106 96,657,608 3,640,751 31,434,436
- -----------------------------------------------------------------------------------------------------------------------
Class C* 1,505,640 20,997,654 -- --
- -----------------------------------------------------------------------------------------------------------------------
Advisor Class 1,449,716 19,444,530 1,661,544 14,964,767
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A -- -- 5,162 45,216
- -----------------------------------------------------------------------------------------------------------------------
Class B -- -- 3,285 27,680
- -----------------------------------------------------------------------------------------------------------------------
Advisor Class -- -- 110 979
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (15,790,359) (197,366,932) (32,214,010) (285,404,844)
- -----------------------------------------------------------------------------------------------------------------------
Class B (4,429,756) (55,017,211) (3,772,881) (32,567,659)
- -----------------------------------------------------------------------------------------------------------------------
Class C* (746,506) (10,239,224) -- --
- -----------------------------------------------------------------------------------------------------------------------
Advisor Class (1,182,546) (15,791,098) (4,795,465) (43,326,586)
- -----------------------------------------------------------------------------------------------------------------------
8,005,779 $ 100,529,378 (4,009,213) $ (37,912,267)
=======================================================================================================================
</TABLE>
* Class C Shares commenced sales on May 3, 1999.
FS-19
<PAGE> 287
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during each of the years in the five-year period ended December 31,
1999, for a share of Class C outstanding during May 3, 1999 (date sales
commenced) through December 31, 1999 and for a share of Advisor Class
outstanding during each of the years in four-year period ended December 31, 1999
and the period June 1, 1995 (date operations commenced) through December 31,
1995.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.90 $ 8.96 $ 9.76 $ 11.00 $ 12.15
- ------------------------------------------------------------ -------- ------- ------- ------- --------
Income from investment operations:
Net investment income (loss) (0.14) (0.02)(b) (0.08) (0.04) (0.04)
- ------------------------------------------------------------ -------- ------- ------- ------- --------
Net realized and unrealized gain (loss) on investments 11.78 (0.03) (0.70) (0.77) 0.26
- ------------------------------------------------------------ -------- ------- ------- ------- --------
Net increase (decrease) from investment operations 11.64 (0.05) (0.78) (0.81) 0.22
- ------------------------------------------------------------ -------- ------- ------- ------- --------
Less distributions from net realized gains -- (0.01) (0.02) (0.43) (1.37)
- ------------------------------------------------------------ -------- ------- ------- ------- --------
Net asset value, end of period $ 20.54 $ 8.90 $ 8.96 $ 9.76 $ 11.00
============================================================ ======== ======= ======= ======= ========
Total return(c) 130.79% (0.54)% (7.99)% (7.43)% 1.94%
============================================================ ======== ======= ======= ======= ========
Ratios and supplemental data:
Net assets, end of period (in 000s) $161,527 $37,608 $44,583 $63,585 $111,105
============================================================ ======== ======= ======= ======= ========
Ratio of net investment income (loss) to average net assets: (1.03)%(d) (0.19)% (0.61)% (0.40)% (0.40)%
============================================================ ======== ======= ======= ======= ========
Ratio of expenses to average net assets:
with fee waivers(e) 1.87%(d) 1.96% 1.99% 1.84% 1.99%
- ------------------------------------------------------------ -------- ------- ------- ------- --------
without fee waivers 1.87%(d) 2.33% 2.06% 1.94% 2.14%
============================================================ ======== ======= ======= ======= ========
Portfolio turnover rate 43% 67% 58% 31% 67%
============================================================ ======== ======= ======= ======= ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Includes reimbursement of Fund operating expenses per share of $0.03.
(c) Does not deduct sales charges.
(d) Ratios are based on average net assets of $77,943,175.
(e) Prior to the period ended December 31, 1999, ratios include expense
reductions.
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.55 $ 8.67 $ 9.49 $ 10.78 $ 12.02
- ------------------------------------------------------------ -------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.21) (0.07)(b) (0.14) (0.11) (0.12)
- ------------------------------------------------------------ -------- ------- ------- ------- -------
Net realized and unrealized gain (loss) on investments 11.28 (0.04) (0.66) (0.75) 0.25
- ------------------------------------------------------------ -------- ------- ------- ------- -------
Net increase (decrease) from investment operations 11.07 (0.11) (0.80) (0.86) 0.13
- ------------------------------------------------------------ -------- ------- ------- ------- -------
Less distributions from net realized gains -- (0.01) (0.02) (0.43) (1.37)
- ------------------------------------------------------------ -------- ------- ------- ------- -------
Net asset value, end of period $ 19.62 $ 8.55 $ 8.67 $ 9.49 $ 10.78
============================================================ ======== ======= ======= ======= =======
Total return(c) 129.47% (1.25)% (8.42)% (8.05)% 1.20%
============================================================ ======== ======= ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in 000s) $117,953 $22,815 $24,250 $32,116 $41,274
============================================================ ======== ======= ======= ======= =======
Ratio of net investment income (loss) to average net assets: (1.68)%(d) (0.84)% (1.26)% (1.05)% (1.05)%
============================================================ ======== ======= ======= ======= =======
Ratio of expenses to average net assets:
with fee waivers(e) 2.52%(d) 2.61% 2.64% 2.49% 2.64%
- ------------------------------------------------------------ -------- ------- ------- ------- -------
without fee waivers 2.52%(d) 2.98% 2.71% 2.59% 2.79%
============================================================ ======== ======= ======= ======= =======
Portfolio turnover rate 43% 67% 58% 31% 67%
============================================================ ======== ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Includes reimbursement of Fund operating expenses per share of $0.03.
(c) Does not deduct sales charges.
(d) Ratios are based on average net assets of $53,594,156.
(e) Prior to the period ended December 31, 1999, ratios include expense
reductions.
FS-20
<PAGE> 288
NOTE 8-FINANCIAL HIGHLIGHTS-(CONTINUED)
<TABLE>
<CAPTION>
Class C
------------
May 3, 1999
through Advisor Class
December 31, --------------------------------------------------
1999(a) 1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------------ -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.33 $ 9.01 $ 9.05 $ 9.81 $11.02 $10.50
- ---------------------------------------------------------- ------- ------- ------ ------- ------ ------
Income from investment operations:
Net investment income (loss) (0.17) (0.09) 0.01(b) (0.01) (0.01) --
- ---------------------------------------------------------- ------- ------- ------ ------- ------ ------
Net realized and unrealized gain (loss) on investments 9.46 11.98 (0.04) (0.73) (0.77) 1.89
- ---------------------------------------------------------- ------- ------- ------ ------- ------ ------
Net increase (decrease) from investment operations 9.29 11.89 (0.03) (0.74) (0.78) 1.89
- ---------------------------------------------------------- ------- ------- ------ ------- ------ ------
Less distributions from net realized gains -- -- (0.01) (0.02) (0.43) (1.37)
- ---------------------------------------------------------- ------- ------- ------ ------- ------ ------
Net asset value, end of period $ 19.62 $ 20.90 $ 9.01 $ 9.05 $ 9.81 $11.02
========================================================== ======= ======= ====== ======= ====== ======
Total return(c) 89.93% 131.96% (0.31)% (7.54)% (7.14)% 18.14%
========================================================== ======= ======= ====== ======= ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $14,891 $10,162 $1,973 $30,351 $413 $558
========================================================== ======= ======= ====== ======= ====== ======
Ratio of net investment income (loss) to average net
assets: (1.68)%(d) (0.68)%(e) 0.16% (0.26)% (0.05)% (0.05)%(f)
========================================================== ======= ======= ====== ======= ====== ======
Ratio of expenses to average net assets:
with fee waivers(g) 2.52%(d) 1.52%(e) 1.61% 1.64% 1.49% 1.64%(f)
- ---------------------------------------------------------- ------- ------- ------ ------- ------ ------
without fee waivers 2.52%(d) 1.52%(e) 1.98% 1.71% 1.59% 1.79%(f)
========================================================== ======= ======= ====== ======= ====== ======
Portfolio turnover rate 43% 43% 67% 58% 31% 67%
========================================================== ======= ======= ====== ======= ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Includes reimbursement of Fund operating expenses per share of $0.03.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) Ratios are annualized and based on average net assets of $4,824,104.
(e) Ratios are based on average net assets of $4,395,059.
(f) Annualized.
(g) Prior to the period ended December 31, 1999, ratios include expense
reductions.
NOTE 9-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-21
<PAGE> 289
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series and Shareholders of
AIM Mid Cap Equity Fund
(formerly AIM Mid Cap Growth Fund):
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
Mid Cap Equity Fund (hereafter referred to as the "Fund")
at December 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights
for each of the periods indicated therein, in conformity
with accounting principles generally accepted in the
United States. These financial statements and financial
highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with auditing standards generally accepted in
the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting
principles used and significant estimates made by
management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-22
<PAGE> 290
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-77.11%
BANKS (REGIONAL)-1.40%
Bank United Corp.-Class A 92,000 $ 2,507,000
- --------------------------------------------------------------
UnionBanCal Corp. 55,000 2,169,062
- --------------------------------------------------------------
4,676,062
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-0.94%
Adolph Coors Co. 60,000 3,150,000
- --------------------------------------------------------------
BIOTECHNOLOGY-0.78%
CV Therapeutics, Inc.(a) 100,000 2,606,250
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.67%
Ackerley Group, Inc. (The) 80,000 1,450,000
- --------------------------------------------------------------
AMFM Inc.(a) 95,500 7,472,875
- --------------------------------------------------------------
8,922,875
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-1.90%
Sigma-Aldrich Corp. 120,000 3,607,500
- --------------------------------------------------------------
Valspar Corp. (The) 65,000 2,721,875
- --------------------------------------------------------------
6,329,375
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.15%
ANTEC Corp.(a) 40,000 1,460,000
- --------------------------------------------------------------
Corning, Inc. 40,000 5,157,500
- --------------------------------------------------------------
PairGain Technologies, Inc.(a) 275,000 3,901,562
- --------------------------------------------------------------
10,519,062
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-8.29%
BEA Systems, Inc.(a) 80,000 5,595,000
- --------------------------------------------------------------
C-bridge Internet Solutions,
Inc.(a) 28,300 1,376,087
- --------------------------------------------------------------
IONA Technologies PLC-ADR
(Ireland)(a) 45,000 2,452,500
- --------------------------------------------------------------
Netegrity, Inc.(a) 40,000 2,277,500
- --------------------------------------------------------------
Novell, Inc.(a) 240,700 9,612,956
- --------------------------------------------------------------
Parametric Technology Co.(a) 160,000 4,330,000
- --------------------------------------------------------------
Synopsys, Inc.(a) 30,000 2,002,500
- --------------------------------------------------------------
27,646,543
- --------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-1.43%
Martin Marietta Materials, Inc. 70,000 2,870,000
- --------------------------------------------------------------
Southdown, Inc. 37,000 1,910,125
- --------------------------------------------------------------
4,780,125
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.73%
US Foodservice, Inc.(a) 145,200 2,432,100
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-5.74%
American Power Conversion Corp.(a) 150,000 $ 3,956,250
- --------------------------------------------------------------
Harman International Industries,
Inc. 100,000 5,612,500
- --------------------------------------------------------------
Molex, Inc.-Class A 135,100 6,113,275
- --------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 110,000 3,478,750
- --------------------------------------------------------------
19,160,775
- --------------------------------------------------------------
ELECTRONICS (COMPONENT
DISTRIBUTORS)-1.79%
Agilent Technologies, Inc.(a) 43,500 3,363,094
- --------------------------------------------------------------
Avnet, Inc. 43,000 2,601,500
- --------------------------------------------------------------
5,964,594
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-1.26%
PE Corp-PE Biosystems Group 35,000 4,210,937
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-8.54%
Altera Corp.(a) 30,000 1,486,875
- --------------------------------------------------------------
Amkor Technology, Inc.(a) 80,000 2,260,000
- --------------------------------------------------------------
Atmel Corp.(a) 76,000 2,246,750
- --------------------------------------------------------------
Burr-Brown Corp.(a) 217,500 7,857,187
- --------------------------------------------------------------
Cypress Semiconductor Corp.(a) 75,000 2,428,125
- --------------------------------------------------------------
Dallas Semiconductor Corp. 49,000 3,157,437
- --------------------------------------------------------------
Lattice Semiconductor Corp.(a) 192,000 9,048,000
- --------------------------------------------------------------
28,484,374
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.53%
Rudolph Technologies, Inc.(a) 98,000 3,283,000
- --------------------------------------------------------------
Teradyne, Inc.(a) 78,000 5,148,000
- --------------------------------------------------------------
8,431,000
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.55%
Ambac Financial Group, Inc. 35,000 1,826,562
- --------------------------------------------------------------
FOODS-3.31%
Earthgrains Co. (The) 122,000 1,967,250
- --------------------------------------------------------------
International Home Foods, Inc.(a) 150,000 2,606,250
- --------------------------------------------------------------
Keebler Foods Co.(a) 110,000 3,093,750
- --------------------------------------------------------------
Suiza Foods Corp.(a) 85,000 3,368,125
- --------------------------------------------------------------
11,035,375
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-0.95%
Mallinckrodt, Inc. 100,000 3,181,250
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-4.05%
Biovail Corp. International
(Canada)(a) 50,000 4,687,500
- --------------------------------------------------------------
Jones Pharma, Inc. 83,100 3,609,656
- --------------------------------------------------------------
</TABLE>
FS-23
<PAGE> 291
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED)
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 73,000 $ 5,233,187
- --------------------------------------------------------------
13,530,343
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.41%
Sybron International Corp.(a) 190,000 4,690,625
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.91%
Dial Corp. (The) 125,000 3,039,063
- --------------------------------------------------------------
HOUSEWARES-0.99%
Fortune Brands, Inc. 100,000 3,306,250
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.30%
Mattel, Inc. 76,000 997,500
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.19%
Applied Power, Inc.-Class A 108,100 3,972,675
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.69%
Pentair, Inc. 60,000 2,310,000
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-1.79%
Mettler-Toledo International,
Inc.(a) 65,000 2,482,188
- --------------------------------------------------------------
Millipore Corp. 90,000 3,476,250
- --------------------------------------------------------------
5,958,438
- --------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-6.42%
BJ Services Co.(a) 109,900 4,595,194
- --------------------------------------------------------------
Cooper Cameron Corp.(a) 75,800 3,709,463
- --------------------------------------------------------------
Rowan Companies, Inc.(a) 194,000 4,207,375
- --------------------------------------------------------------
Santa Fe International Corp. 149,000 3,855,375
- --------------------------------------------------------------
Transocean Sedco Forex Inc. 45,600 1,536,150
- --------------------------------------------------------------
Weatherford International, Inc.(a) 88,400 3,530,475
- --------------------------------------------------------------
21,434,032
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-2.65%
Apache Corp. 50,000 1,846,875
- --------------------------------------------------------------
Burlington Resources, Inc. 63,000 2,082,938
- --------------------------------------------------------------
Devon Energy Corp. 50,000 1,643,750
- --------------------------------------------------------------
EOG Resources, Inc. 125,000 2,195,313
- --------------------------------------------------------------
Noble Affiliates, Inc. 50,000 1,071,875
- --------------------------------------------------------------
8,840,751
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PUBLISHING-1.06%
Meredith Corp. 85,000 $ 3,543,438
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.37%
New York Times Co. (The)-Class A 25,000 1,228,125
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.43%
Ames Department Stores, Inc.(a) 120,000 3,457,500
- --------------------------------------------------------------
Consolidated Stores Corp.(a) 80,000 1,300,000
- --------------------------------------------------------------
4,757,500
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.44%
Abercrombie & Fitch Co.-Class A(a) 55,000 1,467,813
- --------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-2.57%
Infinity Broadcasting Corp.-Class
A(a) 93,975 3,400,720
- --------------------------------------------------------------
Young & Rubicam Inc. 73,000 5,164,750
- --------------------------------------------------------------
8,565,470
- --------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.38%
Convergys Corp.(a) 150,000 4,612,500
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-1.49%
Broadwing Inc.(a) 134,875 4,973,516
- --------------------------------------------------------------
TELEPHONE-1.14%
CenturyTel, Inc. 80,000 3,790,000
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.57%
Jones Apparel Group, Inc.(a) 70,000 1,898,750
- --------------------------------------------------------------
WASTE MANAGEMENT-0.30%
Republic Services, Inc.(a) 70,000 1,006,250
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$177,698,491) 257,280,298
- --------------------------------------------------------------
MONEY MARKET FUNDS-22.88%
STIC Liquid Assets Portfolio(b) 38,181,760 38,181,760
- --------------------------------------------------------------
STIC Prime Portfolio(b) 38,181,760 38,181,760
- --------------------------------------------------------------
Total Money Market Funds (Cost
$76,363,520) 76,363,520
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.99% (Cost
$254,062,011) 333,643,818
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.01% 24,463
- --------------------------------------------------------------
NET ASSETS-100.00% $333,668,281
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-24
<PAGE> 292
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$254,062,011) $333,643,818
- ---------------------------------------------------------
Receivables for:
Fund shares sold 829,319
- ---------------------------------------------------------
Dividends and interest 468,876
- ---------------------------------------------------------
Due from advisor 8,097
- ---------------------------------------------------------
Other assets 24,619
- ---------------------------------------------------------
Total assets 334,974,729
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 612,291
- ---------------------------------------------------------
Accrued advisory fees 192,137
- ---------------------------------------------------------
Accrued distribution fees 311,051
- ---------------------------------------------------------
Accrued transfer agent fees 87,356
- ---------------------------------------------------------
Accrued operating expenses 103,613
- ---------------------------------------------------------
Total liabilities 1,306,448
- ---------------------------------------------------------
Net assets applicable to shares outstanding $333,668,281
=========================================================
NET ASSETS:
Class A $178,550,386
=========================================================
Class B $151,391,453
=========================================================
Class C $ 1,564,451
=========================================================
Advisor Class $ 2,161,991
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 7,604,868
=========================================================
Class B 6,815,706
=========================================================
Class C 70,488
=========================================================
Advisor Class 91,136
=========================================================
Class A:
Net asset value and redemption price per
share $ 23.48
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $23.48 divided
by 94.50%) $ 24.85
=========================================================
Class B:
Net asset value and offering price per
share $ 22.21
=========================================================
Class C:
Net asset value and offering price per
share $ 22.19
=========================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 23.72
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $4,699 foreign withholding
tax) $ 1,675,118
- ---------------------------------------------------------
Interest 2,203,902
- ---------------------------------------------------------
Security lending income 168,057
- ---------------------------------------------------------
Total investment income 4,047,077
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 2,111,743
- ---------------------------------------------------------
Accounting service fees 86,264
- ---------------------------------------------------------
Trustees fees 13,743
- ---------------------------------------------------------
Distribution fees -- Class A 541,241
- ---------------------------------------------------------
Distribution fees -- Class B 1,348,273
- ---------------------------------------------------------
Distribution fees -- Class C 3,130
- ---------------------------------------------------------
Transfer agent fees 799,789
- ---------------------------------------------------------
Other 226,098
- ---------------------------------------------------------
Total expenses 5,130,281
- ---------------------------------------------------------
Less: Expenses paid indirectly (5,433)
- ---------------------------------------------------------
Net expenses 5,124,848
- ---------------------------------------------------------
Net investment income (loss) (1,077,771)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 72,380,220
- ---------------------------------------------------------
Options contracts written 147,118
- ---------------------------------------------------------
72,527,338
- ---------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 17,911,472
- ---------------------------------------------------------
Option contracts written 2,084,709
- ---------------------------------------------------------
19,996,181
- ---------------------------------------------------------
Net gain from investment securities and
option contracts 92,523,519
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $91,445,748
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-25
<PAGE> 293
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,077,771) $ (6,126,755)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
option contracts 72,527,338 (7,289,125)
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and option contracts 19,996,181 (5,896,122)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 91,445,748 (19,312,002)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (16,323,689) (8,638,559)
- ---------------------------------------------------------------------------------------------
Class B (14,494,421) (8,762,197)
- ---------------------------------------------------------------------------------------------
Class C (129,452)
- ---------------------------------------------------------------------------------------------
Advisor Class (193,799) (46,305)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A (34,855,409) (59,340,039)
- ---------------------------------------------------------------------------------------------
Class B (40,751,032) (69,635,070)
- ---------------------------------------------------------------------------------------------
Class C 1,442,045 --
- ---------------------------------------------------------------------------------------------
Advisor Class 909,831 70,469
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (12,950,178) (165,663,703)
=============================================================================================
NET ASSETS:
Beginning of period 346,618,459 512,282,162
- ---------------------------------------------------------------------------------------------
End of period $333,668,281 $ 346,618,459
- ---------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $222,894,326 $ 295,648,297
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and option contracts 31,192,148 (8,615,464)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
option contracts 79,581,807 59,585,626
- ---------------------------------------------------------------------------------------------
$333,668,281 $ 346,618,459
=============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-26
<PAGE> 294
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Mid Cap Equity Fund (the "Fund") is a separate series of AIM Growth Series
(the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares are sold
without a sales charge. Effective March 1, 1999, the Fund discontinued sales of
the Advisor Class to new investors. Matters affecting each portfolio or class
will be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Dividend income is recorded on the ex-dividend date. On
December 31, 1999, undistributed net investment income was increased by
$1,077,771, undistributed net realized gains decreased by $1,578,365 and
paid-in capital increased by $500,594 as a result of differing book/tax
treatment of foreign currency transactions and other reclassifications. Net
assets of the Fund were unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds of fund share redemptions as
distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Covered Call Options -- The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current
FS-27
<PAGE> 295
market value of a written option is the mean between the last bid and asked
prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised, the
Fund realizes a gain or a loss from the sale of the underlying security and
the proceeds of the sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
F. Put Options -- The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.725% on the first $500 million of the Fund's average
daily net assets, plus 0.70% on the next $500 million of the Fund's average
daily net assets, plus 0.675% on the next $500 million of the Fund's average
daily net assets, plus 0.65% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 1.75%, 2.40%, 2.40% and 1.40% of the average daily
net assets of the Fund's Class A, Class B, Class C and Advisor Class shares,
respectively.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
December 31, 1999, AIM was paid $86,264 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $705,008 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $541,241, $1,348,273 and
$3,130, respectively, as compensation under the Plans.
AIM Distributors received commissions of $40,399 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM
FS-28
<PAGE> 296
Distributors received $684 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $5,433 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$5,433 during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period. Prior to May 28, 1999, the Fund, along with certain
other funds advised and/or administered by AIM, had a line of credit with
BankBoston and State Street Bank & Trust Company. The arrangements with the
banks allowed the Fund and certain other funds to borrow, on a first come, first
served basis, an aggregate maximum amount of $250,000,000.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, securities with an aggregate value of $10,500,888 were on
loan to brokers. The loans were secured by cash collateral of $10,710,957
received by the Portfolio. For the year ended December 31, 1999, the Portfolio
received fees of $168,057 for securities lending.
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. The 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 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$214,006,640 and $364,205,155, respectively.
The amount of unrealized appreciation of investment securities, for tax
purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $85,698,986
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (7,113,627)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $78,585,359
=========================================================
</TABLE>
Cost of investments for tax purposes is $255,058,459.
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of year 11,068 $2,262,028
- ------------------------------ -------- ----------
Written 1,828 245,858
- ------------------------------ -------- ----------
Closed (1,847) (123,476)
- ------------------------------ -------- ----------
Exercised (10,049) (2,311,412)
- ------------------------------ -------- ----------
Expired (1,000) (72,998)
- ------------------------------ -------- ----------
End of year -- --
============================== ======== ==========
</TABLE>
FS-29
<PAGE> 297
NOTE 8-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 2,331,884 $ 45,474,921 23,952,734 $ 505,999,810
- ---------------------------------------------------------------------------------------------------------------------
Class B 743,118 14,758,662 5,833,056 120,542,669
- ---------------------------------------------------------------------------------------------------------------------
Class C* 67,678 1,380,504 -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class 49,583 1,032,846 887,277 18,970,978
- ---------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 685,215 14,958,133 448,265 7,998,160
- ---------------------------------------------------------------------------------------------------------------------
Class B 648,821 13,404,549 471,450 8,052,203
- ---------------------------------------------------------------------------------------------------------------------
Class C* 5,521 114,003 -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class 8,785 193,799 2,579 46,305
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (4,913,896) (95,288,463) (27,068,413) (573,338,009)
- ---------------------------------------------------------------------------------------------------------------------
Class B (3,686,690) (68,914,243) (9,774,765) (198,229,942)
- ---------------------------------------------------------------------------------------------------------------------
Class C* (2,711) (52,462) -- --
- ---------------------------------------------------------------------------------------------------------------------
Advisor Class (15,098) (316,814) (896,015) (18,946,814)
- ---------------------------------------------------------------------------------------------------------------------
(4,077,790) $(73,254,565) (6,143,832) $(128,904,640)
=====================================================================================================================
</TABLE>
* Class C Shares Commenced sales on May 3, 1999.
FS-30
<PAGE> 298
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during each of the years in the five-year period ended December 31,
1999, for a share of Class C outstanding during the period May 3, 1999 (date
sales commenced) through December 31, 1999 and for a share of Advisor Class
outstanding each of the years in four-year period ended December 31, 1999 and
the period June 1, 1995 (date sales commenced) through December 31, 1995.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
1999(a) 1998(a) 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.97 $ 21.01 $ 20.77 $ 19.07 $ 17.69
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.01) (0.24) (0.20) 0.03 0.24
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 6.88 (0.81) 3.00 2.96 3.93
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 6.87 (1.05) 2.80 2.99 4.17
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- -- (0.21)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (2.36) (0.99) (2.56) (1.29) (2.79)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 23.48 $ 18.97 $ 21.01 $ 20.77 $ 19.07
============================================================ ======== ======== ======== ======== ========
Total return(b) 37.13% (4.71)% 14.05% 15.65% 23.23%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $178,550 $180,258 $255,674 $343,427 $396,291
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets:
With fee waivers 1.46%(c) 1.56% 1.37% 1.36% 1.46%
============================================================ ======== ======== ======== ======== ========
Without fee waivers 1.46%(c) 1.57% 1.48% 1.41% --
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net assets:
With fee waivers (0.07)%(c) (1.09)% (0.90)% 0.12% 1.24%
============================================================ ======== ======== ======== ======== ========
Without fee waivers (0.07)%(c) (1.10)% (1.01)% 0.07% --
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 90% 168% 190% 253% 71%
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $154,640,295.
<TABLE>
<CAPTION>
Class C
------------
May 3, 1999
Class B through
------------------------------------------------------- December 31,
1999(a) 1998(a) 1997 1996 1995 1999(a)
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.16 $ 20.31 $ 20.28 $ 18.77 $ 17.50 $19.02
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Income from investment operations:
Net investment income (loss) (0.14) (0.38) (0.34) (0.11) 0.10 (0.10)
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Net gains (losses) on securities (both
realized and unrealized) 6.55 (0.78) 2.93 2.91 3.87 5.63
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Total from investment operations 6.41 (1.16) 2.59 2.80 3.97 5.53
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Less distributions:
Dividends from net investment income -- -- -- -- (0.12) --
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58) (2.36)
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Total distributions (2.36) (0.99) (2.56) (1.29) (2.70) (2.36)
- ----------------------------------------------- -------- -------- -------- -------- -------- ------
Net asset value, end of period $ 22.21 $ 18.16 $ 20.31 $ 20.28 $ 18.77 $22.19
=============================================== ======== ======== ======== ======== ======== ======
Total return(b) 36.25% (5.41)% 13.35% 14.82% 22.42% 29.98%
=============================================== ======== ======== ======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $151,392 $165,447 $255,468 $334,590 $348,435 $1,564
=============================================== ======== ======== ======== ======== ======== ======
Ratio of expenses to average net assets:
With fee waivers 2.11%(c) 2.21% 2.02% 2.01% 2.11% 2.11%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Without fee waivers 2.11%(c) 2.22% 2.13% 2.06% -- 2.11%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Ratio of net investment income (loss) to
average net assets:
With fee waivers (0.72)%(c) (1.74)% (1.55)% (0.53)% 0.59% (0.72)%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Without fee waivers (0.72)%(c) (1.75)% (1.66)% (0.58)% -- (0.72)%(c)(d)
=============================================== ======== ======== ======== ======== ======== ======
Portfolio turnover rate 90% 168% 190% 253% 71% 90%
=============================================== ======== ======== ======== ======== ======== ======
<CAPTION>
Advisor Class
---------------------------------------------
1999(a) 1998(a) 1997 1996 1995
------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.08 $21.10 $20.76 $19.05 $20.61
- ----------------------------------------------- ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss) 0.06 (0.17) (0.15) 0.09 0.21
- ----------------------------------------------- ------ ------ ------ ------ ------
Net gains (losses) on securities (both
realized and unrealized) 6.94 (0.86) 3.05 2.91 1.09
- ----------------------------------------------- ------ ------ ------ ------ ------
Total from investment operations 7.00 (1.03) 2.90 3.00 1.30
- ----------------------------------------------- ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income -- -- -- -- (0.28)
- ----------------------------------------------- ------ ------ ------ ------ ------
Distributions from net realized gains (2.36) (0.99) (2.56) (1.29) (2.58)
- ----------------------------------------------- ------ ------ ------ ------ ------
Total distributions (2.36) (0.99) (2.56) (1.29) (2.86)
- ----------------------------------------------- ------ ------ ------ ------ ------
Net asset value, end of period $23.72 $19.08 $21.10 $20.76 $19.05
=============================================== ====== ====== ====== ====== ======
Total return(b) 37.59% (4.59)% 14.54% 15.72% 6.01%
=============================================== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,162 $913 $1,140 $1,986 $1,394
=============================================== ====== ====== ====== ====== ======
Ratio of expenses to average net assets:
With fee waivers 1.11%(c) 1.21% 1.02% 1.01% 1.11%
=============================================== ====== ====== ====== ====== ======
Without fee waivers 1.11%(c) 1.22% 1.13% 1.06% --
=============================================== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to
average net assets:
With fee waivers 0.28%(c) (0.74)% 0.55% 0.47% 1.59%(d)
=============================================== ====== ====== ====== ====== ======
Without fee waivers 0.28%(c) (0.75)% (0.66)% 0.42% --
=============================================== ====== ====== ====== ====== ======
Portfolio turnover rate 90% 168% 190% 253% 71%
=============================================== ====== ====== ====== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $134,827,348, $470,111 and
$1,494,316 for Class B, Class C and Advisor Class, respectively.
(d) Annualized.
NOTE 10-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-31
<PAGE> 299
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of AIM Growth Series
and Shareholders of AIM New Pacific Growth Fund:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of AIM
New Pacific Growth Fund (hereafter referred to as the
"Fund") at December 31, 1999, the results of its
operations, the changes in its net assets and the
financial highlights for each of the periods indicated
therein, in conformity with accounting principles
generally accepted in the United States. These financial
statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express
an opinion on these financial statements based on our
audits. We conducted our audits of these financial
statements in accordance with auditing standards
generally accepted in the United States which require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made
by management, and evaluating the overall financial
statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1999
by correspondence with the custodian, provide a
reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
February 16, 2000
FS-32
<PAGE> 300
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-96.49%
AUSTRALIA-7.32%
Broken Hill Proprietary Co. Ltd.
(Iron & Steel) 360,350 $ 4,735,236
- --------------------------------------------------------------
North Ltd. (Metals Mining) 893,050 2,106,374
- --------------------------------------------------------------
WMC Ltd. (Metals Mining) 607,000 3,349,912
- --------------------------------------------------------------
10,191,522
- --------------------------------------------------------------
CHINA-0.96%
Angang New Steel Co. Ltd. (Metal
Fabricators)(a) 6,000,000 478,549
- --------------------------------------------------------------
Beijing Yanhua Petrochemical Co.
Ltd. (Chemicals-Diversified) 7,364,000 852,589
- --------------------------------------------------------------
1,331,138
- --------------------------------------------------------------
HONG KONG-27.03%
Bank of East Asia, Ltd.
(Banks-Major Regional) 1,000,000 2,778,671
- --------------------------------------------------------------
Cable & Wireless HKT Ltd.
(Telephone) 1,600,200 4,621,405
- --------------------------------------------------------------
Celestial Asia Securities Holdings
Ltd. (Investment
Banking/Brokerage)(a) 8,000,000 1,018,846
- --------------------------------------------------------------
Cheung Kong Holdings Ltd. (Land
Development) 900,000 11,375,185
- --------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 2,700,000 2,240,304
- --------------------------------------------------------------
Great Wall Technology Co.
(Electronics- Component
Distributors)(a) 1,300,000 1,262,623
- --------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail-Food
Chains) 830,000 12,065,350
- --------------------------------------------------------------
Pacific Century CyberWorks Ltd.
(Communications-Equipment)(a) 472,000 1,099,016
- --------------------------------------------------------------
Yizheng Chemical Fibre Co., Ltd.
(Chemicals- Specialty)(a) 4,088,000 1,143,809
- --------------------------------------------------------------
37,605,209
- --------------------------------------------------------------
INDONESIA-2.66%
PT Indah Kiat Pulp & Paper Corp.
Tbk (Paper & Forest Products)(a) 2,700,000 1,062,612
- --------------------------------------------------------------
PT Lippo Bank Tbk (Banks-Major
Regional)(a) 73,600,000 2,633,274
- --------------------------------------------------------------
3,695,886
- --------------------------------------------------------------
MALAYSIA-2.53%
Berjaya Sports Toto Berhad (Leisure
Time- Products) 600,000 1,294,839
- --------------------------------------------------------------
Malayan Banking Berhad (Banks-Major
Regional) 210,000 746,111
- --------------------------------------------------------------
Telekom Malaysia Berhad (Telephone) 381,750 1,476,886
- --------------------------------------------------------------
3,517,836
- --------------------------------------------------------------
PHILIPPINES-3.88%
Equitable PCI Bank (Banks-Major
Regional) 520,000 1,154,839
- --------------------------------------------------------------
Philippine Long Distance Telephone
Co. (Telephone) 100,290 2,550,800
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PHILIPPINES-(CONTINUED)
San Miguel Corp.-Class B
(Beverages- Alcoholic) 1,200,000 $ 1,697,270
- --------------------------------------------------------------
5,402,909
- --------------------------------------------------------------
SINGAPORE-9.98%
DBS Group Holdings Ltd.
(Banks-Money Center) 235,010 3,852,160
- --------------------------------------------------------------
DBS Land Ltd. (Land Development) 1,000,000 1,969,379
- --------------------------------------------------------------
Keppel Land Ltd. (Land Development) 1,450,000 2,376,764
- --------------------------------------------------------------
Neptune Orient Lines Ltd.
(Shipping)(a) 1,850,000 2,477,034
- --------------------------------------------------------------
Oversea-Chinese Banking Corp. Ltd.
(Banks- Major Regional) 350,000 3,215,251
- --------------------------------------------------------------
13,890,588
- --------------------------------------------------------------
SOUTH KOREA-19.69%
Kookmin Bank (Banks-Major Regional) 230,044 3,606,150
- --------------------------------------------------------------
Korea Electric Power Corp.
(Electric Companies) 50,000 1,549,978
- --------------------------------------------------------------
Korea Telecom Corp.-ADR (Telephone) 12,380 925,405
- --------------------------------------------------------------
L.G. Chemical Ltd.
(Chemicals-Diversified) 90,000 2,845,442
- --------------------------------------------------------------
L.G. Information & Communication
(Communications Equipment) 28,747 4,759,521
- --------------------------------------------------------------
Merrill Lynch International & Co.
KOSPI 200- Wts., expiring
12/14/00 573,354 6,565,477
- --------------------------------------------------------------
Samsung Electronics
(Electronics-Component
Distributors) 26,514 6,211,118
- --------------------------------------------------------------
Shinhan Bank-GDR (Banks-Major
Regional)(a) 49,300 934,235
- --------------------------------------------------------------
27,397,326
- --------------------------------------------------------------
TAIWAN-14.67%
Acer Peripherals Inc.
(Computers--Hardware) 730,000 3,023,737
- --------------------------------------------------------------
Asustek Computer, Inc.
(Computers-Hardware) 168,176 1,773,658
- --------------------------------------------------------------
Cathay Life Insurance Co., Ltd.
(Insurance Brokers) 805,000 1,936,514
- --------------------------------------------------------------
China Steel Corp. (Metals Mining) 1,893,000 1,399,318
- --------------------------------------------------------------
Chinatrust Commercial Bank (Banks-
Regional)(a) 2,476,320 2,879,901
- --------------------------------------------------------------
Formosa Plastics Corp.
(Chemicals-Specialty) 749,000 1,491,556
- --------------------------------------------------------------
Hon Hai Precision Industry Co.,
Ltd. (Electronics-Component
Distributors)(a) 250,000 1,863,948
- --------------------------------------------------------------
Shinkong Synthetic Fibers Corp.
(Chemicals- Specialty)(a) 5,000,000 1,401,944
- --------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd. (Computers-Hardware)(a) 871,500 4,637,263
- --------------------------------------------------------------
20,407,839
- --------------------------------------------------------------
</TABLE>
FS-33
<PAGE> 301
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
THAILAND-4.64%
Industrial Finance Corp. of
Thailand (Banks- Regional)(a) 1,934,400 $ 950,123
- --------------------------------------------------------------
Shin Corporations Public Co. Ltd.
(Computers- Software &
Services)(a) 266,800 2,521,726
- --------------------------------------------------------------
Siam Commercial Bank Public Co.
Ltd.-$1.365 Conv. Pfd.
(Banks-Regional) (Acquired
10/22/99-11/03/99; Cost
$998,418)(b) 914,300 1,116,628
- --------------------------------------------------------------
Thai Farmers Bank Public Co. Ltd.
(Banks- Major Regional)(a) 1,114,300 1,863,823
- --------------------------------------------------------------
6,452,300
- --------------------------------------------------------------
UNITED KINGDOM-3.13%
HSBC Holdings PLC (Banks-Major
Regional) 310,263 4,350,507
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$92,650,873) 134,243,060
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-2.83%
STIC Liquid Assets Portfolio(c) 1,969,173 $ 1,969,173
- --------------------------------------------------------------
STIC Prime Portfolio(c) 1,969,173 1,969,173
- --------------------------------------------------------------
Total Money Market Funds (Cost
$3,938,346) 3,938,346
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.32% (Cost
$96,589,219) 138,181,406
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.68% 940,001
- --------------------------------------------------------------
NET ASSETS-100.00% $139,121,407
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
GDR - Global Depositary Receipt
KOSPI - Korea Stock Price Index
Pfd. - Preferred
Wts. - Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of this security has been determined in
accordance with procedures established by the Board of Trustees. The market
value of this security at 12/31/99 was $1,116,628 which represented 0.80% of
the Fund's net assets.
(c) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-34
<PAGE> 302
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$96,589,219) $138,181,406
- ---------------------------------------------------------
Foreign currencies, at value (cost $55,304) 55,527
- ---------------------------------------------------------
Receivables for:
Fund shares sold 1,448,414
- ---------------------------------------------------------
Dividends and interest 47,700
- ---------------------------------------------------------
Due from Advisor 45,000
- ---------------------------------------------------------
Other assets 46,280
- ---------------------------------------------------------
Total assets 139,824,327
- ---------------------------------------------------------
LIABILITIES:
Payable for fund shares reacquired 390,853
- ---------------------------------------------------------
Accrued distribution fees 178,398
- ---------------------------------------------------------
Accrued transfer agent fees 37,755
- ---------------------------------------------------------
Accrued operating expenses 95,914
- ---------------------------------------------------------
Total liabilities 702,920
- ---------------------------------------------------------
Net assets applicable to shares outstanding $139,121,407
- ---------------------------------------------------------
NET ASSETS:
Class A $ 99,154,776
=========================================================
Class B $ 38,583,585
=========================================================
Class C $ 496,168
=========================================================
Advisor Class $ 886,878
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 13,151,088
=========================================================
Class B 5,302,769
=========================================================
Class C 68,211
=========================================================
Advisor Class 117,537
=========================================================
Class A:
Net asset value price per share $ 7.54
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $7.54 divided
by 94.50%) $ 7.98
=========================================================
Class B:
Net asset value and offering price per
share $ 7.28
=========================================================
Class C:
Net asset value and offering price per
share $ 7.27
=========================================================
Advisor Class:
Net asset value and offering price per
share $ 7.55
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend (net of $229,220 foreign
withholding tax) $ 2,128,846
- ---------------------------------------------------------
Interest 195,186
- ---------------------------------------------------------
Security lending income 57,724
- ---------------------------------------------------------
Total investment income 2,381,756
- ---------------------------------------------------------
EXPENSES:
Advisory and administrative fees 1,208,295
- ---------------------------------------------------------
Accounting service fees 42,925
- ---------------------------------------------------------
Custodian fees 107,038
- ---------------------------------------------------------
Distribution fees -- Class A 308,929
- ---------------------------------------------------------
Distribution fees -- Class B 343,884
- ---------------------------------------------------------
Distribution fees -- Class C 1,868
- ---------------------------------------------------------
Trustees' fees 9,739
- ---------------------------------------------------------
Transfer agent fees 704,578
- ---------------------------------------------------------
Interest 70,042
- ---------------------------------------------------------
Other 247,448
- ---------------------------------------------------------
Total expenses 3,044,746
- ---------------------------------------------------------
Less: Expenses waived by advisors (278,210)
- ---------------------------------------------------------
Expenses paid indirectly and expense
reductions (57,023)
- ---------------------------------------------------------
Net expenses 2,709,513
- ---------------------------------------------------------
Net investment income (loss) (327,757)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 18,882,190
- ---------------------------------------------------------
Foreign currencies (466,840)
- ---------------------------------------------------------
18,415,350
- ---------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 36,762,028
- ---------------------------------------------------------
Foreign currencies (8,070)
- ---------------------------------------------------------
36,753,958
- ---------------------------------------------------------
Net gain from investment securities and
foreign currencies 55,169,308
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $ 54,841,551
=========================================================
</TABLE>
See Notes to Financial Statements.
FS-35
<PAGE> 303
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (327,757) $ 1,671,771
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 18,415,350 (40,073,782)
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 36,753,958 22,911,376
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 54,841,551 (15,490,635)
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS IN EXCESS OF NET INVESTMENT INCOME:
Class A (87,958) (876,799)
- --------------------------------------------------------------------------------------------
Class B (36,209) (89,061)
- --------------------------------------------------------------------------------------------
Class C (254) --
- --------------------------------------------------------------------------------------------
Advisor Class (786) (19,770)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (22,320,127) (46,870,786)
- --------------------------------------------------------------------------------------------
Class B (6,726,132) (15,289,487)
- --------------------------------------------------------------------------------------------
Class C 356,060 --
- --------------------------------------------------------------------------------------------
Advisor Class (968,323) (415,164)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 25,057,822 (79,051,702)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 114,063,585 193,115,287
- --------------------------------------------------------------------------------------------
End of period $139,121,407 $114,063,585
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $166,689,561 $196,845,058
- --------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (287,071) (22,386)
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (68,874,157) (87,598,203)
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 41,593,074 4,839,116
- --------------------------------------------------------------------------------------------
$139,121,407 $114,063,585
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-36
<PAGE> 304
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM New Pacific Growth Fund (the "Fund") is a separate series of AIM Growth
Series (the "Trust"). The Trust is organized as a Delaware business trust and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate series portfolios, each having an unlimited number of shares of
beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class shares. Class A
shares are sold with a front-end sales charge. Class B shares and Class C shares
are sold with a contingent deferred sales charge. Advisor Class shares are sold
without a sales charge. Effective March 1, 1999, the Fund discontinued sales of
the Advisor Class to new investors. Matters affecting each portfolio or class
will be voted on exclusively by the shareholders of such portfolio or class. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund. The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the
last sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of trading of the New
York Stock Exchange ("NYSE"). Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the
NYSE. Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the NYSE which would not be reflected in the computation of
the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was increased by $188,279, undistributed net realized gains increased by
$308,696 and paid-in capital decreased by $496,975 as a result of differing
book/tax treatment of foreign currency transactions and other
reclassifications. Net assets of the Fund were unaffected by the
reclassifications.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds of fund share redemptions
as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $67,710,923 as of December 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2006.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that
FS-37
<PAGE> 305
portion of the results of operations resulting from changes in foreign
exchange rates on investments and the fluctuations arising from changes in
market prices of securities held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Expenses -- Distribution expenses directly attributable to a class of
shares are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's sub-advisor and
sub-administrator. The Fund pays AIM investment management and administration
fees at an annual rate of 0.975% on the first $500 million of the Fund's average
daily net assets, plus 0.95% on the next $500 million of the Fund's average
daily net assets, plus 0.925% on the next $500 million of the Fund's average
daily net assets, plus 0.90% on the Fund's average daily net assets exceeding
$1.5 billion. AIM has contractually agreed to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 2.00%, 2.65%, 2.65% and 1.65% of the average daily
net assets of the Fund's Class A, Class B, Class C and Advisor Class shares,
respectively. During the year ended December 31, 1999, AIM waived fees of
$278,210.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
December 31, 1999, AIM was paid $42,925 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended December 31, 1999, AFS was
paid $558,462 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the
1940 Act with respect to the Fund's Class A shares, Class B shares and Class C
shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25%
of the average daily net assets of the Class A, Class B or Class C shares to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own the appropriate
class of shares of the Fund. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges that may be paid
by the respective classes. For the year ended December 31, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $308,929, $343,884 and $1,868,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $41,906 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $1,977 in contingent deferred sales charges imposed on
redemptions of Fund shares.
Certain officers and trustees of the Trust are officers and directors of AIM,
AFS and AIM Distributors.
NOTE 3-EXPENSE REDUCTIONS
During the year ended December 31, 1999, the Fund received reductions in
custodian fees of $4,301 under an expense offset arrangement and AIM directed
certain portfolio trades to brokers who then paid $52,722 of the Fund's
expenses. The effect of the above arrangements resulted in a reduction of the
Fund's total expenses of $57,023 during the year ended December 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. The funds which
are party to the line of credit are charged a commitment fee of 0.09% on the
unused balance of the committed line. The commitment fee is allocated among the
funds based on their respective average net assets for the period. Prior to May
28, 1999, the Fund, along with certain other funds advised and/or administered
by AIM, had a line
FS-38
<PAGE> 306
of credit with BankBoston and State Street Bank & Trust Company. The
arrangements with the banks allowed the Fund and certain other funds to borrow,
on a first come, first served basis, an aggregate maximum amount of
$250,000,000.
During the year ended December 31, 1999, the average outstanding daily balance
of bank loans for the Fund was $1,268,718 with a weighted average interest rate
of 5.52%. Interest expense for the Fund for the year ended December 31, 1999 was
$70,042.
NOTE 5-PORTFOLIO SECURITIES LOANED
At December 31, 1999, there were no securities on loans to brokers. For the year
ended December 31, 1999, the Fund received fees of $57,724 for securities
lending.
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. The 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 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$115,517,581 and $155,632,699, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $43,173,298
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (3,031,416)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $40,141,882
=========================================================
</TABLE>
Cost of investments for tax purposes is $98,039,524.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 113,808,832 $ 643,233,897 220,054,764 $ 1,179,166,766
- ---------------------------------------------------------------------------------------------------------------------------
Class B 17,687,564 97,412,284 29,096,684 151,336,461
- ---------------------------------------------------------------------------------------------------------------------------
Class C* 768,672 4,718,277 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Advisor Class 314,081 1,824,518 5,119,563 27,073,240
- ---------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 13,533 90,093 151,132 760,569
- ---------------------------------------------------------------------------------------------------------------------------
Class B 4,886 32,636 15,481 77,283
- ---------------------------------------------------------------------------------------------------------------------------
Class C* 21 140 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Advisor Class 109 757 3,439 17,402
- ---------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (116,247,910) (665,644,117) (225,597,779) (1,226,798,121)
- ---------------------------------------------------------------------------------------------------------------------------
Class B (18,708,171) (104,171,052) (31,689,112) (166,703,231)
- ---------------------------------------------------------------------------------------------------------------------------
Class C* (700,482) (4,362,357) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Advisor Class (467,522) (2,793,598) (5,082,992) (27,505,806)
- ---------------------------------------------------------------------------------------------------------------------------
(3,526,387) $ (29,658,522) (7,928,820) $ (62,575,437)
===========================================================================================================================
</TABLE>
* Class C Shares commenced sales on May 3, 1999.
FS-39
<PAGE> 307
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
outstanding during each of the years in the five-year period ended December 31,
1999, for a share of Class C outstanding during May 3, 1999 (date sales
commenced) through December 31, 1999 and for a share of Advisor Class
outstanding during each of the years in four-year period ended December 31, 1999
and the period June 1, 1995 (date operations commenced) through December 31,
1995.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 5.19 $ 6.48 $ 13.12 $ 12.47 $ 12.10
- ------------------------------------------------------------ ------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.01) 0.06 0.05 0.02 0.11
- ------------------------------------------------------------ ------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on investments 2.37 (1.30) (5.84) 2.44 0.79
- ------------------------------------------------------------ ------- -------- -------- -------- --------
Net increase (decrease) from investment operations 2.36 (1.24) (5.79) 2.46 0.90
- ------------------------------------------------------------ ------- -------- -------- -------- --------
Distributions to shareholders:
In excess of net investment income (0.01) (0.05) (0.03) -- (0.10)
- ------------------------------------------------------------ ------- -------- -------- -------- --------
From net realized gains -- -- (0.82) (1.81) (0.43)
- ------------------------------------------------------------ ------- -------- -------- -------- --------
Total distributions (0.01) (0.05) (0.85) (1.81) (0.53)
- ------------------------------------------------------------ ------- -------- -------- -------- --------
Net asset value, end of period $ 7.54 $ 5.19 $ 6.48 $ 13.12 $ 12.47
============================================================ ======= ======== ======== ======== ========
Total return(b) 45.42% (19.09)% (44.24)% 20.04% 7.45%
============================================================ ======= ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in 000s) $99,155 $80,824 $135,807 $361,244 $383,722
============================================================ ======= ======== ======== ======== ========
Ratio of net investment income (loss) to average net assets (0.08)%(c) 1.30% 0.41% 0.17% 0.91%
============================================================ ======= ======== ======== ======== ========
Ratio of expense to average net assets including interest:
With fee waivers 2.06%(c) 2.00% 1.66% 1.86% 1.89%
============================================================ ======= ======== ======== ======== ========
Without fee waivers 2.29%(c) 2.40% 1.93% 1.99% 1.94%
============================================================ ======= ======== ======== ======== ========
Ratio of expenses to average net assets, excluding interest
expense:
With fee waivers 2.00%(c) 2.00% 1.66% 1.86% 1.89%
============================================================ ======= ======== ======== ======== ========
Without fee waivers 2.23%(c) 2.40% 1.93% 1.99% 1.94%
============================================================ ======= ======== ======== ======== ========
Ratio of interest expense to average net assets 0.06%(c) -- -- -- --
============================================================ ======= ======== ======== ======== ========
Portfolio turnover rate 98% 96% 80% 93% 63%
============================================================ ======= ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $88,265,497.
<TABLE>
<CAPTION>
CLASS C
-----------
MAY 3, 1999
CLASS B THROUGH ADVISOR CLASS
-------------------------------------------------- DEC. 31, ------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a) 1999(a) 1999(a) 1998(a)
------- ------- ------- -------- -------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 5.04 $ 6.28 $ 12.80 $ 12.29 $ 11.96 $ 5.94 $ 5.18 $ 6.45
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
Income from investment operations:
Net investment income (loss) (0.04) 0.03 (0.03) (0.06) 0.03 (0.03) 0.02 0.08(b)
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
Net realized and unrealized gain (loss) on
investments 2.29 (1.26) (5.67) 2.38 0.75 1.37 2.36 (1.28)
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
Net increase (decrease) from investment
operations 2.25 (1.23) (5.70) 2.32 0.78 1.34 2.38 (1.20)
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
Distributions to shareholders:
In excess of net investment income (0.01) (0.01) -- -- (0.02) (0.01) (0.01) (0.07)
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
From net realized gains -- -- (0.82) (1.81) (0.43) -- -- --
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
Total distributions (0.01) (0.01) (0.82) (1.81) (0.45) (0.01) (0.01) (0.07)
- ------------------------------------------- ------- ------- ------- -------- -------- ------ ------- -------
Net asset value, end of period $ 7.28 $ 5.04 $ 6.28 $ 12.80 $ 12.29 $ 7.27 $ 7.55 $ 5.18
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Total return(b) 44.59% (19.55)% (44.65)% 19.28% 6.54% 22.51% 45.90% (18.51)%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Ratios and supplemental data:
Net assets, end of period (in 000s) $38,584 $31,837 $55,820 $151,805 $130,887 $ 496 $ 887 $ 1,402
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Ratio of net investment income (loss) to
average net assets: (0.73)%(c) 0.65% (0.24)% (0.48)% 0.26% (0.73)%(d) 0.27%(c) 1.65%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Ratio of expense to average net assets
including interest:
With fee waivers 2.71%(c) 2.65% 2.31% 2.51% 2.54% 2.71%(d) 1.71%(c) 1.65%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Without fee waivers 2.94%(c) 3.05% 2.58% 2.64% 2.59% 2.94%(d) 1.94%(c) 2.05%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Ratio of expenses to average net assets,
excluding interest expense:
With fee waivers 2.65%(c) 2.65% 2.31% 2.51% 2.54% 2.65%(d) 1.65%(c) 1.65%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Without fee waivers 2.88%(c) 3.05% 2.58% 2.64% 2.59% 2.88%(d) 1.88%(c) 2.05%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Ratio of interest expense to average net
assets 0.06%(c) -- -- -- -- 0.06%(d) 0.06%(c) --
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
Portfolio turnover rate 98% 96% 80% 93% 63% 98% 98% 96%
=========================================== ======= ======= ======= ======== ======== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
---------------------------
1997(a) 1996(a) 1995(a)
------- ------- -------
<S> <C> <C> <C>
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:
In excess of net investment income (0.08) -- (0.15)
- ------------------------------------------- ------- ------ ------
From net realized gains (0.82) (1.81) (0.43)
- ------------------------------------------- ------- ------ ------
Total distributions (0.90) (1.81) (0.58)
- ------------------------------------------- ------- ------ ------
Net asset value, end of period $ 6.45 $13.16 $12.45
=========================================== ======= ====== ======
Total return(b) (44.26)% 20.56% 1.07%
=========================================== ======= ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000s) $ 1,488 $1,575 $ 935
=========================================== ======= ====== ======
Ratio of net investment income (loss) to
average net assets: 0.76% 0.52% 1.26%(e)
=========================================== ======= ====== ======
Ratio of expense to average net assets
including interest:
With fee waivers 1.31% 1.51% 1.54%(e)
=========================================== ======= ====== ======
Without fee waivers 1.58% 1.64% 1.59%(e)
=========================================== ======= ====== ======
Ratio of expenses to average net assets,
excluding interest expense:
With fee waivers 1.31% 1.51% 1.54%(e)
=========================================== ======= ====== ======
Without fee waivers 1.58% 1.64% 1.59%(e)
=========================================== ======= ====== ======
Ratio of interest expense to average net
assets -- -- --
=========================================== ======= ====== ======
Portfolio turnover rate 80% 93% 63%()
=========================================== ======= ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $34,388,350 and $1,087,061, for
Class B and Advisor Class, respectively.
(d) Ratios are annualized and based on average net assets of $280,562.
(e) Annualized.
NOTE 9-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The effective date of this conversion was
February 11, 2000.
FS-40
<PAGE> 308
PART C
OTHER INFORMATION
Item 23. Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C> <C> <C>
a (1) - (a) Agreement and Declaration of Trust of Registrant, dated May
7, 1998, was filed as an Exhibit to Registrant's 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) First Amendment, dated September 8, 1998, to the Agreement
and Declaration of Trust, dated May 7, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (c) Second Amendment, dated December 10, 1998, to the Agreement
and Declaration of Trust, dated May 7, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 47 to the
Registration Statement on Form N-1A, filed April 14, 1999, and is
hereby incorporated by reference.
- (d) Third Amendment, dated February 16,1999, to the Agreement and
Declaration of Trust, dated May 7, 1998, was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 47 to the
Registration Statement on Form N-1A, filed April 14, 1999, and is
hereby incorporated by reference.
- (e) Fourth Amendment, dated February 16, 1999, to the Agreement
and Declaration of Trust, dated May 7, 1998, was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 47 to the
Registration Statement on Form N-1A, filed April 14, 1999, and is
hereby incorporated by reference.
- (f) Fifth Amendment, dated February 11, 2000, to the Agreement
and Declaration of Trust, dated May 7, 1998, is filed herewith
electronically.
b (1) - (a) By-Laws of Registrant, dated May 7, 1998, were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 43 to the
Registration Statement on Form N-1A, filed on June 1, 1998.
- (b) Amendment No. 1, dated December 10, 1998, to the By-Laws of
Registrant, dated May 7, 1998, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 47 to the Registration
Statement on Form N-1A, filed April 14, 1999.
(2) - (a) Amended and Restated By-Laws of Registrant, dated December
10, 1998 were filed as an Exhibit to Registrant's Post-Effective
No. 47 to the Registration Statement on Form N-1A, filed April
14, 1999, and are hereby incorporated by reference.
- (b) First Amendment to Amended and Restated By-Laws of
Registrant, as adopted June 15, 1999, is filed herewith
electronically.
c - Provisions of instruments defining the rights of holders of
Registrant's securities are contained in Articles II, VI, VII,
VIII and IX of Registrant's Agreement and Declaration of Trust,
which 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.
</TABLE>
<PAGE> 309
<TABLE>
<CAPTION>
<S> <C> <C> <C>
d (1) - Investment Management and Administration Contract, dated May 29,
1998, between Registrant and A I M Advisors, Inc., was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A filed on August 26, 1998.
(2) - Amended and Restated Investment Management and Administration
Contract, dated March 18, 1999, between Registrant and A I M
Advisors, Inc. is filed herewith electronically.
(3) - Second Amended and Restated Investment Management and
Administration Contract, dated September 1, 1999, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(4) - Administration Contract, dated May 29, 1998, between Registrant
and A I M Advisors, Inc., was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 45 to the Registration Statement on
Form N-1A filed on August 26, 1998.
(5) - Amended and Restated Administration Contract, dated September 8,
1998, between Registrant and A I M Advisors, Inc. is filed
herewith electronically.
(6) - Sub-Administration Contract, dated May 29, 1998, between A I M
Advisors, Inc. and INVESCO (NY), Inc. with respect to Registrant,
was filed as an Exhibit to Registrant's Post-Effective Amendment
No. 45 to the Registration Statement on Form N-1A filed on August
26, 1998.
(7) - Sub-Advisory and Sub-Administration Contract, dated May 29, 1998,
between A I M Advisors, Inc. and INVESCO (NY), Inc., with respect
to Registrant, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 45 to the Registration Statement on
Form N-1A filed on August 26, 1998.
(8) - Sub-Advisory Contract, dated December 14, 1998, between A I M
Advisors, Inc. and INVESCO (NY), Inc., with respect to
Registrant, was filed as an Exhibit to Registrant's
Post-Effective No. 47 to the Registration Statement on Form N-1A,
filed April 14, 1999.
(9) - Sub-Advisory Contract, dated December 14, 1998, between A I M
Advisors, Inc. and INVESCO Asset Management Limited is filed
herewith electronically.
(10) - Amended and Restated Sub-Advisory Contract, dated February 12,
1999, between A I M Advisors, Inc. and INVESCO Asset Management
Limited, with respect to Registrant was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 47 to the Registration
Statement on Form N-1A, filed April 14, 1999.
(11) - Second Amended and Restated Sub-Advisory Contract, dated
September 1, 1999, between Registrant and INVESCO Asset
Management Limited is filed herewith electronically.
(12) - Sub-Advisory Contract, dated April 1, 1999, between A I M
Advisors, Inc. and INVESCO Asset Management (Japan) Limited is
filed herewith electronically.
(13) - Sub-Advisory Contract, dated April 1, 1999, between A I M
Advisors, Inc. and INVESCO Asia Limited is filed herewith
electronically.
(14) - Investment Management and Administration Contract, dated May 29,
1998, between Growth Portfolio and A I M Advisors, Inc., was
filed as an Exhibit to Registrant's Post-Effective Amendment No.
45 to the Registration Statement on Form N-1A filed on August 26,
1998, and is hereby incorporated by reference.
(15) - 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, was filed as
</TABLE>
<PAGE> 310
<TABLE>
<S> <C> <C>
an Exhibit to Registrant's Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A filed on August 26, 1998.
e (1) - Distribution Agreement, dated May 29, 1998, between Registrant
and A I M Distributors, Inc. with respect to Class A shares, was
filed as an Exhibit to Registrant's Post-Effective Amendment No.
45 to the Registration Statement on Form N-1A filed on August 26,
1998.
(2) - (a) Distribution Agreement, dated May 29, 1998, between
Registrant and A I M Distributors, Inc. with respect to Class B
shares, was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 45 to the Registration Statement on Form N-1A filed
on August 26, 1998, and is hereby incorporated by reference.
- (b) Amendment No.1, dated March 18, 1999, to the Distribution
Agreement, dated May 29, 1998, between Registrant and A I M
Distributors, Inc., with respect to Class B shares, was filed as
an Exhibit to Registrant's Post-Effective No. 47 to the
Registration Statement on Form N-1A, filed April 14, 1999, and is
hereby incorporated by reference.
- (c) Amendment No. 2, dated September 1, 1999, to the Distribution
Agreement between Registrant and A I M Distributors, Inc., with
respect to Class B shares, is filed herewith electronically.
(3) - (a) Master Distribution Agreement, dated May 3, 1999, between
Registrant and A I M Distributors, Inc., with respect to Class A
and Class C shares, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 47 to the Registration Statement on
Form N-1A, filed April 14, 1999 and is hereby incorporated by
reference.
- (b) Amendment No. 1, dated September 1, 1999, to the Master
Distribution Agreement between Registrant and A I M Distributors,
Inc., with respect to class A and Class C shares, is filed
herewith electronically.
(4) - Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 46 to the Registration Statement on
Form N-1A, filed on February 12, 1999, and is hereby incorporated
by reference.
(5) - Form of Bank Selling Group Agreement between A I M Distributors,
Inc. and banks was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 46 to the Registration Statement on
Form N-1A, filed on February 12, 1999, and is hereby incorporated
by reference.
</TABLE>
<PAGE> 311
<TABLE>
<S> <C> <C>
f - Agreements Concerning Officers and Directors/Trustees Benefits -
None.
g (1) - (a) Custodian Contract, dated September 15, 1988, between State
Street Bank and Trust Company and Registrant was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (b) Amendment (1994) to the Custodian Contract, dated September
15, 1988, between State Street Bank and Trust Company and
Registrant was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 46 to the Registration Statement on Form N-1A,
filed on February 12, 1999, and is hereby incorporated by
reference.
- (c) Amendment, dated June 20, 1995, to the Custodian Contract,
dated September 15, 1988, between State Street Bank and Trust
Company and Registrant was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 46 to the Registration Statement on
Form N-1A, filed on February 12, 1999, and is hereby incorporated
by reference.
- (d) Notice of Addition of Funds, dated August 1, 1995, to the
Custodian Contract dated September 15, 1988, between State Street
Bank and Trust Company and Registrant was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 47 to the Registration
Statement on Form N-1A, filed April 14, 1999, and is hereby
incorporated by reference.
- (e) Notice of Transfer, dated May 28, 1998, to the Custodian,
amending the Custodian Contract dated September 15, 1988, between
State Street Bank and Trust Company and Registrant was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (f) Amendment, dated January 26, 1999, to the Custodian Contract,
dated September 15, 1988, between State Street Bank and Trust
Company and Registrant was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 46 to the Registration Statement on
Form N-1A, filed on February 12, 1999, and is hereby incorporated
by reference.
h (1) - (a) Transfer Agency and Service Agreement between Registrant and
A I M Fund Services, Inc., dated September 8, 1998, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (b) Amendment No. 1, dated May 3, 1999, to the Transfer Agency
and Service Agreement between Registrant and A I M Fund Services,
Inc., was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 47 to the Registration Statement on Form N-1A,
filed April 14, 1999, and is hereby incorporated by reference.
- (c) Amendment No. 2, dated July 1, 1999, to the Transfer Agency
and Service Agreement between Registrant and A I M Fund Services,
Inc. is filed herewith electronically.
- (d) Amendment No. 3, dated July 1, 1999, to the Transfer Agency
and Service Agreement between Registrant and A I M Fund Services,
Inc. is filed herewith electronically.
- (e) Amendment No. 4, dated February 11, 2000, to the Transfer
Agency and Service Agreement between Registrant and A I M Fund
Services, Inc. is filed herewith electronically.
(2) - (a) 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.), was
filed as an Exhibit to Registrant's Post-Effective Amendment
</TABLE>
<PAGE> 312
<TABLE>
<S> <C> <C>
No. 45 to the Registration Statement on Form N-1A filed on August
26, 1998, and is hereby incorporated by reference.
- (b) 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.
(formerly, The Shareholder Services Group, Inc.), was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A filed on August 26, 1998, and
is hereby incorporated by reference.
- (c) 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.), was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A filed on August 26, 1998, and
is hereby incorporated by reference.
- (d) 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.), was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A filed on August 26, 1998, and
is hereby incorporated by reference.
- (e) Amendment No. 4, dated June 30, 1998, to the Remote Access
and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (f) Amendment No. 5, dated July 1, 1998, to the Remote Access and
Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.) was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (g) Exhibit 1, effective as of August 4, 1997, to the Remote
Access and Related Services Agreement, dated December 23, 1994,
between Registrant and First Data Investor Services Group, Inc.
(formerly, The Shareholder Services Group, Inc.), was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 45 to the
Registration Statement on Form N-1A filed on August 26, 1998, and
is hereby incorporated by reference.
- (h) Amendment No. 6, dated August 30, 1999, to the Remote Access
and Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc. is filed
herewith electronically.
- (i) Preferred Registration Technology Escrow Agreement, dated
September 10, 1997, between Registrant and First Data Investor
Services Group, Inc. (formerly, The Shareholder Services Group,
Inc.), was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 45 to the Registration Statement on Form N-1A filed
on August 26, 1998, and is hereby incorporated by reference.
(3) - Fund Accounting and Pricing Agent Agreement between Registrant
and INVESCO (NY), Inc., dated May 29, 1998, is filed herewith
electronically.
(4) - Fund Accounting and Pricing Agent Agreement, dated June 1, 1998,
between A I M Advisors, Inc. and Registrant is filed herewith
electronically.
</TABLE>
<PAGE> 313
<TABLE>
<S> <C> <C>
(5) - Master Accounting Services Agreement, dated July 1, 1999, between
Registrant and A I M Advisors, Inc. is filed herewith
electronically.
(6) - Memorandum of Agreement, dated May 3, 1999, between Registrant
and A I M Advisors, Inc. is filed herewith electronically.
i (1) - Opinion and Consent of Kirkpatrick & Lockhart LLP is filed
herewith electronically.
(2) - Opinion and Consent of Delaware Counsel is filed herewith
electronically.
j - Consent of PricewaterhouseCoopers LLP is filed herewith
electronically.
k - Financial Statements - None.
l - Agreements Concerning Initial Capitalization - None.
m (1) - Distribution Plan adopted pursuant to Rule 12b-1, dated May 29,
1998, with respect to Class A shares was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 46 to the Registration
Statement on Form N-1A, filed on February 12, 1999.
(2) - (a) Distribution Plan adopted pursuant to Rule 12b-1, dated May
29, 1998, with respect to Class B shares was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
- (b) Amendment No. 1, dated March 18, 1999, to the Distribution
Plan adopted pursuant to Rule 12b-1, with respect to Class B
shares, was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 47 to the Registration Statement on Form N-1A,
filed April 14, 1999, and is hereby incorporated by reference.
(3) - Master Distribution Plan pursuant to Rule 12b-1, dated May 3,
1999, with respect to Class A and Class C shares, is filed
herewith electronically.
(4) - (a) Amended and Restated Master Distribution Plan, dated July 1,
1999, adopted pursuant to Rule 12b-1, with respect to Class A and
Class C shares, is filed herewith electronically.
- (b) Amendment No. 1, dated September 1, 1999, to Master
Distribution Plan, adopted pursuant to Rule 12b-1, with respect
to Class A and Class C shares, is filed herewith electronically.
(5) - Form of Shareholder Service Agreement to be used in connection
with Registrant's Distribution Plans was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 46 to the Registration
Statement on Form N-1A, filed on February 12, 1999, and is hereby
incorporated by reference.
(6) - Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Distribution Plans was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
(7) - Form of Agency Pricing Agreement (for Class A Shares) to be used
in connection with Registrant's Distribution Plans was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
(8) - Form of Service Agreement for Bank Trust Department and for
Brokers for Bank Trust Departments to be used in connection with
Registrant's Distribution Plans was filed as an
</TABLE>
<PAGE> 314
<TABLE>
<S> <C> <C>
Exhibit to Registrant's Post-Effective Amendment No. 46 to the
Registration Statement on Form N-1A, filed on February 12, 1999,
and is hereby incorporated by reference.
n - Rule 18f-3 Multiple Class Plan was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 45 to the Registration
Statement on Form N-1A filed on August 26, 1998, and is hereby
incorporated by reference.
o - Reserved.
p (1) - The AIM Management Group Code of Ethics, as amended February 24,
2000, relating to AIM Management Group Inc. and A I M Advisors,
Inc. is filed herewith electronically.
(2) - Code of Ethics of AIM Growth Series, effective as of March 14,
2000, is filed herewith electronically.
(3) - Code of Ethics of Growth Portfolio, effective as of March 14,
2000, is filed herewith electronically.
</TABLE>
Item 24. Persons Controlled by or Under Common Control with Registrant
Provide a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrants. For any person
controlled by another person, disclose the percentage of voting securities owned
by the immediately controlling person or other basis of that person's control.
For each company, also provide the state or other sovereign power under the laws
of which the company is organized.
None.
Item 25. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified against any liability incurred in their official
capacity, other than insurance provided by any director, officer, affiliated
person or underwriter for their own protection.
The Registrant's 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
Amended and Restated By-Laws and applicable law.
Article VII, Section 3 of the Registrant's Amended and Restated By-Laws
also provides that every person who is, or has been, a Trustee or
officer of the Registrant shall be indemnified by the Trust to the
fullest extent permitted by the Delaware Business Trust Act, the
Registrant's Amended and Restated By-Laws and other applicable law.
A I M Advisors, Inc. ("AIM"), the Registrant and other investment
companies managed by AIM, their respective officers, trustees,
directors and employees (the "Insured Parties") are insured under a
joint Mutual Fund and Investment Advisory Professional and Directors
and Officers Liability Policy, issued by ICI Mutual Insurance Company,
with a $35,000,000 limit of coverage.
Section 9 of the Investment Management and Administration Contract
between the Registrant and AIM provides that AIM shall not be liable,
and each series of the Registrant shall indemnify AIM and its
directors, officers and employees, for any costs or liabilities arising
from any error
<PAGE> 315
of judgment or mistake of law or any loss suffered by any series of the
Registrant or the Registrant in connection with the matters to which
the Investment Management and Administration Contract relates except a
loss resulting from willful misfeasance, bad faith or gross negligence
on the part of AIM in the performance by AIM of its duties or from
reckless disregard by AIM of its obligations and duties under the
Investment Management and Administration Contract.
Section 7 of the Sub-Advisory Contract between AIM and INVESCO Asia
Limited, Section 7 of the Sub-Advisory Contract between AIM and INVESCO
Asset Management Limited and Section 7 of the Sub-Advisory Contract
between AIM and INVESCO Asset Management (Japan) Limited,
(collectively, the "Sub-Advisory Contracts") provide that the
Sub-advisors shall not be liable for any costs or liabilities arising
from any error of judgment or mistake of law or any loss suffered by
any series of the Registrant or the Registrant in connection with the
matters to which the Sub-Advisory Contracts relate except a loss
resulting from willful misfeasance, bad faith or gross negligence on
the part of the Sub-advisors in the performance by the Sub-advisors of
their duties or from reckless disregard by the Sub-advisors of their
obligations and duties under the Sub-Advisory Contracts.
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature that each investment advisor of the Registrant, and each
director, officer or partner of the advisor, is or has been, engaged within the
last two fiscal years, for his or her own account or in the capacity of
director, officer, employee, partner, or trustee.
See the material under the heading "Fund 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 Amendment.
Information as to the Directors and Officers of A I M Advisors, Inc.,
INVESCO Asset Management Limited and INVESCO Asset Management (Japan)
Limited is included in Schedule A and Schedule D of Part I of each
entity's Form ADV (File No. 801-12313, File No. 801-50197 and File No.
801-52601, respectively), filed with the Securities and Exchange
Commission, which are incorporated herein by reference.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the Registrant's
securities also acts as a principal underwriter, depositor, or investment
advisor.
A I M Distributors, Inc., the Registrant's principal underwriter, also
acts as a principal underwriter to the following investment companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds (Retail Classes)
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund, Inc.
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
AIM Floating Rate Fund
<PAGE> 316
(b) Provide the information required by the following tables for each
director, officer, or partner of each principal underwriter named in
the Response to Item 20:
<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
James L. Salners Executive Vice President None
Robert H. Graham Senior Vice President & Director Chairman of the Board
& President
W. Gary Littlepage Senior Vice President & Director None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B.J. Thompson First Vice President None
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Glenda A. Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
</TABLE>
- ----------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
<PAGE> 317
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
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
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer
& Controller
Kathleen J. Pflueger Secretary Assistant Secretary
Luke P. Beausoleil Assistant Vice President None
Sheila R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel Assistant Secretary
& Assistant Secretary
</TABLE>
- ----------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
<PAGE> 318
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address with Principal Underwriter with Registrant
- ---------------- -------------------------- --------------------
<S> <C> <C>
Samuel D. Sirko Assistant General Counsel Vice President &
& Assistant Secretary Secretary
P. Michelle Grace Assistant Secretary None
Lisa A. Moss Assistant Secretary None
Stephen I. Winer Assistant Secretary None
</TABLE>
- ----------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) Provide the information required by the following table for all commissions
and other compensation received, directly or indirectly, from the Registrant
during the last fiscal year by each principal underwriter who is not an
affiliated person of the Registrant or any affiliated person of an affiliated
person.
Not Applicable.
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical
possession of each such account, book or other document required to be
maintained by section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that
section.
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-advisors, INVESCO
Asset Management Ltd., 11 Devonshire Square, London EC2M 4YR, England
and INVESCO Asset Management (Japan) Limited, Imperial Tower, 1-1-1
Uchisaiwai-cho, Chiyoda-Ku, Tokyo 100-0011, and its custodian, State
Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110.
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, Massachusetts 02110.
Item 29. Management Services
Provide a summary of the substantive provisions of any
management-related service contract not discussed in Part A or Part B,
disclosing the parties to the contract and the total amount paid and by whom for
the Registrant's last three fiscal years.
None.
Item 30. Undertakings
In initial registration statements filed under the Securities Act,
provide an undertaking to file an amendment to the registration statement with
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the Registrant intends to
raise its initial capital under section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
None.
<PAGE> 319
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 28th day of
April, 2000.
REGISTRANT: AIM GROWTH SERIES
By: /s/ ROBERT H. GRAHAM
------------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President April 28, 2000
----------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ C. DEREK ANDERSON Trustee April 28, 2000
-----------------------------------------
(C. Derek Anderson)
/s/ FRANK S. BAYLEY Trustee April 28, 2000
-----------------------------------------
(Frank S. Bayley)
/s/ RUTH H. QUIGLEY Trustee April 28, 2000
-----------------------------------------
(Ruth H. Quigley)
/s/ DANA R. SUTTON Vice President & Treasurer April 28, 2000
----------------------------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
</TABLE>
<PAGE> 320
SIGNATURES
Growth Portfolio has duly caused this Post-Effective Amendment of AIM
Growth Series to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston and the State of Texas on the 28th day of
April 2000.
Registrant: GROWTH PORTFOLIO
By: /s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham, President
This Post-Effective Amendment to the Registration Statement of AIM
Growth Series has been signed below by the following persons in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President April 28, 2000
----------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ C. DEREK ANDERSON Trustee April 28, 2000
-----------------------------------------
(C. Derek Anderson)
/s/ FRANK S. BAYLEY Trustee April 28, 2000
-----------------------------------------
(Frank S. Bayley)
/s/ RUTH H. QUIGLEY Trustee April 28, 2000
-----------------------------------------
(Ruth H. Quigley)
/s/ DANA R. SUTTON Vice President & Treasurer April 28, 2000
----------------------------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
</TABLE>
<PAGE> 321
INDEX TO EXHIBITS
AIM GROWTH SERIES
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
a(1)(f) Fifth Amendment, dated February 11, 2000, to the Agreement and
Declaration of Trust, dated May 7, 1998
b(2)(b) First Amendment to Amended and Restated By-Laws of Registrant, as
adopted June 15, 1999
d(2) Amended and Restated Investment Management and Administration
Contract, dated March 18, 1999, between Registrant and A I M
Advisors, Inc.
d(3) Second Amended and Restated Investment Management and
Administration Contract, dated September 1, 1999, between
Registrant and A I M Advisors, Inc.
d(5) Amended and Restated Administration Contract, dated September 8,
1998, between Registrant and A I M Advisors, Inc.
d(9) Sub-Advisory Contract, dated December 14, 1998, between A I M
Advisors, Inc. and INVESCO Asset Management Limited
d(11) Second Amended and Restated Sub-Advisory Contract, dated
September 1, 1999, between Registrant and INVESCO Asset
Management Limited
d(12) Sub-Advisory Contract, dated April 1, 1999, between A I M
Advisors, Inc. and INVESCO Asset Management (Japan) Limited
d(13) Sub-Advisory Contract, dated April 1, 1999, between A I M
Advisors, Inc. and INVESCO Asia Limited
e(2)(c) Amendment No. 2, dated September 1, 1999, to the Distribution
Agreement between Registrant and A I M Distributors, Inc., with
respect to Class B shares
e(3)(b) Amendment No. 1, dated September 1, 1999, to the Master
Distribution Agreement between Registrant and A I M Distributors,
Inc., with respect to Class A and Class C shares
h(1)(c) Amendment No. 2, dated July 1, 1999, to the Transfer Agency and
Service Agreement between Registrant and A I M Fund Services,
Inc.
h(1)(d) Amendment No. 3, dated July 1, 1999, to the Transfer Agency and
Service Agreement between Registrant and A I M Fund Services,
Inc.
h(1)(e) Amendment No. 4, dated February 11, 2000, to the Transfer Agency
and Service Agreement between Registrant and A I M Fund Services,
Inc.
</TABLE>
<PAGE> 322
<TABLE>
<S> <C>
h(2)(h) Amendment No. 6, dated August 30, 1999, to the Remote Access and
Related Services Agreement, dated December 23, 1994, between
Registrant and First Data Investor Services Group, Inc.
h(3) Fund Accounting and Pricing Agent Agreement between Registrant
and INVESCO (NY), Inc., dated May 29, 1998
h(4) Fund Accounting and Pricing Agent Agreement, dated June 1, 1998,
between A I M Advisors, Inc. and Registrant
h(5) Master Accounting Services Agreement, dated July 1, 1999, between
Registrant and A I M Advisors, Inc.
h(6) Memorandum of Agreement, dated May 3, 1999, between Registrant
and A I M Advisors, Inc.
i(1) Opinion and Consent of Kirkpatrick & Lockhart LLP
i(2) Opinion and Consent of Delaware Counsel
j Consent of PricewaterhouseCoopers LLP
m(3) Master Distribution Plan pursuant to Rule 12b-1, dated May 3,
1999, with respect to Class A and Class C shares
m(4)(a) Amended and Restated Master Distribution Plan, dated July 1,
1999, adopted pursuant to Rule 12b-1, with respect to Class A and
Class C shares
m(4)(b) Amendment No. 1, dated September 1, 1999, to Master Distribution
Plan, adopted pursuant to Rule 12b-1, with respect to Class A and
Class C shares
p(1) The AIM Management Group Code of Ethics, as amended February 24,
2000, relating to AIM Management Group Inc. and A I M Advisors,
Inc.
p(2) Code of Ethics of AIM Growth Series, effective as of March 14,
2000
p(3) Code of Ethics of Growth Portfolio, effective as of March 14,
2000
</TABLE>
<PAGE> 1
EXHIBIT a(1)(f)
FIFTH AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM GROWTH SERIES
THIS FIFTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF AIM
GROWTH SERIES (the "Amendment") is entered into as of the 11th day of February,
2000, among C. Derek Anderson, Frank S. Bayley, Robert H. Graham and Ruth H.
Quigley, as Trustees, and each person who became or becomes a Shareholder in
accordance with the terms set forth in that certain Agreement and Declaration
of Trust of AIM Growth Series, a Delaware business trust (the "Trust"), entered
into as of May 7, 1998, as amended (the "Agreement").
WHEREAS, Sections 2.3 and 9.7 of the Agreement empower the Trustees
without Shareholder action to amend the Agreement in order to change the
designations of the Portfolios and the Classes thereof; and
WHEREAS, the Trustees on November 3, 1999, acting pursuant to Section
9.3 of the Agreement, approved the termination of the Advisor Classes of the
Portfolios and the conversion of shares of such Advisor Classes into shares of
Class A of the Portfolios;
NOW, THEREFORE, the Trustees hereby amend the Agreement as follows:
1. Capitalized terms not specifically defined in this Amendment
shall have the meanings ascribed to them in the Agreement.
2. Schedule A to the Agreement is hereby deleted in its
entirety and a new Schedule A to the Agreement is substituted to read in its
entirety as follows:
"SCHEDULE A
AIM Growth Series shall be divided into the following Portfolios, each
of which shall have three Classes (Class A, Class B and Class C):
AIM Basic Value Fund
AIM Euroland Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund
Dated: February 11th, 2000"
3. Except for the above change in Schedule A to the Agreement,
the Agreement shall in all other respects remain in full force and effect.
1
<PAGE> 2
4. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same Amendment.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this Fifth Amendment to Agreement and Declaration of Trust
of AIM Growth Series as of the day and year first above written.
/s/ C. DEREK ANDERSON /s/ ROBERT H. GRAHAM
- --------------------------- ---------------------------
C. Derek Anderson, Trustee Robert H. Graham, Trustee
/s/ FRANK S. BAYLEY /s/ RUTH H. QUIGLEY
- --------------------------- ---------------------------
Frank S. Bayley, Trustee Ruth H. Quigley, Trustee
[THIS IS THE SIGNATURE PAGE FOR
THE FIFTH AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
OF AIM GROWTH SERIES]
2
<PAGE> 1
EXHIBIT b(2)(b)
FIRST AMENDMENT TO AMENDED AND RESTATED
BYLAWS OF AIM GROWTH SERIES
(a Delaware Business Trust)
ADOPTED JUNE 15, 1999
The Bylaws of AIM Growth Series are hereby amended as follows:
WHEREAS, the Board of Trustees of the Fund desires to modify the
manner in which a chairman is appointed to preside at each shareholder
meeting;
NOW THEREFORE BE IT RESOLVED, that paragraph (a) of Article IV,
Section 9 of each Fund's Bylaws be, and it hereby is, amended by
deleting paragraph (a) of Article IV, Section 9 in its entirety and
replacing it with the following:
Section 9. Organization of Meetings.
(a) The meetings of the shareholders shall
be presided over by the Chairman of the Board, or if the
Chairman shall not be present or if there is no Chairman, by
the President, or if the President shall not be present, by a
Vice President, or if no Vice President is present, by a
chairman appointed for such purpose by the Board of Trustees
or, if not so appointed, by a chairman appointed for such
purpose by the officers and Trustees present at the meeting.
The Secretary of the Trust, if present, shall act as
Secretary of such meetings, or if the Secretary is not
present, an Assistant Secretary of the Trust shall so act,
and if no Assistant Secretary is present, then a person
designated by the Secretary of the Trust shall so act, and if
the Secretary has not designated a person, then the meeting
shall elect a secretary for the meeting.
<PAGE> 1
EXHIBIT d(2)
AIM GROWTH SERIES
AMENDED AND RESTATED
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
AIM GROWTH SERIES
AND
A I M ADVISORS, INC.
Contract made as of March 18, 1999, 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 has offered 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 (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 desired 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 the Company and
the Adviser entered into an Investment Management and Administration Contract
on May 29, 1998 (the "Advisory Agreement"); and
WHEREAS the Company and the Advisor desire to amend and restate the
Advisory Agreement to (i) change the name of AIM Mid Cap Growth Fund to AIM Mid
Cap Equity Fund as of September 8, 1998 and (ii) remove AIM International
Growth Fund and AIM Worldwide Growth Fund since these funds ceased operations
on February 12, 1999;
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.
1
<PAGE> 2
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 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;
2
<PAGE> 3
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 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.
3
<PAGE> 4
(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
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.
4
<PAGE> 5
(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.
(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.
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<PAGE> 6
(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.
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.
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<PAGE> 7
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.
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/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
-------------------------- --------------------------
Name: Kathleen J. Pflueger Name: Robert H. Graham
Title: Assistant Secretary Title: President
Attest: A I M ADVISORS, INC.
By: /s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
-------------------------- --------------------------
Name: Kathleen J. Pflueger Name: Robert H. Graham
Title: Assistant Secretary Title: President
7
<PAGE> 8
APPENDIX A
TO
AMENDED AND RESTATED
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 JAPAN GROWTH FUND,
AIM NEW PACIFIC GROWTH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $ 500 million............................................. .975%
Next $ 500 million.............................................. .95%
Next $ 500 million.............................................. .925%
On amounts thereafter........................................... .90%
AIM MID CAP EQUITY FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $ 500 million............................................. .725%
Next $ 500 million.............................................. .70%
Next $ 500 million.............................................. .675%
On amounts thereafter........................................... .65%
8
<PAGE> 1
EXHIBIT d(3)
AIM GROWTH SERIES
SECOND AMENDED AND RESTATED
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN
AIM GROWTH SERIES
AND
A I M ADVISORS, INC.
Contract made as of September 1, 1999, 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 has offered 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 (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 desired 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 the Company and
the Adviser entered into an Investment Management and Administration Contract
on May 29, 1998 (the "Advisory Agreement"); and
WHEREAS the Company and the Advisor desire to amend and restate the
Advisory Agreement to (i) change the name of AIM Mid Cap Growth Fund to AIM Mid
Cap Equity Fund as of September 8, 1998 and (ii) remove AIM International
Growth Fund and AIM Worldwide Growth Fund since these funds ceased operations
on February 12, 1999;
WHEREAS the Company and the Advisor desire to amend and restate the
Advisory Agreement to change the name of AIM Europe Growth Fund to AIM Euroland
Growth Fund as of September 1, 1999;
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.
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<PAGE> 2
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 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:
2
<PAGE> 3
(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 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.
3
<PAGE> 4
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
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.
4
<PAGE> 5
(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.
(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.
5
<PAGE> 6
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.
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
6
<PAGE> 7
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.
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/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
----------------------- ------------------------
Name: Ofelia M. Mayo Name: Robert H. Graham
Title: Title:
Attest: A I M ADVISORS, INC.
By: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------- ------------------------
Name: P. Michelle Grace Name: Robert H. Graham
Title: Title:
7
<PAGE> 8
APPENDIX A
TO
AMENDED AND RESTATED
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 Euroland Growth Fund, AIM Japan Growth Fund,
AIM New Pacific Growth Fund
Net Assets Annual Rate
- ---------- -----------
First $ 500 million........................................... .975%
Next $ 500 million............................................ .95%
Next $ 500 million............................................ .925%
On amounts thereafter......................................... .90%
AIM Mid Cap Equity Fund
Net Assets Annual Rate
- ---------- -----------
First $ 500 million........................................... .725%
Next $ 500 million............................................ .70%
Next $ 500 million............................................ .675%
On amounts thereafter......................................... .65%
8
<PAGE> 1
EXHIBIT d(5)
AMENDED AND RESTATED
ADMINISTRATION CONTRACT
BETWEEN
AIM GROWTH SERIES
AND
A I M ADVISORS, INC.
Contract made as of September 8, 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 has offered 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 desired to retain Administrator as administrator
to furnish certain administration services to the Company and the Funds, and
the Company and Administrator entered into an administration contract on May
29, 1998 with respect to such services (the "Administration Contract"); and
WHEREAS the Company and the Administrator desire to amend and restate
the Administration Contract to change the name of (i) AIM Small Cap Equity Fund
to AIM Small Cap Growth Fund and (ii) AIM America Value Fund to AIM Basic Value
Fund;
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
<PAGE> 2
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.
(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.
2
<PAGE> 3
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 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.
3
<PAGE> 4
(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.
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.
4
<PAGE> 5
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 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
5
<PAGE> 6
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.
Attest: /s/ KATHLEEN J. PFLUEGER AIM GROWTH SERIES
------------------------ By: /s/ ROBERT H. GRAHAM
------------------------
Name: Robert H. Graham
Title: President
Attest: /s/ KATHLEEN J. PFLUEGER A I M ADVISORS, INC.
----------------------- By: /s/ ROBERT H. GRAHAM
Kathleen J. Pflueger ------------------------
Name: Robert H. Graham
Title: President
6
<PAGE> 7
APPENDIX A
TO
AMENDED AND RESTATED
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 Growth Fund 0.25%
AIM Basic Value Fund 0.25%
7
<PAGE> 1
EXHIBIT d(9)
AIM GROWTH SERIES
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT LIMITED
Contract made as of December 14, 1998, between A I M Advisors, Inc.,
a Delaware corporation ("Adviser"), and INVESCO Asset Management Limited, a
company organized under the laws of England and Wales ("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 and AIM Europe 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 to
furnish certain advisory 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 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 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
1
<PAGE> 2
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. 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.
4. 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.
5. 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
2
<PAGE> 3
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) 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) 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.
6. 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.
3
<PAGE> 4
(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.
7. 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 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.
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 (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, when required by the 1940 Act.
(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.
4
<PAGE> 5
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, 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.
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," "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.
5
<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.
A I M ADVISORS, INC.
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
---------------------------- ----------------------------
Name: Robert H. Graham
Title: President
INVESCO ASSET MANAGEMENT LIMITED
Attest: [ILLEGIBLE] By: /s/ GRAEME J. PROUDFOOT
---------------------------- ----------------------------
Name: Graeme J. Proudfoot
Title: Director
6
<PAGE> 7
APPENDIX A
TO
AIM GROWTH SERIES
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT LIMITED
AIM EUROPE GROWTH FUND, AIM INTERNATIONAL GROWTH FUND, AIM WORLDWIDE
GROWTH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $ 500 million................................................. 0.39%
Next $ 500 million.................................................. 0.38%
Next $ 500 million.................................................. 0.37%
On amounts thereafter............................................... 0.36%
7
<PAGE> 1
EXHIBIT d(11)
AIM GROWTH SERIES
SECOND AMENDED AND RESTATED
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT LIMITED
Contract made as of September 1, 1999, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and INVESCO Asset Management Limited, a
company organized under the laws of England and Wales ("Sub-Adviser").
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 of AIM
Euroland Growth Fund, ("Fund") a series of AIM Growth Series ("Company"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), 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 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
1
<PAGE> 2
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. 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.
4. 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.
5. 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
2
<PAGE> 3
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, 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) 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.
6. 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
3
<PAGE> 4
the proportion which such period bears to the full month in which such
effectiveness or termination occurs.
7. 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 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.
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 (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, when required by the 1940 Act.
(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.
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, 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.
4
<PAGE> 5
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," "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.
5
<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.
A I M ADVISORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ ROBERT H. GRAHAM
----------------------- ------------------------
Name: Robert H. Graham
Title: President
INVESCO ASSET MANAGEMENT LIMITED
Attest: /s/ ILLEGIBLE By: /s/ GRAEME J. PROUDFOOT
----------------------- ------------------------
Name: Graeme J. Proudfoot
Title: President
6
<PAGE> 7
APPENDIX A
TO
AIM GROWTH SERIES
AMENDED AND RESTATED
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT LIMITED
AIM Euroland Growth Fund
Net Assets Annual Rate
First $ 500 million............................................ 0.39%
Next $ 500 million............................................. 0.38%
Next $ 500 million............................................. 0.37%
On amounts thereafter.......................................... 0.36%
7
<PAGE> 1
EXHIBIT d(12)
AIM GROWTH SERIES
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT (JAPAN) LIMITED
Contract made as of April 1, 1999, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and INVESCO Asset Management (Japan) Limited,
a corporation organized under the laws of Japan ("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 Japan Growth Fund, such Fund
being a series of the Company's shares of beneficial interest; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser to
furnish certain advisory services to the Fund, 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 of the 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 the 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 the 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 Fund or provide the Fund, Adviser's other
clients, or Sub-Adviser's other clients with research, analysis, advice and
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
1
<PAGE> 2
Adviser and the Sub-Adviser to the Fund and their other clients and that the
total commissions or spreads paid by the 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 Fund, 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. 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.
4. 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.
5. Expenses.
(a) During the term of this Contract, the 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 the 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
2
<PAGE> 3
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) 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) The payment or assumption by Sub-Adviser of any expense of the
Company or the 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 the Fund on any subsequent occasion.
6. 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 the 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.
3
<PAGE> 4
(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.
7. 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 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.
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 the
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, when required by the 1940 Act.
(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 the 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 the Fund.
(c) Notwithstanding the foregoing, with respect to the 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.
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, and no amendment
4
<PAGE> 5
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.
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," "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.
5
<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.
A I M ADVISORS, INC.
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
---------------------------- -----------------------------
Name: Robert H. Graham
Title: President
INVESCO ASSET MANAGEMENT (JAPAN)
LIMITED
Attest: /s/ [ILLEGIBLE] By: /s/ NARABU KOGA
---------------------------- -----------------------------
Name: Narabu Koga
Title: President
6
<PAGE> 7
APPENDIX A
TO
AIM GROWTH SERIES
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASSET MANAGEMENT (JAPAN) LIMITED
AIM JAPAN GROWTH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $ 500 million.............................. 0.39%
Next $ 500 million............................... 0.38%
Next $ 500 million............................... 0.37%
On amounts thereafter............................ 0.36%
7
<PAGE> 1
EXHIBIT d(13)
AIM GROWTH SERIES
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASIA LIMITED
Contract made as of April 1, 1999, between A I M Advisors, Inc., a
Delaware corporation ("Adviser"), and INVESCO Asia Limited, a corporation
organized under the laws of Hong Kong ("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 New Pacific Growth Fund,
such Fund being a series of the Company's shares of beneficial interest; and
WHEREAS Adviser desires to retain Sub-Adviser as sub-adviser to
furnish certain advisory services to the Fund, 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 of the 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 the 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 the 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 Fund or provide the Fund, Adviser's other
clients, or Sub-Adviser's other clients with research, analysis, advice and
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
1
<PAGE> 2
Adviser and the Sub-Adviser to the Fund and their other clients and that the
total commissions or spreads paid by the 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 Fund, 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. 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.
4. 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.
5. Expenses.
(a) During the term of this Contract, the 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 the 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
2
<PAGE> 3
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) 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) The payment or assumption by Sub-Adviser of any expense of the
Company or the 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 the Fund on any subsequent occasion.
6. 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 the 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.
3
<PAGE> 4
(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.
7. 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 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.
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 the
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, when required by the 1940 Act.
(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 the 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 the Fund.
(c) Notwithstanding the foregoing, with respect to the 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.
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, and no amendment
4
<PAGE> 5
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.
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," "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.
5
<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.
A I M ADVISORS, INC.
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
------------------------------- ------------------------------
Name: Robert H. Graham
Title: President
INVESCO ASIA LIMITED
Attest: /s/ [ILLEGIBLE] By: /s/ ANNA TONG
------------------------------- ------------------------------
Name: Anna Tong
Title: Managing Director
/s/ ANDREW LO
------------------------------
Andrew Lo
Chief Executive Officer Asia
6
<PAGE> 7
APPENDIX A
TO
AIM GROWTH SERIES
SUB-ADVISORY CONTRACT
BETWEEN
A I M ADVISORS, INC.
AND
INVESCO ASIA LIMITED
AIM NEW PACIFIC GROWTH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $ 500 million............................... 0.39%
Next $ 500 million................................ 0.38%
Next $ 500 million................................ 0.37%
On amounts thereafter............................. 0.36%
7
<PAGE> 1
EXHIBIT e(2)(c)
AMENDMENT NO. 2
DISTRIBUTION AGREEMENT
between
AIM GROWTH SERIES
and
A I M DISTRIBUTORS, INC.
Class B Shares
The Distribution Agreement (the "Agreement"), dated May 29, 1998, as
amended March 18, 1999, by and between AIM Growth Series, a Delaware business
trust, and A I M Distributors, Inc., a Delaware corporation, is hereby amended
as follows:
Schedule A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"SCHEDULE A
TO
DISTRIBUTION AGREEMENT
OF
AIM GROWTH SERIES
CLASS B SHARES
- --------------
AIM Basic Value Fund
AIM Euroland Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund
AIM Small Cap Growth Fund"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Date: September 1, 1999
AIM GROWTH SERIES
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Assistant Secretary President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ MICHAEL J. CEMO
---------------------------- --------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT e(3)(b)
AMENDMENT NO. 1
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM GROWTH SERIES
(CLASS A AND C SHARES)
AND
A I M DISTRIBUTORS, INC.
The Master Distribution Agreement (the "Agreement"), dated May 3, 1999,
by and between AIM Growth Series, a Delaware business trust, and A I M
Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM GROWTH SERIES
CLASS A SHARES CLASS C SHARES
- -------------- --------------
AIM Basic Value Fund AIM Basic Value Fund
AIM Euroland Growth Fund AIM Euroland Growth Fund
AIM Japan Growth Fund AIM Japan Growth Fund
AIM Mid Cap Equity Fund AIM Mid Cap Equity Fund
AIM New Pacific Growth Fund AIM New Pacific Growth Fund
AIM Small Cap Growth Fund AIM Small Cap Growth Fund"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Date: September 1, 1999
AIM GROWTH SERIES
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Assistant Secretary President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ P. MICHELLE GRACE By: /s/ MICHAEL J. CEMO
---------------------------- --------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT h(1)(c)
AMENDMENT NUMBER 2 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 1999 is made to the Transfer Agency and
Service Agreement dated September 8, 1998 (the "Agreement") between AIM Growth
Series (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article
10 of the Agreement.
A fee calculated by multiplying the number of shareholder accounts in the Fund
by $.15 shall be paid by the Fund to AFS concurrently with the fees payable by
the Fund to AFS under Article 2 of the Agreement.
Upon a vote of the Board of Directors of the Fund terminating this Amendment,
this Amendment shall cease to apply, and the Transfer Agency and Service
Agreement shall be complete without reference hereto.
AIM GROWTH SERIES
By: /s/ ROBERT H. GRAHAM
--------------------------------
President
ATTEST: /s/ KATHLEEN J. PFLUEGER
---------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
--------------------------------
President
ATTEST: /s/ LISA A. MOSS
---------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(1)(d)
AMENDMENT NUMBER 3 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 1999 is made to the Transfer Agency and
Service Agreement dated September 8, 1998 (the "Agreement") between AIM Growth
Series (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to Article
10 of the Agreement.
Paragraph 1 of the Fee Schedule is hereby deleted in its entirety and replaced
with the following:
"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.
Per Account Fee
Fund Type Annualized
--------- ----------
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividends 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65
Advisor Class Annual/Semi-Annual Dividends 15.15
Advisor Class Quarterly/Monthly Dividends 17.15
Advisor Class Daily Accrual 19.65"
All other terms and provisions of the Agreement not amended herein shall remain
in full force and effect.
AIM GROWTH SERIES
By: /s/ ROBERT H. GRAHAM
--------------------------------
President
ATTEST: /s/ KATHLEEN J. PFLUEGER
---------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
--------------------------------
President
ATTEST: /s/ LISA A. MOSS
---------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(1)(e)
AMENDMENT NUMBER 4 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of February 11, 2000 is made to the Transfer Agency
and Service Agreement dated September 8, 1998 (the "Agreement") between AIM
Growth Series (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to
Article 10 of the Agreement.
Paragraph 1 of the Fee Schedule is hereby deleted in its entirety and replaced
with the following:
"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.
Per Account Fee
Fund Type Annualized
--------- ----------
Class A Annual/Semi-Annual Dividends $15.15
Class A Quarterly & Monthly Dividends 17.15
Class A Daily Accrual 19.65
Class B 19.65
Class C 19.65"
All other terms and provisions of the Agreement not amended herein shall remain
in full force and effect.
AIM GROWTH SERIES
By: /s/ ROBERT H. GRAHAM
----------------------------
President
ATTEST: /s/ SAMUEL D. SIRKO
---------------------------------
Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
----------------------------
President
ATTEST: /s/ SAMUEL D. SIRKO
---------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT (h)(2)(h)
AMENDMENT NO. 6 TO THE REMOTE ACCESS
AND RELATED SERVICES AGREEMENT
FOR IMPRESSNET(TM) SERVICES
THIS AMENDMENT, dated as of the 30th day of August, 1999 is made to the
Remote Access and Related Services Agreement dated as of December 23, 1994, as
amended (the "Agreement") between each registered investment company listed on
Exhibit 1 of the Agreement (the "Fund") and FIRST DATA INVESTOR SERVICES GROUP,
INC. ("Investor Services Group").
WITNESSETH
WHEREAS, the Fund desires to enable Shareholders and Financial
Planners to conduct certain account transactions through the use of the
Internet and Investor Services Group desires to allow such access and provide
certain services as more fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of
the date first referenced above, Investor Services Group Agreement shall be
amended as follows:
1. Definitions. Terms not otherwise defined herein shall have the same
meanings as ascribed them in the Agreement. In addition, the following
definitions are hereby incorporated into Agreement:
(a) "End-User" shall mean any Shareholder or Financial Planner that
accesses the Investor Services Group recordkeeping system via
IMPRESSNet--Registered Trademark--.
(b) "Financial Planner" shall mean any investment advisor,
broker-dealer, financial planner or any other person authorized to act
on behalf of a Shareholder.
(c) "Financial Transaction" shall mean purchase, redemption, exchange
or any other transaction involving the movement of Shares initiated by
an End-User.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
(e) "IMPRESSNet--Registered Trademark--" shall mean the Investor
Services Group proprietary system consisting of the Investor Services
Group Secure Net Gateway and the Investor Services Group Web
Transaction Engine and shall also be deemed to be part of, and
included within the definition of "FDISG System" and "FDISG
Facilities", as those terms are defined in the Agreement.
(f) "Investor Services Group Secure Net Gateway" shall mean the system
of computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet.
<PAGE> 2
(g) "Investor Services Group Web Transaction Engine" shall mean the
system of computer hardware and software created and established by
Investor Services Group in order to enable Shareholders of the Fund to
perform the transactions contemplated hereunder.
(h) "Internet" shall mean the communications network comprised of
multiple communications networks linking education, government,
industrial and private computer networks.
(i) "Shares" refers collectively to such shares of capital stock or
beneficial interest, as the case may be, or class thereof, of a Fund
as may be issued from time to time.
(j) "Shareholder" shall mean a record owner of Shares of the Fund.
2. Responsibilities of Investor Services Group. In addition to the
services rendered by Investor Services Group as set forth in the
Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of
IMPRESSNet--Registered Trademark-- Fees attached hereto as Schedule A
of this Amendment:
(a) In accordance with the written IMPRESSNet--Registered Trademark--
procedures and product functionality documentation provided to the
Fund by Investor Services Group, Investor Services Group shall,
through the use of the Investor Services Group Web Transaction Engine
and Secure Net Gateway enable End-Users to utilize the Internet to
access the Investor Services Group System in order to perform
transactions in Shareholder accounts. IMPRESSNet--Registered
Trademark-- shall be accessible by End-Users in order to perform
transactions in Shareholder accounts via the Internet at least 95% of
the time during any 24 hour period, excluding a) the standard Initial
Program Loads (IPL) which shall be scheduled from 9:00 p.m. Saturday
through 7:00 a.m. Sunday Central Time, and b) the software change
windows which shall be scheduled from 12:00 a.m. Friday through 4:00
a.m. Friday Central Time and 12:00 a.m. Monday through 4:00 a.m.
Monday Central Time.
(b) (i) With respect to Shareholders, process the set up of personal
identification numbers ("PIN") which shall include verification of
initial identification numbers issued, reset and activate personalized
PIN's and reissue new PIN's in connection with lost PIN's; and (ii)
with respect to Financial Planners process the set up of digital
certificates which shall include verification of initial digital
certificates issued, reset and activate digital certificates and
reissue digital certificates in connection with expired or terminated
certificates.
(c) Installation services which shall include, review and sign off on
the Fund's network requirements, recommending method of linking to the
FDISG Web Transaction Engine, installing network hardware and
software, implementing the network connectivity, and testing the
network connectivity and performance;
2
<PAGE> 3
(d) Maintenance and support of the Investor Services Group Secure Net
Gateway and the Investor Services Group Web Transaction Engine, which
includes the following:
(i) error corrections, minor enhancements and interim upgrades to
IMPRESSNet--Registered Trademark-- which are made generally
available by FDISG to IMPRESSNet--Registered Trademark--
customers;
(ii) help desk support to provide assistance to Fund employees
with the Fund's use of IMPRESSNet--Registered Trademark--.
Maintenance and support shall not include (i) access to or use of any
substantial added functionality, new interfaces, new architecture, new
platforms, new versions or major development efforts, unless made
generally available by FDISG to IMPRESSNet--Registered Trademark--
clients, as determined solely by FDISG; or (ii) development of
customized features.
(e) Maintenance and upkeep of the security infrastructure and
capabilities described in the procedures and product functionality
documentation.
(f) Prepare and forward monthly usage reports to the Fund which shall
provide the Fund with a summary of activity and functionality used by
End-Users. In addition, the Fund will be provided web-site access for
determination of daily usage activity.
3. Responsibility of the Fund. In connection with the services provided
by Investor Services Group hereunder, the Fund shall be responsible
for the following:
(a) establishment and maintenance of the Fund Home Page on the
Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable End-Users to access the Fund Home
Page and/or the Investor Services System via the Internet;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services
Group to provide the services contemplated hereunder.
4 Software Exclusivity. The Fund may choose to have exclusive use of
enhancement software paid for by the Fund. Such exclusivity would
extend for a period of nine (9) months from the date the enhancement
is placed into the production libraries. Software exclusivity would be
waived if the Fund accepts either of the following conditions:
a). If prior to implementation, Investor Services Group or other
Investor Services Group clients agree to share in the expense of
the enhancements.
b). At any time during the 9 months following implementation, Investor
Services Group or other Investor Services Group clients agree to
share the expense for the enhancements.
3
<PAGE> 4
The Agreement, as previously amended and as amended by this Amendment,
("Modified Agreement") constitutes the entire agreement between the parties
with respect to the subject matter hereof. The Modified Agreement supersedes
all prior and contemporaneous agreements between the parties in connection with
the subject matter hereof. No officer, employee, servant or other agent of
either party is authorized to make any representation, warranty, or other
promises not expressly contained herein with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers, as of the day and year first
above written.
On behalf of the Funds and respective FIRST DATA INVESTOR SERVICES
Portfolios and Classes set forth in GROUP, INC.
Exhibit 1 of the Agreement which may
be amended from time to time.
<TABLE>
<S> <C>
By: /s/ROBERT H. GRAHAM By: /s/DEBRLEE G. GOLDBERG
-------------------------------- -------------------------------
Name: Robert H. Graham Name: Debrlee G. Goldberg
------------------------------- ----------------------------
Title: President Title: SVP
------------------------------ ---------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE A
IMPRESSNET(TM) Fees
WEB TRANSACTION ENGINE
SET UP FEE: $150.00 PER HOUR
o Reviewing client network requirements and signing off on the
requirements
o Recommending method of linking to the Web Transaction Engine
o Installing the network hardware and software
o Implementing the network connectivity
o Testing the network connectivity and performance
FINANCIAL TRANSACTION COST:
<TABLE>
<CAPTION>
NUMBER OF TRANSACTIONS PER MONTH FEE PER TRANSACTION
-------------------------------- -------------------
<S> <C>
0-10,000 $.50
10,001-20,000 $.40
20,001+ $.25
</TABLE>
SOFTWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Releases of new versions of Web Transaction Engine (does not include
customization)
o Maintain security infrastructure with auditing function for the
purpose of Fund and Shareholder protection
o Monthly Usage Reports and web access as described in Paragraph 2(f) of
this Amendment No. 6
o Help Desk Support (contact and escalation procedures set forth in
Exhibit 1)
HARDWARE MAINTENANCE FEE: $25,000 PER ANNUM
o Does not include client hardware and software requirements.
o Installation of hardware is billed as time and materials
o Does not include third party hardware and software maintenance
agreements
The Software Maintenance Fee and Hardware Maintenance Fee shall remain
unchanged until December 31, 2002. During each one year term of the agreement
after December 31, 2002, the Software Maintenance Fee and Hardware Maintenance
Fee may be changed no more than 5% than the then-current Software Maintenance
Fee and Hardware Maintenance Fee upon 90 days' prior written notice to the
Funds. Such change to the Software Maintenance Fee and Hardware Maintenance Fee
shall be effective at the beginning of the next one year term of the Agreement.
5
<PAGE> 6
CUSTOMIZED DEVELOPMENT: $150 PER HOUR
The above referenced fees do not include fees associated with third party
software products which may be required to utilize future releases of
IMPRESSNet(TM) .
6
<PAGE> 7
EXHIBIT 1 OF SCHEDULE A
IMPRESSNET HELP DESK AND ESCALATION PROCEDURES
This is directed to the IMPRESSNet staff as well as the customer base to ensure
a common understanding of the expectations surrounding help desk support.
It is assumed that each site has a front line of technical support which
filters out calls and determines that the issue is IMPRESSNet related and is
severe enough to justify immediate attention. It is requested that off-hour
calls be reserved for major production or data integrity issues.
Once an issue is determined to be IMPRESSNet related, the client representative
(either the user or a point of contact) should call the First Data Help Desk at
(508) 871-8550.
The Help Desk has a list of primary and secondary developers on call by
product. It is advantageous to provide a clear and concise problem statement to
the Help Desk personnel along with a telephone number and point of contact. The
caller should be sure to obtain a ticket number to facilitate progress tracking
if necessary.
o The Help Desk will call and/or page the primary on-call developer and
allow 15 minutes for a return call.
o If no response is received, the Help Desk will call and/or page the
secondary on call and wait 10 minutes for a return call.
o If no response is received, the manager on call will be called and/or
paged.
o If no response is received, the Help Desk personnel will contact the
Vice President of Corporate Systems and then the Manager of the
Environmental Support Group.
o Finally, if no response is received the Help Desk personnel has access
to SCONCALL (special procedures utilized by help desk personnel)
Once the developer or manager is assigned the call, they are responsible for
seeing that the issue is satisfactorily addressed. They are not necessarily
responsible for physically addressing the issue.
The assigned person will contact the designated client personnel to inform them
the issue is being addressed and to collect any relevant information.
If an issue will take more than an hour to resolve, the assigned person will
periodically update the Help Desk with a progress status.
Once the issue has been addressed it is the responsibility of the assigned
person to notify the Help Desk that the issue can be marked as "resolved".
7
<PAGE> 8
The Help Desk will contact the client to obtain confirmation of resolution
prior to closing the ticket.
If there has been a lack of response on a particular issue after the specified
time period, please contact your Client Service or IMPRESSNet Manager.
8
<PAGE> 1
EXHIBIT h(3)
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement") is made
as of May 29, 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
subadvised 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 CO (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.
(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
<PAGE> 2
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:
(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:
- 2 -
<PAGE> 3
(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 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 which will include the following items:
(A) schedule of investment;
(B) statement of assets and liabilities;
(C) statement of operations;
(D) statement 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
- 3 -
<PAGE> 4
(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.
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,
- 4 -
<PAGE> 5
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 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
- 5 -
<PAGE> 6
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 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 and 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 expense 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.
- 6 -
<PAGE> 7
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.
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. A11 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
- 7 -
<PAGE> 8
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 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 authorizations 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
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.
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
- 8 -
<PAGE> 9
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:
o 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.
o The Fee Rate is determined by dividing the Asset Multiplier by the net
assets of the INVESCO (NY) Funds.
o 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>
- 9 -
<PAGE> 1
EXHIBIT h(4)
FUND ACCOUNTING AND PRICING AGENT AGREEMENT
This Fund Accounting and Pricing Agent Agreement (the "Agreement")
is made as of June 1, 1998, by and between AIM Growth Series (the "Company")
and A I M Advisors, Inc. ("AIM").
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 of the Company's shares (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 advised and administered by AIM, and such complex is currently
comprised of the following investment companies: AIM Growth Series, AIM
Investment Funds, Inc., AIM Investment Portfolios, Inc., AIM Series Trust, GT
Global Floating Rate Fund, Inc., GT Global Variable Investment Series and GT
Global Variable Investment Trust (the "AIM Funds");
WHEREAS, the Company desires to retain AIM to act as its accounting
and pricing agent, and AIM 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 AIM hereby agree as follows:
SECTION 1. APPOINTMENT. The Company hereby appoints AIM 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. AIM 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 Directors/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 Funds' assets.
1
<PAGE> 2
(d) "Governing Documents" means the Agreement and Declaration of
Trust, Articles of Incorporation, By-Laws and/or 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
AIM from an Authorized Person or from a person reasonably believed by AIM 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 AIM and signed by an Authorized Person.
SECTION 3. COMPLIANCE WITH LAWS, ETC. In performing its responsibilities
hereunder, AIM 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, AIM shall
provide the following services to the Funds:
(a) PRICING AGENT. As pricing agent, AIM shall:
(1) Obtain security market quotes from services
approved by AIM or, if such quotes are unavailable, from such sources as may be
designated in procedures adopted by AIM and approved by the Company's Board,
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'
portfolio manager.
(b) ACCOUNTING AGENT. As fund accounting agent, AIM shall:
(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;
2
<PAGE> 3
(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 AIM;
(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' portfolio manager(s) with the beginning
cash balance available for investment purposes
and update the cash availability throughout the
day as necessary;
(C) verify investment buy/sell trade tickets
received from a Fund's portfolio manager(s) 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' statements
of assets and liabilities and statements 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 which will include the following items:
(A) schedule of investments;
(B) statement of assets and liabilities;
(C) statement of operations; and
(D) changes in net assets;
3
<PAGE> 4
(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 AIM
hereunder during the term of the Agreement, each Fund shall pay to AIM monthly
such fees as shall be agreed to from time to time by the Company and AIM, 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 AIM, each Fund shall reimburse
AIM for certain expenses that it incurs in rendering services with respect to
that Fund under this Agreement.
SECTION 6. RELIANCE BY AIM ON INSTRUCTIONS. Unless otherwise provided in this
Agreement, AIM shall act only upon Oral or Written Instructions. AIM shall be
entitled to rely upon any such Instructions actually received by it under this
Agreement. The Company agrees that AIM shall incur no liability to the Company
or any of the Funds in acting upon Oral or Written Instructions given to AIM
hereunder, provided that, such Instructions reasonably appear to have been
received from an Authorized Person.
SECTION 7. COOPERATION WITH AGENTS OF THE COMPANY. AIM 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.
SECTION 8. CONFIDENTIALITY. AIM, 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 AIM, 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, AIM 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, AIM:
(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 AIM in writing, and in computing the net asset value
per Share of a Fund, AIM 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 AIM, (2) as to the existence, status and proper treatment of reserves,
if any, authorized by a Fund, (3) as to the
4
<PAGE> 5
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 AIM's negligence in the performance of its
duties under this Agreement or for AIM's negligent failure to perform such
duties as are specifically assumed by AIM in this Agreement, provided that, to
the extent that duties, obligations and responsibilities are not expressly set
forth in this Agreement, AIM shall not be liable for any act or omission that
does not constitute willful misfeasance, bad faith or negligence on the part of
AIM or reckless disregard by AIM of such duties, obligations and
responsibilities; and
(c) without limiting the generality of the foregoing, AIM shall not,
in connection with AIM'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 to the applicable requirements of this Agreement, if any, and
that AIM reasonably believes to be genuine; and
(2) delays or errors or loss of data occurring by
reason of circumstances beyond AIM'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 AIM's computation of a Fund's net asset
value: AIM 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 AIM's negligence or willful misfeasance in the computation
and determination of such net asset value. The parties hereto acknowledge,
however, that AIM 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 AIM 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. AIM's liability for any such negligence or willful
misfeasance which
5
<PAGE> 6
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, AIM 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) AIM'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 AIM from a source that AIM
was authorized to rely upon. Nevertheless, AIM 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 AIM has reason to believe
that any such information is incorrect.
SECTION 10. RECEIPT OF ADVICE. If AIM is in doubt as to any action to be taken
or omitted by it, AIM may request, and shall be entitled to rely upon,
directions and advice from the Company, including Oral or Written Instructions
where 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 AIM pursuant to this Section, AIM shall be entitled to rely on and follow
the advice received from counsel as described above. AIM 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 AIM, 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 AIM 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 AIM's properly taking or omitting to take such
action under the terms of this Agreement.
SECTION 11. INDEMNIFICATION OF AIM. The Company agrees to indemnify and hold
harmless AIM 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 AIM 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 AIM of its responsibilities under
this Agreement;
provided that, AIM shall not be indemnified against any liability to the
Company or the Funds, or
6
<PAGE> 7
any expenses incident thereto, arising out of AIM'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. AIM 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
AIM that does not meet the standard of care to which AIM is subject under
Section 9, above.
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
AIM 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 AIM 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 AIM.
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.
7
<PAGE> 8
SECTION 19. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the Company and AIM and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided that the
Company and AIM 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 AIM 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 the laws of the State of Delaware. 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 AIM and their respective successors.
8
<PAGE> 9
IN WITNESS WHEREOF, the Company and AIM have caused this
Agreement to be executed by their officers designated below as of this day,
month and year first above written.
AIM GROWTH SERIES
By: /s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
President
Attest: /s/ SAMUEL D. SIRKO
--------------------------------
Samuel D. Sirko
Assistant Secretary
A I M ADVISORS, INC.
By: /s/ CAROL F RELIHAN
---------------------------------
Carol F Relihan
Senior Vice President, General Counsel
and Secretary
Attest: /s/ SAMUEL D. SIRKO
---------------------------------
Samuel D. Sirko
Assistant Secretary
9
<PAGE> 10
SCHEDULE A
TO
FUND ACCOUNTING
AND
PRICING AGENT AGREEMENT
FOR
AIM GROWTH SERIES
FUND ACCOUNTING AND PRICING AGENT FEES
Each Fund shall pay a Fee to AIM 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:
o An Asset Multiplier is determined by multiplying 0.0003 times the
first $5 billion in average net assets of the AIM Funds plus 0.0002
times such net assets over $5 billion.
o The Fee Rate is determined by dividing the Asset Multiplier by the
net assets of the AIM Funds.
o 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, as
appropriate.
Example: For Fund X having $100 million in average net assets during December
1997, in which the AIM Funds have average net assets of $8 billion:
Asset Multiplier = (0.0003) ($5 billion) + (0.0002) ($3 billion) = $2.1 million
Fee Rate = $2.1 million = 0.0002625
------------
$8 billion
Monthly Fee = ( 31 ) (0.0002625) ($100 million) = $2,229.45
-------
( 365 )
10
<PAGE> 1
EXHIBIT h(5)
MASTER ACCOUNTING SERVICES AGREEMENT
This MASTER ACCOUNTING SERVICES AGREEMENT (the "Agreement") is made
this 1st day of July, 1999 by and between A I M ADVISORS, INC., a Delaware
corporation (the "AIM") and AIM Growth Series, a Delaware business trust (the
"Trust") with respect to the separate series set forth from time to time in
Appendix A to this Agreement (the "Portfolios").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Portfolios are separate series of beneficial interests
representing interests in separate investment portfolios of the Trust; and
WHEREAS, the Trust desires to retain AIM to provide the accounting
services to the Trust as described herein;
NOW, THEREFORE, the parties hereby agree as follows:
1. AIM hereby agrees to provide, or arrange for the provision of the
services of a principal financial officer of the Trust (including related
office space, facilities and equipment) whose normal duties consist of
maintaining the financial accounts and books and records of the Trust and the
Portfolios, including daily net asset value calculations and the preparation of
tax returns; and the services (including related office space, facilities and
equipment) of any of the personnel operating under the direction of such
principal financial officer.
2. The services provided hereunder shall at all times be subject to
the direction and supervision of the Trust's Board of Trustees.
3. As full compensation for the services performed and the facilities
furnished by or at the direction of AIM, the Portfolios shall pay AIM such fees
as are determined in accordance with the methodologies established from time to
time by the Trust's Board of Trustees. Such amounts shall be paid to AIM on a
quarterly basis.
4. AIM shall not be liable for any error of judgment or for any loss
suffered by the Trust or the Portfolios in connection with any matter to which
this Agreement relates, except a loss resulting from AIM's willful misfeasance,
bad faith or gross negligence in the performance of its duties or from reckless
disregard of its obligations and duties under this Agreement.
5. The Trust and AIM each hereby represent and warrant, but only as to
themselves, that each has all requisite authority to enter into, execute,
deliver and perform its obligations under this Agreement and that this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
<PAGE> 2
6. Nothing in this Agreement shall limit or restrict the rights of any
trustee, officer or employee of AIM who may also be a trustee, officer or
employee of the Trust to engage in any other business or to devote his time and
attention in part to the management or other aspects of any business, whether
of a similar or a dissimilar nature, nor limit or restrict the right of AIM to
engage in any other business or to render services of any kind to any other
corporation, firm, individual or association.
7. This Agreement shall continue in effect until June 30, 2001 and
shall continue in effect from year to year thereafter; provided that such
continuance is specifically approved at least annually:
(a) (i) by the Trust's Board of Trustees or (ii) by the vote of
a majority of the outstanding voting securities of the Trust (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Trust's
Trustees who are not parties to this Agreement or interested persons of
a party to this Agreement, by votes cast in person at a meeting
specifically called for such purpose.
This Agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a) (4) of the 1940 Act) or, with respect to
one or more Portfolios in the event of termination of the Investment Management
and Administration Contract relating to such Portfolio(s) between the Trust and
AIM.
8. This Agreement may be amended or modified, but only by a written
instrument signed by both the Trust and AIM.
9. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (a) to AIM at Eleven Greenway Plaza, Suite 100, Houston,
Texas 77046, Attention: President, with a copy to the General Counsel, or (b)
to the Trust at Eleven Greenway Plaza, Suite 100, Houston, Texas 77046,
Attention: President, with a copy to the General Counsel.
10. Notice is hereby given that this Agreement is being executed by the
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, shareholders or the investment advisor of the Trust individually but
are binding only upon the assets and property belonging to the Trust, 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.
11. This Agreement contains the entire agreement between the parties
hereto and supersedes all prior agreements, understandings and arrangements
with respect to the subject matter hereof.
12. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
A I M ADVISORS, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Assistant Secretary President
(SEAL)
AIM GROWTH SERIES
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Assistant Secretary President
(SEAL)
3
<PAGE> 4
AIM GROWTH SERIES
APPENDIX A TO MASTER ACCOUNTING SERVICES AGREEMENT
JULY 1, 1999
AIM New Pacific Growth Fund
AIM Europe Growth Fund
AIM Japan Growth Fund
AIM Mid Cap Equity Fund
AIM Small Cap Growth Fund
AIM Basic Value Fund
4
<PAGE> 1
EXHIBIT h(6)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 3rd day of May,
1999 between AIM Growth Series (the "Company"), on behalf of the funds listed
on Exhibit "A" to this Memorandum of Agreement (the "Funds"), and A I M
Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and AIM agree as follows:
The Company and AIM agree until the date set forth on the attached
Exhibit "A" that AIM will waive its fees or reimburse expenses to the extent
that the expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) of a class of a Fund exceed the rate set forth on
Exhibit "A" of the average daily net assets allocable to such class. Neither
the Company nor AIM may remove or amend the expense limitations to the
Company's detriment prior to the date set forth on Exhibit "A." AIM will not
have any right to reimbursement of any amount so waived or reimbursed.
The Company and AIM agree to review the then-current expense
limitations for each class of each fund listed on Exhibit "A" on a date prior
to the date listed on that Exhibit to determine whether such limitations should
be amended, continued or terminated. Unless the Company, by vote of its Board
of Trustees, or AIM terminates the limitations, or the Company and AIM are
unable to reach an agreement on the amount of the limitations to which the
Company and AIM desire to be bound, the limitations will continue for
additional one-year terms at the rate to which the Company and AIM mutually
agree. Exhibit "A" will be amended to reflect that rate and the new date
through which the Company and AIM agree to be bound.
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 Memorandum of
Agreement have been authorized by the Trustees of the Company, and this
Memorandum of 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 and property of the Funds, as
provided in the Company's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Company and AIM have entered into this
Memorandum of Agreement as of the date first above written.
AIM Growth Series,
on behalf of each Fund listed in
Exhibit "A" to this Memorandum
of Agreement
By: /s/ ROBERT H. GRAHAM
--------------------------------
Title: President
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
--------------------------------
Title:
<PAGE> 2
EXHIBIT "A"
AIM GROWTH SERIES
FUND EXPENSE LIMITATIONS COMMITTED UNTIL
- ---- ------------------- ---------------
AIM Basic Value Fund
Class A 1.75% June 30, 2000
Class B 2.40% June 30, 2000
Class C 2.40% June 30, 2000
Advisor Class 1.40% June 30, 2000
AIM Small Cap Growth
Fund
Class A 1.75% June 30, 2000
Class B 2.40% June 30, 2000
Class C 2.40% June 30, 2000
Advisor Class 1.40% June 30, 2000
AIM Europe Growth
Fund
Class A 2.00% June 30, 2000
Class B 2.65% June 30, 2000
Class C 2.65% June 30, 2000
Advisor Class 1.65% June 30, 2000
AIM Japan Growth Fund
Class A 2.00% June 30, 2000
Class B 2.65% June 30, 2000
Class C 2.65% June 30, 2000
Advisor Class 1.65% June 30, 2000
AIM Mid Cap Equity
Fund
Class A 1.75% June 30, 2000
Class B 2.40% June 30, 2000
Class C 2.40% June 30, 2000
Advisor Class 1.40% June 30, 2000
AIM New Pacific Growth
Fund
Class A 2.00% June 30, 2000
Class B 2.65% June 30, 2000
Class C 2.65% June 30, 2000
Advisor Class 1.65% June 30, 2000
<PAGE> 1
EXHIBIT i(1)
KIRKPATRICK & LOCKHART LLP 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778.9000
www.kl.com
April 28, 2000
AIM Growth Series
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Ladies and Gentlemen:
We have acted as counsel to AIM Growth Series, a Delaware business
trust (the "Trust"), in connection with Post-Effective Amendment No. 48 ("PEA")
to the Trust's Registration Statement on Form N-1A (File No. 2-57526) relating
to the issuance and sale of Shares of the Trust. You have requested our opinion
with respect to the matters set forth below.
In this opinion letter, the term "Shares" refers to the Class A,
Class B, and Class C shares of beneficial interest in each series of the Trust
listed in Schedule A attached to this opinion letter (each, a "Portfolio"),
that may be issued during the time that the PEA is effective and has not been
superseded by another post-effective amendment.
In connection with rendering the opinions set forth below, we have
examined copies, believed by us to be genuine, of the Trust's Agreement and
Declaration of Trust dated as of May 7, 1998 (the "Agreement"), and Bylaws, and
any amendments thereto, and such other documents relating to its organization
and operation as we have deemed relevant to our opinions, as set forth herein.
With respect to matters governed by the laws of the State of Delaware
(excluding the securities laws thereof), we have relied solely on the opinion
letter of Potter Anderson & Corroon LLP, special Delaware counsel to the Trust,
an executed copy of which is appended hereto as Exhibit A.
The opinions set forth in this letter are limited to the laws and
facts in existence on the date hereof, and are further limited to the laws
(other than laws relating to choice of law) of the State of Delaware that in
our experience are normally applicable to the issuance of shares of beneficial
interest by business trusts and to the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Securities and Exchange Commission (the
"SEC") thereunder. Based on and subject to the foregoing, and the additional
qualifications and other matters set forth below, it is our opinion that as of
the date hereof the Shares, when sold in accordance with the terms contemplated
by the PEA, including receipt by the Trust of full payment for the Shares and
compliance with the 1933 Act and 1940 Act, will have been validly issued and
will be fully paid and non-assessable.
<PAGE> 2
KIRKPATRICK & LOCKHART LLP
AIM Growth Series
April 28, 2000
Page 2
We are furnishing this opinion letter to you solely in connection
with the issuance of the Shares. You may not rely on this opinion letter in any
other connection, and it may not be furnished to or relied upon by any other
person for any purpose, without specific prior written consent.
The foregoing opinions are rendered as of the date of this letter,
except as otherwise indicated. We assume no obligation to update or supplement
our opinions to reflect any changes of law or fact that may occur.
We hereby consent to this opinion letter accompanying the PEA when
it is filed with the SEC and to the reference to our firm in the statements of
additional information that are being filed as part of such PEA.
Very truly yours,
/s/ KIRKPATRICK & LOCKHART LLP
KIRKPATRICK & LOCKHART LLP
<PAGE> 3
SCHEDULE A
AIM GROWTH SERIES
AIM Euroland Growth Fund
AIM Japan Growth Fund
AIM New Pacific Growth Fund
AIM Mid Cap Equity Fund
AIM Small Cap Growth Fund
AIM Basic Value Fund
<PAGE> 1
EXHIBIT i(2)
[POTTER ANDERSON & CORROON LLP]
April 28, 2000
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., NW
2nd Floor
Washington, DC 20036
Re: AIM Growth Series
Ladies and Gentlemen:
We have acted as special Delaware counsel for AIM Growth Series, a
Delaware business trust (the "Trust") in connection with the proposed issuance
of shares (collectively the "Shares") of Class A, Class B, and Class C
(collectively, the "Classes") of AIM Euroland Growth Fund, AIM Japan Growth
Fund, AIM New Pacific Growth Fund, AIM Mid Cap Equity Fund, AIM Small Cap Growth
Fund, and AIM Basic Value Fund (collectively, the "Portfolios") as designated on
Schedule A to that certain Agreement and Declaration of Trust dated as of May 7,
1998, entered into among William J. Guilfoyle, C. Derek Anderson, Frank S.
Bayley, Arthur C. Patterson, and Ruth H. Quigley, as Trustees, and the
Shareholders of the Trust (the "Original Declaration"). Initially capitalized
terms used herein and not otherwise defined are used herein as defined in the
Declaration.
For purposes of giving the opinions hereinafter set forth, we have
examined only the following documents and have conducted no independent factual
investigation of our own:
1. The Certificate of Trust for the Trust, dated as of May 7, 1998, as
filed in the Office of the Secretary of State of the State of Delaware (the
"Secretary of State") on May 7, 1998;
2. The Original Declaration;
3. The First Amendment to Original Declaration of Trust of the Trust
entered into as of September 8, 1998 (the "First Amendment");
4. The Second Amendment to Original Declaration of Trust of the Trust
entered into as of December 10, 1998 (the "Second Amendment,");
5. The Third Amendment to the Original Declaration dated as of February
16, 1999 (the "Third Amendment");
<PAGE> 2
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6. The Fourth Amendment to the Original Declaration dated as of
September 1, 1999 (the "Fourth Amendment");
7. The Fifth Amendment to the Original Declaration dated as of February
11, 2000 (the "Fifth Amendment", together with the Original Declaration, the
First Amendment, the Second Amendment, the Third Amendment, and the Fourth
Amendment collectively, the "Declaration");
8. Schedule A to the Declaration as in effect on the date hereof;
9. The By-laws of the Trust as in effect on the date hereof;
10. Resolutions of the Trustees as in effect on the date hereof
designating and eliminating, as the case may be, Classes and approving the
issuance of the Shares (collectively, the "Share Resolutions");
11. Resolutions of the Trustees (the "18f-3 Resolutions" and together
with the Share Resolutions, the "Resolutions") adopting that certain plan
pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the 18f-3
Plan");
12. A Certificate of the Secretary of the Trust dated as of April 28,
2000 certifying as to the organizational documents of the Trust, certain
authorizing resolutions, the Resolutions, and the signatures of the Trust's
officers;
13. A Certificate of Good Standing for the Trust, dated April 28, 2000
obtained from the Secretary of State; and
14. The Post-Effective Amendment No. 48 (the "PEA") to the Trust's
registration statement on Form N-1A (the "Form N-1A") as filed with the
Securities and Exchange Commission on or about April 28, 2000, pursuant to the
Securities Act of 1933, as amended, covering the Shares (the PEA together with
the Form N-1A, the "Registration Statement").
As to certain facts material to the opinions expressed herein, we have
relied upon the representations and warranties contained in the documents
examined by us.
Based upon the foregoing, and upon an examination of such questions of
law of the State of Delaware as we have considered necessary or appropriate, and
subject to the assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:
<PAGE> 3
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1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act.
2. Each Portfolio has been duly created and is validly existing as a
series under Section 3804 of the Delaware Act.
3. The Declaration constitutes the legal, valid and binding obligation
of the Trustees, enforceable against the Trustees, in accordance with its terms.
4. Subject to the other qualifications set forth herein, the Shares
have been duly authorized and when the Shares shall have been otherwise issued
and sold in accordance with the Declaration, the Resolutions, the 18f-3 Plan and
the By-laws, such Shares will be validly issued, fully paid, and non-assessable
undivided beneficial interests in the assets of the respective Portfolios of
which such Shares form a part, as the case may be.
5. When and if the actions referred to in paragraph 4 have occurred,
the holders of the Shares as beneficial owners of the Shares will be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware, except that such holders of Shares may be obligated to provide
indemnity and/or security in connection with the issuance of replacement
certificates for lost or destroyed certificates, if any, representing such
Shares, if such holders request certificates in accordance with the By-laws and
such certificates are lost.
In addition to the assumptions and qualifications set forth above, all
of the foregoing opinions contained herein are subject to the following
assumptions, qualifications, limitations and exceptions:
a. The foregoing opinions are limited to the laws of the State of
Delaware presently in effect, excluding the securities laws thereof. We have not
considered and express no opinion on the laws of any other jurisdiction,
including, without limitation, federal laws and rules and regulations relating
thereto.
b. We have assumed the legal capacity of any natural persons who are
parties to any of the documents examined by us.
c. The foregoing opinion regarding the enforceability of the
Declaration is subject to (i) applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, fraudulent transfer and similar laws relating to or
affecting creditors rights generally including, without limitation, the Delaware
Uniform Fraudulent Conveyance Act, the provisions of the United States
Bankruptcy Code and the Delaware insolvency statutes, (ii) principles of equity
including, without limitation, concepts of materiality, good faith, fair
<PAGE> 4
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dealing, conscionability and reasonableness (regardless of whether such
enforceability is considered in a proceeding in equity or at law), (iii)
applicable law relating to fiduciary duties, and (iv) public policy limitations
with respect to exculpation, contribution and indemnity provisions.
d. We have assumed that all signatures on documents examined by us
are genuine, that all documents submitted to us as originals are authentic and
that all documents submitted to us as copies conform with the originals.
e. We have assumed that the Declaration, the By-laws, the 18f-3 Plan
and the Resolutions, collectively, constitute the entire agreement with respect
to the subject matter thereof, including (i) with respect to the creation,
dissolution and winding up of the Trust and the Portfolio, (ii) the terms
applicable to the Shares, and (iii) the power and authority of the Trustees.
f. We have assumed that to the extent any additional rights and/or
preferences are stated in the 18f-3 Plan, such additional rights and/or
preferences (x) are enforceable in accordance with their terms, and (y) do not
conflict with the Certificate of Trust, the Declaration, the By-laws, or any
statute, rule or regulation applicable to the Trust or any Portfolio.
g. We have assumed that no event set forth in Section 9.3(a) of the
Declaration has occurred with respect to the Trust or any Portfolio.
h. Notwithstanding any provision in the Declaration to the contrary,
we note that upon the occurrence of an event set forth in Section 9.3(a)
thereof, with respect to the Trust or a Portfolio, as the case may be, the Trust
or such Portfolio, as applicable, cannot make any payments or distributions to
the Shareholders thereof until their respective creditors' claims are either
paid in full or reasonable provision for payment thereof has been made.
i. With respect to the enforceability of any provision of the
Declaration wherein the parties provide for the appointment of a liquidator, we
note that upon the application of any beneficial owner, the Delaware Court of
Chancery has the power, upon cause shown, to wind up the affairs of a Delaware
business trust or series thereof and in connection therewith to appoint a
liquidating trustee other than the one agreed to by the beneficial owners
thereof.
j. We have assumed that the 18f-3 Plan has not been amended,
modified, or revoked in any manner from the date of its adoption, and that the
18f-3 Plan remains in full force and effect on the date hereof.
<PAGE> 5
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k. We have assumed that the Trust maintains separate and distinct
records for each Portfolio and that the Trust and the Trustees hold and account
for the assets belonging to each such Portfolio separately from the other assets
of any other Portfolio and the assets of the Trust generally, if any.
l. We note that we do not assume responsibility for the contents of
any registration statement pursuant to which the shares have been, are, or may
be sold.
This opinion is rendered solely for your benefit in connection with the
matters set forth herein and, without our prior written consent, may not be
furnished (except that it may be furnished to any federal, state or local
regulatory agencies or regulators having appropriate jurisdiction and entitled
to such disclosure) or quoted to, or relied upon by, any other person or entity
for any purpose. Kirkpatrick & Lockhart LLP may rely on this opinion with
respect to the matters set forth herein in connection with its opinion being
delivered on even date herewith.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In giving the
foregoing consent, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ POTTER ANDERSON & CORROON LLP
<PAGE> 1
EXHIBIT j
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form N-1A of our
reports dated February 16, 2000, relating to the financial statements and
financial highlights of the AIM Growth Series (AIM Basic Value Fund, AIM Small
Cap Growth Fund, AIM Euroland Growth Fund, AIM Japan Growth Fund, AIM Mid Cap
Equity Fund, and AIM New Pacific Growth Fund) which appear in such Registration
Statement. We also consent to the references to us under the headings "Financial
Statements", "Independent Accountants" and "Financial Highlights" in such
Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 1, 2000
<PAGE> 1
EXHIBIT m(3)
MASTER DISTRIBUTION PLAN
OF
AIM GROWTH SERIES
(CLASS A AND CLASS C SHARES)
SECTION 1. AIM Growth Series (the "Fund") on behalf of the series of the
Shares of beneficial interest set forth in Appendix A attached hereto (the
"Portfolios") may act as a distributor of the Class A shares and Class C shares
of such Portfolios (the "Shares") of which the Fund is the issuer, pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), according to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur pursuant to the terms of this Master
Distribution Plan expenses at the rates set forth in Appendix A per annum of
the average daily net assets of the Fund attributable to the Shares, subject to
any applicable limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Appendix A may be used to finance any
activity which is primarily intended to result in the sale of the Shares,
including, but not limited to, expenses of organizing and conducting sales
seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, overhead, supplemental payments to dealers and
other institutions as asset-based sales charges. Amounts set forth in Appendix
A may also be used to finance payments of service fees under a shareholder
service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. The distribution agreement with any Distributor shall
provide that the portion of the amounts set forth in Appendix A that is an
asset based sales charge with respect to Class C Shares shall be deemed to be
paid for services rendered by the Distributor or any Dealers in placing the
Class C Shares, which services are fully performed upon the settlement of each
sale of a Class C Share (or share of another portfolio from which the Class C
Share derives). No provision of this Plan shall be interpreted to prohibit any
payments by the Fund during periods when the Fund has suspended or otherwise
limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan shall be
used in part for the implementation by Distributors of
shareholder service arrangements with respect to the Shares. The
maximum service fee paid to any service provider shall be
twenty-five one-hundredths of one percent (0.25%) per annum of
the average daily net assets of the Fund attributable to the
Shares owned by the customers of such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may enter into
agreements substantially in the form attached hereto as Exhibit
A ("Service Agreements") with such broker-dealers ("Dealers") as
may be selected from time to time by Distributors for the
provision of distribution-related personal shareholder services
in connection with the sale of Shares to the Dealers' clients
and customers ("Customers") who may from time to time directly
or beneficially own Shares. The distribution-related personal
continuing shareholder services to be rendered by Dealers under
the Service Agreements may include, but shall not be limited to,
the following: (i) distributing sales literature; (ii) answering
routine Customer inquiries concerning the Fund and the Shares;
(iii) assisting Customers in changing dividend options, account
designations and addresses, and in enrolling into any of several
retirement plans offered in connection with the purchase of
Shares; (iv) assisting in the establishment and maintenance of
customer accounts and records, and in the processing of purchase
and redemption transactions; (v) investing dividends and capital
gains distributions automatically in Shares; and (vi) providing
such other information and services as the Fund or the Customer
may reasonably request.
(c) Distributors may also enter into Bank Shareholder
Service Agreements substantially in the form attached hereto as
Exhibit B ("Bank Agreements") with selected banks acting in an
agency capacity for their customers ("Banks"). Banks acting in
such capacity will provide some or all of the shareholder
services to their customers as set forth in the Bank Agreements
from time to time.
(d) Distributors may also enter into Agency Pricing
Agreements substantially in the form attached hereto as Exhibit
C ("Pricing Agreements") with selected retirement plan service
providers acting in an agency capacity for their customers
("Retirement Plan Providers"). Retirement Plan Providers acting
in such capacity will provide some or all of the shareholder
services to their customers as set forth in the Pricing
Agreements from time to time.
(e) Distributors may also enter into Shareholder Service
Agreements substantially in the form attached hereto as Exhibit
D ("Bank Trust Department Agreements and Brokers for Bank Trust
Department Agreements") with selected bank trust departments and
brokers for bank trust departments. Such bank trust departments
and brokers for bank trust departments will provide some or all
of the shareholder services to their customers as set forth in
the Bank Trust Department Agreements and Brokers for Bank Trust
Department Agreements from time to time.
SECTION 5. Any amendment to this Plan that requires the approval of the
shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall become
effective as to such Class upon the approval of such amendment by a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of such
Class, provided that the Board of Trustees of the Fund has approved such
amendment in accordance with the provisions of Section 6 of this Plan.
SECTION 6. This Plan, any amendment to this Plan and any agreements
related to this Plan shall become effective immediately upon the receipt by the
Fund of both (a) the affirmative vote of a majority of the Board of Trustees of
the Fund, and (b) the affirmative vote of a majority of those trustees of the
Fund who are not "interested persons" of the Fund (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Dis-interested Trustees"), cast in person
at a meeting called for the purpose of voting on
-2-
<PAGE> 3
this Plan or such agreements. Notwithstanding the foregoing, no such amendment
that requires the approval of the shareholders of a Class of a Fund shall
become effective as to such Class until such amendment has been approved by the
shareholders of such Class in accordance with the provisions of Section 5 of
this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect until June 30, 1999 and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Trustees
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
SECTION 9. This Plan may be terminated at any time by vote of a majority
of the Dis- interested Trustees, or by vote of a majority of the outstanding
voting securities of the Shares . If this Plan is terminated, the obligation of
the Fund to make payments pursuant to this Plan will also cease and the Fund
will not be required to make any payments beyond the termination date even with
respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in writing,
and shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Dis-interested Trustees or by a vote of the outstanding voting
securities of the Fund attributable to the Shares, on not more
than sixty (60) days' written notice to any other party to the
agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
AIM GROWTH SERIES
(on behalf of its Class A and
Class C Shares)
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Assistant Secretary President
Effective as of May 3 , 1999
------------------------
-3-
<PAGE> 4
APPENDIX A
TO
MASTER DISTRIBUTION PLAN
OF
AIM GROWTH SERIES
(CLASS A AND CLASS C SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan for
each Portfolio as designated below, a Distribution Fee* determined by applying
the annual rate set forth below as to each Portfolio (or Class A or Class C
thereof) to the average daily net assets of the Portfolio (or Class A or Class
C thereof) for the plan year, computed in a manner used for the determination
of the offering price of shares of the Portfolio (or Class A or Class C
thereof).
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
Class A Shares
--------------
AIM Basic Value Fund 0.10% 0.25% 0.35%
AIM Europe Growth Fund 0.10% 0.25% 0.35%
AIM Japan Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Equity Fund 0.10% 0.25% 0.35%
AIM New Pacific Growth Fund 0.10% 0.25% 0.35%
AIM Small Cap Growth Fund 0.10% 0.25% 0.35%
Class C Shares
--------------
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Europe Growth Fund 0.75% 0.25% 1.00%
AIM Japan Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Equity Fund 0.75% 0.25% 1.00%
AIM New Pacific Growth Fund 0.75% 0.25% 1.00%
AM Small Cap Growth Fund 0.75% 0.25% 1.00%
- --------
* The Distribution Fee is payable apart from the sales charge, if
any, as stated in the current prospectus for the applicable
Class and the applicable Portfolio.
-4-
<PAGE> 1
EXHIBIT m(4)(a)
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM GROWTH SERIES
(CLASS A AND CLASS C SHARES)
SECTION 1. AIM Growth Series (the "Fund") on behalf of the series of
the Shares of beneficial interest set forth in Appendix A attached hereto (the
"Portfolios") may act as a distributor of the Class A shares and Class C shares
of such Portfolios (the "Shares") of which the Fund is the issuer, pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), according to the terms of this Distribution Plan (the "Plan").
SECTION 2. The Fund may incur pursuant to the terms of this Master
Distribution Plan expenses at the rates set forth in Appendix A per annum of
the average daily net assets of the Fund attributable to the Shares, subject to
any applicable limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
SECTION 3. Amounts set forth in Appendix A may be used to finance any
activity which is primarily intended to result in the sale of the Shares,
including, but not limited to, expenses of organizing and conducting sales
seminars, advertising programs, finders fees, printing of prospectuses and
statements of additional information (and supplements thereto) and reports for
other than existing shareholders, preparation and distribution of advertising
material and sales literature, overhead, supplemental payments to dealers and
other institutions as asset-based sales charges. Amounts set forth in Appendix
A may also be used to finance payments of service fees under a shareholder
service arrangement to be established by A I M Distributors, Inc.
("Distributors") as the Fund's distributor in accordance with Section 4, and
the costs of administering the Plan. To the extent that amounts paid hereunder
are not used specifically to reimburse Distributors for any such expense, such
amounts may be treated as compensation for Distributors' distribution-related
services. All amounts expended pursuant to the Plan shall be paid to
Distributors and are the legal obligation of the Fund and not of Distributors.
That portion of the amounts paid under the Plan that is not paid or advanced by
Distributors to dealers or other institutions that provide personal continuing
shareholder service as a service fee pursuant to Section 4 shall be deemed an
asset-based sales charge. The distribution agreement with any Distributor shall
provide that the portion of the amounts set forth in Appendix A that is an
asset based sales charge with respect to Class C Shares shall be deemed to be
paid for services rendered by the Distributor or any Dealers in placing the
Class C Shares, which services are fully performed upon the settlement of each
sale of a Class C Share (or share of another portfolio from which the Class C
Share derives). No provision of this Plan shall be interpreted to prohibit any
payments by the Fund during periods when the Fund has suspended or otherwise
limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Plan
shall be used in part for the implementation by
Distributors of shareholder service arrangements with
respect to the Shares. The maximum service fee paid to any
service provider shall be twenty-five one-hundredths of
one percent (0.25%) per annum of the average daily net
assets of the Fund attributable to the Shares owned by the
customers of such service provider.
<PAGE> 2
(b) Pursuant to this program, Distributors may
enter into agreements substantially in the form attached
hereto as Exhibit A ("Service Agreements") with such
broker-dealers ("Dealers") as may be selected from time to
time by Distributors for the provision of
distribution-related personal shareholder services in
connection with the sale of Shares to the Dealers' clients
and customers ("Customers") who may from time to time
directly or beneficially own Shares. The
distribution-related personal continuing shareholder
services to be rendered by Dealers under the Service
Agreements may include, but shall not be limited to, the
following: (i) distributing sales literature; (ii)
answering routine Customer inquiries concerning the Fund
and the Shares; (iii) assisting Customers in changing
dividend options, account designations and addresses, and
in enrolling into any of several retirement plans offered
in connection with the purchase of Shares; (iv) assisting
in the establishment and maintenance of customer accounts
and records, and in the processing of purchase and
redemption transactions; (v) investing dividends and
capital gains distributions automatically in Shares; and
(vi) providing such other information and services as the
Fund or the Customer may reasonably request.
(c) Distributors may also enter into Bank
Shareholder Service Agreements substantially in the form
attached hereto as Exhibit B ("Bank Agreements") with
selected banks acting in an agency capacity for their
customers ("Banks"). Banks acting in such capacity will
provide some or all of the shareholder services to their
customers as set forth in the Bank Agreements from time to
time.
(d) Distributors may also enter into Variable
Group Annuity Contractholder Service Agreements
substantially in the form attached hereto as Exhibit C
("Variable Contract Agreements") with selected insurance
companies ("Companies") offering variable annuity
contracts to employers as funding vehicles for retirement
plans qualified under Section 401(a) of the Internal
Revenue Code, where amounts contributed under such plans
are invested pursuant to such variable annuity contracts
in Shares of the Fund. The Companies receiving payments
under such Variable Contract Agreements will provide
specialized services to contractholders and plan
participants, as set forth in the Variable Contract
Agreements from time to time.
(e) Distributors may also enter into Agency
Pricing Agreements substantially in the form attached
hereto as Exhibit D ("Pricing Agreements") with selected
retirement plan service providers acting in an agency
capacity for their customers ("Retirement Plan
Providers"). Retirement Plan Providers acting in such
capacity will provide some or all of the shareholder
services to their customers as set forth in the Pricing
Agreements from time to time.
(f) Distributors may also enter into Shareholder
Service Agreements substantially in the form attached
hereto as Exhibit E ("Bank Trust Department Agreements and
Brokers for Bank Trust Department Agreements") with
selected bank trust departments and brokers for bank trust
departments. Such bank trust departments and brokers for
bank trust departments will provide some or all of the
shareholder services to their customers as set forth in
the Bank Trust Department Agreements and Brokers for Bank
Trust Department Agreements from time to time.
-2-
<PAGE> 3
SECTION 5. Any amendment to this Plan that requires the approval of
the shareholders of a Class pursuant to Rule 12b-1 under the 1940 Act shall
become effective as to such Class upon the approval of such amendment by a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
such Class, provided that the Board of Trustees of the Fund has approved such
amendment in accordance with the provisions of Section 6 of this Plan.
SECTION 6. This Plan, any amendment to this Plan and any agreements
related to this Plan shall become effective immediately upon the receipt by the
Fund of both (a) the affirmative vote of a majority of the Board of Trustees of
the Fund, and (b) the affirmative vote of a majority of those trustees of the
Fund who are not "interested persons" of the Fund (as defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the "Dis-interested Trustees"), cast in person
at a meeting called for the purpose of voting on this Plan or such agreements.
Notwithstanding the foregoing, no such amendment that requires the approval of
the shareholders of a Class of a Fund shall become effective as to such Class
until such amendment has been approved by the shareholders of such Class in
accordance with the provisions of Section 5 of this Plan.
SECTION 7. Unless sooner terminated pursuant to Section 9, this Plan
shall continue in effect until June 30, 2000 and thereafter shall continue in
effect so long as such continuance is specifically approved, at least annually,
in the manner provided for approval of this Plan in Section 6.
SECTION 8. Distributors shall provide to the Fund's Board of Trustees
and the Board of Trustees shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
SECTION 9. This Plan may be terminated at any time by vote of a
majority of the Dis- interested Trustees, or by vote of a majority of the
outstanding voting securities of the Shares . If this Plan is terminated, the
obligation of the Fund to make payments pursuant to this Plan will also cease
and the Fund will not be required to make any payments beyond the termination
date even with respect to expenses incurred prior to the termination date.
SECTION 10. Any agreement related to this Plan shall be made in
writing, and shall provide:
(a) that such agreement may be terminated at any
time, without payment of any penalty, by vote of a
majority of the Dis-interested Trustees or by a vote of
the outstanding voting securities of the Fund attributable
to the Shares, on not more than sixty (60) days' written
notice to any other party to the agreement; and
(b) that such agreement shall terminate
automatically in the event of its assignment.
SECTION 11. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in Section 5 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for in Section 6 hereof.
-3-
<PAGE> 4
AIM GROWTH SERIES
(on behalf of its Class A and
Class C Shares)
Attest: /s/ KATHLEEN J. PFLUEGER By: /s/ ROBERT H. GRAHAM
------------------------------ --------------------------------
Assistant Secretary President
Effective as of May 3, 1999, as amended and restated July 1, 1999.
-4-
<PAGE> 5
APPENDIX A
TO
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN
OF
AIM GROWTH SERIES
(CLASS A AND CLASS C SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan for
each Portfolio as designated below, a Distribution Fee* determined by applying
the annual rate set forth below as to each Portfolio (or Class A or Class C
thereof) to the average daily net assets of the Portfolio (or Class A or Class
C thereof) for the plan year, computed in a manner used for the determination
of the offering price of shares of the Portfolio (or Class A or Class C
thereof).
MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
Class A Shares
AIM Basic Value Fund 0.10% 0.25% 0.35%
AIM Europe Growth Fund 0.10% 0.25% 0.35%
AIM Japan Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Equity Fund 0.10% 0.25% 0.35%
AIM New Pacific Growth Fund 0.10% 0.25% 0.35%
AIM Small Cap Growth Fund 0.10% 0.25% 0.35%
Class C Shares
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Europe Growth Fund 0.75% 0.25% 1.00%
AIM Japan Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Equity Fund 0.75% 0.25% 1.00%
AIM New Pacific Growth Fund 0.75% 0.25% 1.00%
AIM Small Cap Growth Fund 0.75% 0.25% 1.00%
- --------------------
* The Distribution Fee is payable apart from the sales charge,
if any, as stated in the current prospectus for the
applicable Class and the applicable Portfolio.
-5-
<PAGE> 1
EXHIBIT m(4)(b)
AMENDMENT NO. 1
MASTER DISTRIBUTION PLAN
of
AIM GROWTH SERIES
(Class A and Class C Shares)
The Amended and Restated Master Distribution Plan (the "Agreement"),
dated July 1, 1999, pursuant to Rule 12b-1 of AIM Growth Series, a Delaware
business trust, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
TO
AMENDED AND RESTATED MASTER DISTRIBUTION PLAN
OF
AIM GROWTH SERIES
(Class A and Class C Shares)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan for
each Portfolio as designated below, a Distribution Fee* determined by applying
the annual rate set forth below as to each Portfolio (or Class A or Class C
thereof) to the average daily net assets of the Portfolio (or Class A or Class
C thereof) for the plan year, computed in a manner used for the determination
of the offering price of shares of the Portfolio (or Class A or Class C
thereof).
MINIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
Class A Shares
--------------
AIM Basic Value Fund 0.10% 0.25% 0.35%
AIM Euroland Growth Fund 0.10% 0.25% 0.35%
AIM Japan Growth Fund 0.10% 0.25% 0.35%
AIM Mid Cap Equity Fund 0.10% 0.25% 0.35%
AIM New Pacific Growth Fund 0.10% 0.25% 0.35%
AIM Small Cap Growth Fund 0.10% 0.25% 0.35%
- -----------------
* The Distribution Fee is payable apart from the sales charge,
if any, as stated in the current prospectus for the
applicable Class and the applicable Portfolio.
<PAGE> 2
MINIMUM MAXIMUM MAXIMUM
ASSET-BASED SERVICE AGGREGATE
FUND SALES CHARGE FEE ANNUAL FEE
---- ------------ ------- ----------
Class C Shares
--------------
AIM Basic Value Fund 0.75% 0.25% 1.00%
AIM Euroland Growth Fund 0.75% 0.25% 1.00%
AIM Japan Growth Fund 0.75% 0.25% 1.00%
AIM Mid Cap Equity Fund 0.75% 0.25% 1.00%
AIM New Pacific Growth Fund 0.75% 0.25% 1.00%
AM Small Cap Growth Fund 0.75% 0.25% 1.00%"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Date: September 1, 1999
AIM GROWTH SERIES
Attest: /s/ OFELIA M. MAYO By: /s/ ROBERT H. GRAHAM
----------------------------- ----------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT p(1)
A I M MANAGEMENT GROUP INC.
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED FEBRUARY 24, 2000)
WHEREAS, the members of the AIM Management Group are A I M Management Group
Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly
owned and indirect subsidiaries (individually and collectively referred to as
"AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to
AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as principal
underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the
transfer agent, dividend disbursing agent and shareholder processing agent for
AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect to
each portfolio under management and the interests of the client accounts and of
the shareholders of AIM's investment company clients must take precedence over
the personal interests of the employees of AIM, thus requiring a rigid adherence
to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no intentional
or inadvertent action is taken by an employee of AIM which is, or appears to be,
adverse to the interests of AIM or any of its client accounts, including the
defining of standards of behavior for such employees, while at the same time
avoiding unnecessary interference with the privacy or personal freedom of such
employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the
Code") on May 1, 1981, and adopted amendments thereto in January 1989, October
1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and
now deem it advisable to update and revise said Code in light of new investment
company products developed by AIM and changing circumstances in the securities
markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors
hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1
under the Investment Company Act of 1940 ("1940 Act"), with the intention that
certain provisions of the Code shall become applicable to the officers,
directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers,
directors and employees (as hereinafter designated) of AIM. Unless
otherwise indicated, the term "employee" as used herein means: (i) all
officers, directors and employees of AIM Advisors and its wholly owned
and indirect subsidiaries and (ii) officers, directors and employees
of AIM Management who
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<PAGE> 2
have an active part in the management, portfolio selection,
underwriting or shareholder functions with respect to AIM's investment
company clients or provide one or more similar services for AIM's
non-investment company clients. The term "employee" does not include
directors of AIM Management who do not maintain an office at the home
office of AIM Management and who do not regularly obtain information
concerning the investment recommendations or decisions made by AIM on
behalf of client accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless such
person or entity has adopted a code of ethics in compliance with
Section 17(j) of the 1940 Act; or, in the event that such person or
entity is domiciled outside of the United States, has adopted employee
standards of conduct that provide equivalent protections to AIM's
client accounts. In performing sub-advisory services, such person or
entity will be subject to the direction and supervision of AIM, and
subject to the policies and control of the Boards of
Directors/Trustees of the respective AIM investment company client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a Code of
Ethics Committee ("Committee"). The Committee shall have the
responsibility for interpreting the provisions of the Code, for
adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of the
provisions of the Code, or of any such related Procedures has
occurred. The Committee will appoint an officer to monitor personal
investment activity by "Covered Persons" (as defined in the Procedures
adopted hereunder), both before and after any trade occurs and to
prepare periodic and annual reports, conduct education seminars and
obtain employee certifications as deemed appropriate. In the event of
a finding that a violation has occurred requiring significant remedial
action, the Committee shall take such action as it deems appropriate
on the imposition of sanctions or initiation of disgorgement
proceedings. The Committee shall also make recommendations and submit
reports to the Boards of Directors/Trustees of AIM's investment
company clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor, and a
statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant to
Section 204A under the 1940 Act; and the procedures designed to
prevent the misuse of material non-public information by any
person associated with such sub-advisor; and
o such other information as may reasonably be necessary for AIM to
report to the Boards of Directors/Trustees of its investment
company client account(s) as to such sub-advisor's adherence to
the Boards' policies and controls referenced in Section I.B.
above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out the
intent of the Code. Among other things, the Procedures require certain new
employees to complete an Asset Disclosure Form, a Brokerage Accounts
Listing Form and such other forms as deemed appropriate by the Committee.
Such Procedures are hereby incorporated into the Code and are made a part
of the Code. Therefore, a violation of the Procedures shall be deemed a
violation of the Code itself.
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<PAGE> 3
IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall comply
strictly with all applicable federal and state laws and all rules and
regulations of any governmental agency or self-regulatory organization
governing his/her actions as an employee.
B. Each employee shall comply with all laws and regulations, and AIM's
prohibition against insider trading. Trading on or communicating
material non-public information, or "inside information", of any sort,
whether obtained in the course of research activities, through a
client relationship or otherwise, is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines
established by AIM to ensure compliance with applicable federal and
state laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly participate
in, assist, or condone any act in violation of any statute or
regulation governing AIM or any act that would violate any provision
of this Code, or of the Procedures adopted hereunder.
D. Each employee shall have and maintain knowledge of and shall comply
with the provisions of this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her control, with
a view to preventing any violation by such persons of applicable
statutes or regulations, AIM's corporate procedures, or the provisions
of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of applicable
statutes, regulations or provisions of the Code or of any Procedures
adopted hereunder has occurred shall immediately report such evidence
to the Chief Compliance Officer of AIM. Such action by the employee
will remain confidential, unless the employee waives confidentiality
or federal or state authorities compel disclosure. Failure to report
such evidence may result in disciplinary proceedings and may include
sanctions as set forth in Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the
highest ethical and fiduciary standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an actual or
potential conflict of interest with AIM or its client accounts, or
which may be otherwise detrimental to the interests of the members of
AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary
obligation to clients of AIM, and shall not deprive any client account
of an investment opportunity in order to personally benefit from that
opportunity.
- -----------------
(1)Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as AIM or
its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and AIM, its
officers, directors and employees, on the other hand, such conflict may result
from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate" of
such individual, as such term is defined in the 1940 Act. Such conflict may also
arise from the purchase or sale for a client account of securities in which an
officer, director or employee of AIM has an economic interest. Moreover, such
conflict may arise in connection with vendor relationships in which such
employee has any direct or indirect financial interest, family interests or
other personal interest. To the extent of conflicts of interest between AIM and
a vendor, such conflicts must be resolved in a manner that is not
disadvantageous to AIM. In any such case, potential or actual conflicts must be
disclosed to AIM and the first preference and priority must be to avoid such
conflicts of interest wherever possible and, where they unavoidably occur, to
resolve them in a manner that is not disadvantageous to a client.
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<PAGE> 4
C. Without the knowledge and approval of the Chief Executive Officer of
AIM Management, employees shall not engage in a business activity or
practice for compensation in competition with the members of AIM. Each
employee, who is deemed to be a "Covered Person" as defined in the
Procedures adopted hereunder, shall obtain the written approval of AIM
Management's Chief Executive Officer to participate on a board of
directors/trustees of any of the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend to
raise proceeds in a public securities offering.
In the relatively small number of instances in which board approval is
authorized, investment personnel serving as directors shall be
isolated from those making investment decisions through AIM's "Chinese
Wall" Procedures.
D. Each employee, in making an investment recommendation or taking any
investment action, shall exercise diligence and thoroughness, and
shall have a reasonable and adequate basis for any such recommendation
or action.
E. Each employee shall not attempt to improperly influence for such
person's personal benefit any investment strategy to be followed or
investment action to be taken by the members of AIM for its client
accounts.
F. Each employee shall not improperly use for such person's personal
benefit any knowledge, whether obtained through such person's
relationship with AIM or otherwise, of any investment recommendation
made or to be made, or of any investment action taken or to be taken
by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating to a
client account's portfolio or transactions or to the investment
recommendations of AIM, nor shall any employee disclose any non-public
information relating to the business or operations of the members of
AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker/dealer or other vendor who transacts business with AIM or its
client accounts, any gifts, gratuities or other things of more than de
minimis value or significance that their acceptance might reasonably
be expected to interfere with or influence the exercise of independent
and objective judgment in carrying out such person's duties or
otherwise gives the appearance of a possible impropriety. For this
purpose, gifts, gratuities and other things of value shall not include
unsolicited entertainment so long as such unsolicited entertainment is
not so frequent or extensive as to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of AIM
shall not acquire securities for an account for which he/she has a
direct or indirect beneficial interest in an initial public offering
("IPO") or on behalf of any person, entity or organization that is not
an AIM client. All other employees shall not acquire securities for an
account for which he/she has a direct or indirect beneficial interest
offered in an IPO or on behalf of any person, entity or organization
that is not an AIM client account except in those circumstances where
different amounts of such offerings are specified for different
investor types (e.g., private investors and institutional investors)
and such transaction has been pre-cleared by the Compliance Office.
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<PAGE> 5
J. All personal securities transactions by employees must be conducted
consistent with this Code and the Procedures adopted hereunder, and in
such a manner as to avoid any actual or potential conflicts of
interest or any abuse of such employee's position of trust and
responsibility. Unless an exemption is available, employees who are
deemed to be "Covered Persons" as defined in the Procedures adopted
hereunder, shall pre-clear all personal securities transactions in
securities in accordance with the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, (or registered representative and/or
principal of AIM), shall refrain from engaging in personal securities
transactions in connection with a security that is not registered
under Section 12 of the Securities Act of 1933 (i.e., a private
placement security) unless such transaction has been pre-approved by
the Chief Compliance Officer or the Director of Investments (or their
designees).
L. Employees, who are deemed to be "Covered Persons" as defined in the
Procedures adopted hereunder, may not engage in a transaction in
connection with the purchase or sale of a security within seven
calendar days before and after an AIM investment company client trades
in that same (or equivalent) security unless the de minimis exemption
is available.
M. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, may not purchase and voluntarily
sell, or sell and voluntarily purchase the same (or equivalent)
securities of the same issuer within 60 calendar days unless such
employee complies with the disgorgement procedures adopted by the Code
of Ethics Committee. Subject to certain limited exceptions set forth
in the related Procedures, any transaction under this provision may
result in disgorgement proceedings for any profits received in
connection with such transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures adopted
hereunder may be subject to sanctions, which may include, among other
things, restrictions on such person's personal securities transactions; a
letter of admonition, education or formal censure; fines, suspension,
re-assignment, demotion or termination of employment; or other significant
remedial action. Employees may also be subject to disgorgement proceedings
for transactions in securities that are inconsistent with Sections V.L. and
V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common sense)
and good business judgment also apply. Every person subject to this Code
should read and understand these documents thoroughly. They present
important rules of conduct and operating controls for all employees.
Employees are also expected to present questions to the attention of their
supervisors and to the Chief Compliance Officer (or designee) and to report
suspected violations as specified in these documents.
For the Boards of Directors:
The AIM Management Group
by: /s/ CHARLES T. BAUER
------------------------------------
Charles T. Bauer
February 24, 2000
------------------------------------
Date
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<PAGE> 1
EXHIBIT p(2)
CODE OF ETHICS
OF
AIM GROWTH SERIES
WHEREAS, AIM GROWTH SERIES (the "Company") is a registered investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a
Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code,
effective as of March 14, 2000.
I. Definitions
For the purpose of the Code the following terms shall have the meanings
set forth below:
A. "Access person" means any director, trustee, officer, or advisory
person of the Company; provided, however, that any person who is
an access person of any investment advisor of, or principal
underwriter for, any registered investment company and who is
required by Rule 17j-1 of the 1940 Act to report his or her
securities transactions to such investment advisor or principal
underwriter, shall not be deemed an access person of the Company.
B. "Advisory person" means
1. any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship
with the Company, its investment advisor or administrator,
as defined in Section I.D. hereof), who, in connection with
his or her regular functions or duties, makes, participates
in, or obtains information (other than publicly available
information) regarding the purchase or sale of a security by
the Company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
2. any natural person directly or indirectly owning,
controlling, or holding with power to vote, 25% or more of
the outstanding voting securities of any of the Company, its
investment advisor or administrator, who obtains information
(other than publicly available information) concerning
recommendations made by the Company, its investment advisor
or administrator with regard to the purchase or sale of a
security.
C. "Affiliated persons" or "Affiliates" means
1. any employee or access person of the Company, and any member
of the immediate family (defined as spouse, child, mother,
father, brother, sister, in-law or any other relative) of
any such person who lives in the same household as such
person or who is financially dependent upon such person;
2. any account for which any of the persons described in
Section I.C.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to which any
such person either has the authority to make investment
decisions or from time to time give investment advice; and
3. any partnership, corporation, joint venture, trust or other
entity in which any employee of the Company or access person
of the Company directly or indirectly, in the aggregate, has
a 10% or more beneficial interest or for which any such
person is a general partner or an executive officer.
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<PAGE> 2
D. "Control" means the power to exercise a controlling influence over
the management or policies of a corporation. Any person who owns
beneficially, either directly or through one or more controlled
corporations, more than 25% of the voting securities of a
corporation shall be presumed to control such corporation.
E. "Security" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, or, in
general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in,
temporary or interim certificate for, receipt of, guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing; provided, however, that "security" shall not mean
securities issued or guaranteed by the Government of the United
States, its agencies or instrumentalities, bankers' acceptances,
bank certificates of deposit, commercial paper and shares of
registered open-end investment companies.
F. "Purchase or sale of a security" includes the writing of an
option to purchase or sell a security.
G. "Security held or to be acquired" by the Company means any
security that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for purchase
by the Company.
H. "Beneficial ownership of a security" by any person includes
securities held by:
1. a spouse, minor children or relatives who share the same
home with such person;
2. an estate for such person's benefit;
3. a trust, of which
a. such person is a trustee or such person or members of
such person's immediate family have a vested interest
in the income or corpus of the trust, or
b. such person owns a vested beneficial interest, or
c. such person is the settlor and such person has the
power to revoke the trust without the consent of all
the beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury shares
of the corporation) of which such person is an officer,
director or 10% stockholder;
6. any other person if, by reason of contract, understanding,
relationship, agreement or other arrangement, such person
obtains therefrom benefits substantially equivalent to
those of ownership; or
7. such person's spouse or minor children or any other person,
if, even though such person does not obtain therefrom the
above-mentioned benefits of ownership, such person can vest
or re-vest title in himself at once or at some future time.
A beneficial owner of a security also includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power and/or investment power with respect to such security.
Voting power includes the power to vote, or to direct the voting
of such security, and investment power includes the power to
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<PAGE> 3
dispose, or to direct the disposition of such security. A person
is the beneficial owner of a security if he has the right to
acquire beneficial ownership of such security at any time within
sixty (60) days.
II. Identification of access persons
A. The Company will maintain a list of all access persons and will
notify each access person in writing that such person is an access
person. Once a person has been so identified, he/she shall
continue to be an access person until otherwise notified in
writing by the Company; provided, however, if such person is an
access person solely because he/she is a director/trustee of the
Company, such person shall cease to be an access person at the
time such person ceases to be a director/trustee.
B. Each access person will be given a copy of the Code at the time
such person becomes an access person.
III. Compliance with Governing Laws, Regulations and Procedures
A. Each access person shall comply strictly with all applicable
federal and state laws and all rules and regulations of any
governmental agency or self-regulatory organization governing his
or her activities.
B. Each access person shall comply strictly with procedures
established by the Company to ensure compliance with applicable
federal and state laws and regulations of governmental agencies
and self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or
condone any acts in violation of any statute or regulation
governing securities matters, nor any act that would violate any
provision of this Code or any rules adopted thereunder.
IV. Confidentiality of Transactions
A. Information relating to the Company's portfolio and research and
studies activities is confidential until publicly available.
Whenever statistical information or research is supplied to or
requested by the Company, such information must not be disclosed
to any persons other than as duly authorized by the President or
the Board of Directors/Trustees of the Company. If the Company is
considering a particular purchase or sale of a security, this must
not be disclosed except to such duly authorized persons.
B. If any access person should obtain information concerning the
Company's portfolio (including the consideration by the Company of
acquiring or recommending any security for the Company's
portfolio), whether in the course of such person's duties or
otherwise, such person shall respect the confidential nature of
this information and shall not divulge it to anyone unless it is
properly part of such person's services to the Company to do so or
such person is specifically authorized to do so by the President
of the Company.
V. Ethical Standards
A. Access persons shall conduct themselves in a manner consistent
with the highest ethical standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an
actual or potential conflict of interest, or the appearance of a
conflict of interest, with the Company or which may be otherwise
detrimental to the interests of the Company.
B. Conflicts of interest generally result from a situation in which
an individual has personal interests in a matter that is or may be
competitive with his responsibilities to another person or entity
(such as the Company) or where an individual has or may have
competing obligations or responsibilities to two or more persons
or entities. In the case of the relationship between the
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<PAGE> 4
Company on the one hand, and its employees and access persons and
their respective affiliates on the other hand, such conflicts may
result from the purchase or sale of securities for the account of
the Company and for the personal account of the individual
involved or the account of any affiliate of such person. Such
conflict may also arise from the purchase or sale for the account
of the Company of securities in which an access person or employee
of the Company (or an affiliate of such person) has an interest.
In any such case, potential or actual conflicts must be disclosed
to the Company, and the first preference and priority must be to
avoid such conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in a manner not disadvantageous
to the Company.
VI. Activities and Transactions of Access Persons
A. No access person shall recommend to, or cause or attempt to cause,
the Company to acquire, dispose of, or hold any security
(including, any option, warrant or other right or interest
relating to such security) which such access person or an
affiliate of such access person has direct or indirect beneficial
ownership, unless the access person shall first disclose to the
Board of Directors/Trustees all facts reasonably necessary to
identify the nature of the ownership of such access person or his
or her affiliate in such security.
B. No access person or affiliate of such access person shall engage
in a purchase or sale of a security (including, any option,
warrant or other right or interest relating to such security),
other than on behalf of the Company, with respect to any security,
which, to the actual knowledge of such access person at the time
of such purchase or sale, is (i) being considered for purchase or
sale by the Company; or (ii) being purchased or sold by the
Company.
C. The prohibitions of Section VI.B. above shall not apply to:
1. Purchases or sales effected in any account over which the
access person has no direct or indirect influence or control.
2. Purchases or sales which are non-volitional on the part of
either the access person or the Company.
3. Purchases that are part of an automatic dividend reinvestment
plan.
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer,
and sales of such rights so acquired.
5. Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be
very unlikely to affect trading in or the market value of
the security, or because they clearly are not related
economically to the securities to be purchased, sold or held
by the Company.
D. If, in compliance with the limitations and procedures set forth in
this Section VI, any access person or an affiliate of such person
shall engage in a purchase or sale of a security held or to be
acquired by the Company, first preference and priority must be
given to any transactions that involve the Company, and the
Company must have the benefit of the best price obtainable on
acquisition and the best price obtainable on disposition of such
securities.
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Directors/Trustees in writing, setting forth with
reasonable specificity the nature of such fiduciary obligations
and the reasons why such access person believes such person is
unable to comply with any such provisions. The Board of
Directors/Trustees may, in its discretion, exempt such access
person or an affiliate of
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<PAGE> 5
such person from any such provisions, if the Board of
Directors/Trustees shall determine that the services of such
access person are valuable to the Company and the failure to grant
such exemption is likely to cause such access person to be unable
to render services to the Company. Any access person granted an
exemption (including, an exception for an affiliate of such
person) pursuant to this Section VI.E. shall, within three
business days after engaging in a purchase or sale of a security
held or to be acquired by a client, furnish the Board of
Directors/Trustees with a written report concerning such
transaction, setting forth the information specified in Section
VII.B. hereof.
VII. Reporting Procedures
A. Except as provided by Sections VII.C. and VII.D. hereof, every
access person shall report to the Board of Directors/Trustees the
information described in Section VII.B. hereof with respect to
transactions in any security in which such access person has, or
by reason of such transaction acquires, any direct or indirect
beneficial ownership in the security (whether or not such security
is a security held or to be acquired by a client); provided,
however, that any such report may contain a statement that the
report shall not be construed as an admission by the person making
such report that he has any direct or indirect beneficial
ownership in the security to which the report relates.
B. Every report required to be made pursuant to Section VII.A. hereof
shall be made not later than ten days after the end of the
calendar quarter in which the transaction to which the report
relates was effected and shall contain the following information:
1. The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom
the transaction was effected.
C. Notwithstanding the provisions of Section VII.A. and VII.B. hereof,
no person shall be required to make a report with respect to
transactions effected for any account over which such person does
not have any direct or indirect influence or control.
D. Notwithstanding the provisions of Section VII.A. and VII.B.
hereof, an access person who is not an "interested person" of the
Company within the meaning of Section 2(a)(19) of the 1940 Act,
and who would be required to make a report solely by reason of
being a director/trustee of the Company, need only report a
transaction in a security if such director/trustee, at the time of
the transaction, knew or, in the ordinary course of fulfilling his
official duties as a director/trustee of the Company, should have
known, that, during the 15-day period immediately preceding or
after the date of the transaction by the director/trustee, such
security is or was purchased or sold, or considered by the Company
or its investment advisor for purchase or sale by the Company.
E. Every access person who beneficially owns, directly or indirectly,
1/2% or more of the stock of any company the securities of which
are eligible for purchase by the Company shall report such
holdings to the Company.
VIII. Review Procedures
A. The reports submitted by access persons pursuant to Section VII.B.
hereof shall be reviewed at least quarterly by the Board of
Directors/Trustees or such other persons or committees as shall
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be designated by the Board of Directors/Trustees, in order to
monitor compliance with this Code.
B. If it is determined by the Board of Directors/Trustees that a
violation of this Code has occurred and that the person violating
this Code has purchased or sold a security at a more advantageous
price than that obtained by the Company, such person shall be
required to offer to sell to or purchase from the Company, as the
case may be, such security at the more advantageous price. If this
cannot be consummated, then the Board of Directors/Trustees shall
take such other course of action as it may deem appropriate. With
respect to any violation of this Code, the Board of
Directors/Trustees may take any preventive, remedial or other
action that it may deem appropriate. In determining whether or not
there has been, or may be, a conflict of interest between the
Company and any person subject to this Code, the Board of
Directors/Trustees shall consider all of the relevant facts and
circumstances.
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<PAGE> 1
EXHIBIT p(3)
CODE OF ETHICS
OF
GROWTH PORTFOLIO
WHEREAS, Growth Portfolio (the "Company") is a registered investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a
Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code,
effective as of March 14, 2000.
I. DEFINITIONS
For the purpose of the Code the following terms shall have the meanings
set forth below:
A. "ACCESS PERSON" means any director, trustee, officer, or advisory
person of the Company; provided, however, that any person who is
an access person of any investment advisor of, or principal
underwriter for, any registered investment company and who is
required by Rule 17j-1 of the 1940 Act to report his or her
securities transactions to such investment advisor or principal
underwriter, shall not be deemed an access person of the Company.
B. "ADVISORY PERSON" means
1. any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship
with the Company, its investment advisor or administrator,
as defined in Section I.D. hereof), who, in connection with
his or her regular functions or duties, makes, participates
in, or obtains information (other than publicly available
information) regarding the purchase or sale of a security by
the Company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
2. any natural person directly or indirectly owning,
controlling, or holding with power to vote, 25% or more of
the outstanding voting securities of any of the Company, its
investment advisor or administrator, who obtains information
(other than publicly available information) concerning
recommendations made by the Company, its investment advisor
or administrator with regard to the purchase or sale of a
security.
C. "AFFILIATED PERSONS" or "AFFILIATES" means
1. any employee or access person of the Company, and any member
of the immediate family (defined as spouse, child, mother,
father, brother, sister, in-law or any other relative) of
any such person who lives in the same household as such
person or who is financially dependent upon such person;
2. any account for which any of the persons described in
Section I.C.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to which any
such person either has the authority to make investment
decisions or from time to time give investment advice; and
3. any partnership, corporation, joint venture, trust or other
entity in which any employee of the Company or access person
of the Company directly or indirectly, in the aggregate, has
a 10% or more beneficial interest or for which any such
person is a general partner or an executive officer.
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<PAGE> 2
D. "CONTROL" means the power to exercise a controlling influence over
the management or policies of a corporation. Any person who owns
beneficially, either directly or through one or more controlled
corporations, more than 25% of the voting securities of a
corporation shall be presumed to control such corporation.
E. "SECURITY" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, pre-organization certificate or subscription,
transferable share, investment contract, voting-trust
certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, or, in
general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in,
temporary or interim certificate for, receipt of, guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing; provided, however, that "security" shall not mean
securities issued or guaranteed by the Government of the United
States, its agencies or instrumentalities, bankers' acceptances,
bank certificates of deposit, commercial paper and shares of
registered open-end investment companies.
F. "PURCHASE OR SALE OF A SECURITY" includes the writing of an
option to purchase or sell a security.
G. "SECURITY HELD OR TO BE ACQUIRED" by the Company means any
security that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for purchase
by the Company.
H. "BENEFICIAL OWNERSHIP OF A SECURITY" by any person includes
securities held by:
1. a spouse, minor children or relatives who share the same
home with such person;
2. an estate for such person's benefit;
3. a trust, of which
a. such person is a trustee or such person or members of
such person's immediate family have a vested interest
in the income or corpus of the trust, or
b. such person owns a vested beneficial interest, or
c. such person is the settlor and such person has the
power to revoke the trust without the consent of all
the beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury shares
of the corporation) of which such person is an officer,
director or 10% stockholder;
6. any other person if, by reason of contract, understanding,
relationship, agreement or other arrangement, such person
obtains therefrom benefits substantially equivalent to
those of ownership; or
7. such person's spouse or minor children or any other person,
if, even though such person does not obtain therefrom the
above-mentioned benefits of ownership, such person can vest
or re-vest title in himself at once or at some future time.
A beneficial owner of a security also includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power and/or investment power with respect to such security.
Voting power includes the power to vote, or to direct the voting
of such security, and investment power includes the power to
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<PAGE> 3
dispose, or to direct the disposition of such security. A person
is the beneficial owner of a security if he has the right to
acquire beneficial ownership of such security at any time within
sixty (60) days.
II. IDENTIFICATION OF ACCESS PERSONS
A. The Company will maintain a list of all access persons and will
notify each access person in writing that such person is an access
person. Once a person has been so identified, he/she shall
continue to be an access person until otherwise notified in
writing by the Company; PROVIDED, HOWEVER, if such person is an
access person solely because he/she is a director/trustee of the
Company, such person shall cease to be an access person at the
time such person ceases to be a director/trustee.
B. Each access person will be given a copy of the Code at the time
such person becomes an access person.
III. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each access person shall comply strictly with all applicable
federal and state laws and all rules and regulations of any
governmental agency or self-regulatory organization governing his
or her activities.
B. Each access person shall comply strictly with procedures
established by the Company to ensure compliance with applicable
federal and state laws and regulations of governmental agencies
and self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or
condone any acts in violation of any statute or regulation
governing securities matters, nor any act that would violate any
provision of this Code or any rules adopted thereunder.
IV. CONFIDENTIALITY OF TRANSACTIONS
A. Information relating to the Company's portfolio and research and
studies activities is confidential until publicly available.
Whenever statistical information or research is supplied to or
requested by the Company, such information must not be disclosed
to any persons other than as duly authorized by the President or
the Board of Directors/Trustees of the Company. If the Company is
considering a particular purchase or sale of a security, this must
not be disclosed except to such duly authorized persons.
B. If any access person should obtain information concerning the
Company's portfolio (including the consideration by the Company of
acquiring or recommending any security for the Company's
portfolio), whether in the course of such person's duties or
otherwise, such person shall respect the confidential nature of
this information and shall not divulge it to anyone unless it is
properly part of such person's services to the Company to do so or
such person is specifically authorized to do so by the President
of the Company.
V. ETHICAL STANDARDS
A. Access persons shall conduct themselves in a manner consistent
with the highest ethical standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an
actual or potential conflict of interest, or the appearance of a
conflict of interest, with the Company or which may be otherwise
detrimental to the interests of the Company.
B. Conflicts of interest generally result from a situation in which
an individual has personal interests in a matter that is or may be
competitive with his responsibilities to another person or entity
(such as the Company) or where an individual has or may have
competing obligations or responsibilities to two or more persons
or entities. In the case of the relationship between the
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<PAGE> 4
Company on the one hand, and its employees and access persons and
their respective affiliates on the other hand, such conflicts may
result from the purchase or sale of securities for the account of
the Company and for the personal account of the individual
involved or the account of any affiliate of such person. Such
conflict may also arise from the purchase or sale for the account
of the Company of securities in which an access person or employee
of the Company (or an affiliate of such person) has an interest.
In any such case, potential or actual conflicts must be disclosed
to the Company, and the first preference and priority must be to
avoid such conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in a manner not disadvantageous
to the Company.
VI. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
A. No access person shall recommend to, or cause or attempt to cause,
the Company to acquire, dispose of, or hold any security
(including, any option, warrant or other right or interest
relating to such security) which such access person or an
affiliate of such access person has direct or indirect beneficial
ownership, unless the access person shall first disclose to the
Board of Directors/Trustees all facts reasonably necessary to
identify the nature of the ownership of such access person or his
or her affiliate in such security.
B. No access person or affiliate of such access person shall engage
in a purchase or sale of a security (including, any option,
warrant or other right or interest relating to such security),
other than on behalf of the Company, with respect to any security,
which, to the actual knowledge of such access person at the time
of such purchase or sale, is (i) being considered for purchase or
sale by the Company; or (ii) being purchased or sold by the
Company.
C. The prohibitions of Section VI.B. above shall not apply to:
1. Purchases or sales effected in any account over which the
access person has no direct or indirect influence or control.
2. Purchases or sales which are non-volitional on the part of
either the access person or the Company.
3. Purchases that are part of an automatic dividend reinvestment
plan.
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer,
and sales of such rights so acquired.
5. Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be
very unlikely to affect trading in or the market value of
the security, or because they clearly are not related
economically to the securities to be purchased, sold or held
by the Company.
D. If, in compliance with the limitations and procedures set forth in
this Section VI, any access person or an affiliate of such person
shall engage in a purchase or sale of a security held or to be
acquired by the Company, first preference and priority must be
given to any transactions that involve the Company, and the
Company must have the benefit of the best price obtainable on
acquisition and the best price obtainable on disposition of such
securities.
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such access person shall so advise the
Board of Directors/Trustees in writing, setting forth with
reasonable specificity the nature of such fiduciary obligations
and the reasons why such access person believes such person is
unable to comply with any such provisions. The Board of
Directors/Trustees may, in its discretion, exempt such access
person or an affiliate of
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<PAGE> 5
such person from any such provisions, if the Board of
Directors/Trustees shall determine that the services of such
access person are valuable to the Company and the failure to grant
such exemption is likely to cause such access person to be unable
to render services to the Company. Any access person granted an
exemption (including, an exception for an affiliate of such
person) pursuant to this Section VI.E. shall, within three
business days after engaging in a purchase or sale of a security
held or to be acquired by a client, furnish the Board of
Directors/Trustees with a written report concerning such
transaction, setting forth the information specified in Section
VII.B. hereof.
VII. REPORTING PROCEDURES
A. Except as provided by Sections VII.C. and VII.D. hereof, every
access person shall report to the Board of Directors/Trustees the
information described in Section VII.B. hereof with respect to
transactions in any security in which such access person has, or
by reason of such transaction acquires, any direct or indirect
beneficial ownership in the security (whether or not such security
is a security held or to be acquired by a client); provided,
however, that any such report may contain a statement that the
report shall not be construed as an admission by the person making
such report that he has any direct or indirect beneficial
ownership in the security to which the report relates.
B. Every report required to be made pursuant to Section VII.A. hereof
shall be made not later than ten days after the end of the
calendar quarter in which the transaction to which the report
relates was effected and shall contain the following information:
1. The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom
the transaction was effected.
C. Notwithstanding the provisions of Section VII.A. and VII.B. hereof,
no person shall be required to make a report with respect to
transactions effected for any account over which such person does
not have any direct or indirect influence or control.
D. Notwithstanding the provisions of Section VII.A. and VII.B.
hereof, an access person who is not an "interested person" of the
Company within the meaning of Section 2(a)(19) of the 1940 Act,
and who would be required to make a report solely by reason of
being a director/trustee of the Company, need only report a
transaction in a security if such director/trustee, at the time of
the transaction, knew or, in the ordinary course of fulfilling his
official duties as a director/trustee of the Company, should have
known, that, during the 15-day period immediately preceding or
after the date of the transaction by the director/trustee, such
security is or was purchased or sold, or considered by the Company
or its investment advisor for purchase or sale by the Company.
E. Every access person who beneficially owns, directly or indirectly,
1/2% or more of the stock of any company the securities of which
are eligible for purchase by the Company shall report such
holdings to the Company.
VIII. REVIEW PROCEDURES
A. The reports submitted by access persons pursuant to Section VII.B.
hereof shall be reviewed at least quarterly by the Board of
Directors/Trustees or such other persons or committees as shall
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be designated by the Board of Directors/Trustees, in order to
monitor compliance with this Code.
B. If it is determined by the Board of Directors/Trustees that a
violation of this Code has occurred and that the person violating
this Code has purchased or sold a security at a more advantageous
price than that obtained by the Company, such person shall be
required to offer to sell to or purchase from the Company, as the
case may be, such security at the more advantageous price. If this
cannot be consummated, then the Board of Directors/Trustees shall
take such other course of action as it may deem appropriate. With
respect to any violation of this Code, the Board of
Directors/Trustees may take any preventive, remedial or other
action that it may deem appropriate. In determining whether or not
there has been, or may be, a conflict of interest between the
Company and any person subject to this Code, the Board of
Directors/Trustees shall consider all of the relevant facts and
circumstances.
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