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[AIM LOGO APPEARS HERE]
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SUMMIT
INVESTORS
PLANS
Prospectus
March 1, 1995
<PAGE> 2
PROSPECTUS
MARCH 1, 1995
SUMMIT INVESTORS PLANS
Summit Investors Plans (the "Plans") for the accumulation of shares of AIM
Summit Fund, Inc. (the "Fund") is offered by A I M Distributors, Inc., the
sponsor and principal underwriter("AIM Distributors" or "Sponsor"). A Plan calls
for fixed monthly investments for 15 years (180 investments), with the investor
(the "Planholder") having the option to make additional monthly investments for
up to a total of 25 years (300 investments). The front-end load (the "Creation
and Sales Charge") on 15 year Plans range from 8.50% on $9,000 Plans ($50.00 per
month) to 1.00% on $1,080,000 Plans ($6,000 per month) and from 9.61% to 1.01%
of the net amount invested, respectively. Total deductions (Creation and Sales
Charges and custodian fees) range from 13.00% (on $9,000 Plans) to 1.04% (on
$1,080,000 Plans) of the net amount invested.
Investments under a Plan are applied, after authorized deductions, to the
purchase of Fund shares at net asset value. These shares should be considered a
long-term investment and are not suitable for investors seeking quick profits or
who might be unable to complete a Plan. Since a major portion of the entire
Creation and Sales Charge is deducted from the first year's payment, withdrawal
or termination of an investment in the early years of a Plan will probably
result in a loss. For example, on a $9,000 Plan ($50 per month) deductions
amount to 11.50% of the investments made if the Plan is completed. However, even
after the application of the refund privilege described on pages 11 and 12,
total deductions would amount to 18% of total investments if the Plan were
terminated at any time between two months and 18 months. Moreover, if the Plan
were continued for 19 months, total deductions would amount to 36.62% of total
payments; they would amount to 30.77% if the Plan were continued for two years.
A detailed description of all deductions appears on pages 4 and 5.
The value of the Fund's shares is subject to fluctuations in the values of
the securities in the Fund's portfolio. A Plan calls for monthly investments at
regular intervals regardless of the price level of Fund shares. Investors should
therefore consider their financial ability to continue a Plan. A Plan offers no
assurance against loss in a declining market. Terminating a Plan at a time when
the value of the Fund shares then held is less than their cost will result in a
loss. Prepayment of all or part of the first year's investments in a Plan
increases the possible loss in the event of early termination.
SHARES OF THE FUND ARE OFFERED TO THE GENERAL PUBLIC ONLY THROUGH SUMMIT
INVESTORS PLANS. Shares of certain other mutual funds managed or advised by the
Fund's investment advisor, which might be considered to have investment
objectives similar in many respects to those of the Fund, may be acquired by
direct purchase at sales charges not exceeding 5.50% of the public offering
price per share without incurring custodian fees or penalties for early
termination.
AN INVESTOR HAS THE RIGHT TO A 45 DAY REFUND OF HIS INVESTMENT, AS WELL AS
CERTAIN OTHER LIMITED REFUND RIGHTS FOR CERTAIN PERIODS OF TIME AND UNDER THE
CONDITIONS DESCRIBED IN MORE DETAIL UNDER THE HEADING "CANCELLATION AND REFUND
RIGHTS" ON PAGE 11.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUS OF AIM SUMMIT FUND, INC.
Investors should read and retain this Prospectus for future reference.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction........................................................... 3
Allocation of Investments and Deductions............................... 4
Total 25 Year Allocations of Investments and Deductions When Extended
Investment Option is Used............................................ 5
A Typical $50 Monthly Investment Plan.................................. 6
How To Start a Summit Investors Plan................................... 7
Rights and Privileges of Planholders................................... 7
Reinvestment of Income Dividends and Capital Gains Distributions.. 7
Rights of Accumulation............................................ 7
Federal Income Tax Withholding.................................... 8
Voting Rights..................................................... 8
Statements, Reports and Notices................................... 9
Retirement Plans.................................................. 9
Pre-Authorized Check Investment Program........................... 9
Transfer or Assignment............................................ 9
Acceleration of Investments....................................... 10
Changing the Face Amount of a Plan................................ 10
Extended Investment Option........................................ 10
Systematic Withdrawal Program..................................... 11
Cancellation and Refund Rights.................................... 12
Partial Withdrawal or Partial Liquidation Without Termination..... 12
Complete Withdrawal or Termination................................ 13
Plan Reinstatement Privilege...................................... 14
Continuation of Custodianship..................................... 15
Custodian and Sponsor Charges.......................................... 15
Taxes.................................................................. 17
Substitution of Shares................................................. 18
Termination of a Plan.................................................. 19
The Custodian.......................................................... 20
The Sponsor............................................................ 21
General................................................................ 23
Illustration of a Hypothetical Plan.................................... 24
Financial Statements................................................... 25
AIM Summit Fund, Inc. Prospectus....................................... A-1
</TABLE>
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NO SALESMAN, DEALER OR OTHER PERSON IS AUTHORIZED BY THE SPONSOR OR AIM
SUMMIT FUND, INC. TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS OR IN THE PROSPECTUS OF AIM SUMMIT FUND, INC.
OR IN ANY OTHER PRINTED OR WRITTEN MATERIAL AUTHORIZED BY THE SPONSOR OR AIM
SUMMIT FUND, INC., AND NO PERSON SHOULD RELY UPON ANY INFORMATION NOT CONTAINED
IN THESE MATERIALS.
2
<PAGE> 4
INTRODUCTION
Many people recognize the desirability of accumulating an investment
portfolio through a planned long-range investment program, but find it difficult
to save the necessary money to make periodic stock purchases. Summit Investors
Plans is designed to provide an effective and convenient method for investors to
create an investment fund for future capital or income needs by systematically
investing a modest sum each month in shares of a mutual fund.
Every Plan represents an agreement between State Street Bank and Trust
Company ("State Street Bank" or the "Custodian") and the Planholder under which
investments (after deduction of the sales charge and custodian fees) are used to
purchase shares of AIM Summit Fund, Inc. (the "Fund") at their net asset value.
Investments made through a Plan will not result in direct ownership of Fund
shares; rather the Plan will represent an interest in a trust which will have
direct ownership of the Fund shares. Planholders will have a beneficial interest
in the underlying shares of the Fund. PLAN CERTIFICATES, ISSUED UNDER PRIOR
PROSPECTUSES, ARE NO LONGER PROVIDED. ALL PLANS ESTABLISHED ON OR AFTER MARCH 1,
1995 ARE GOVERNED SOLELY BY THE RULES, RIGHTS, PRIVILEGES AND BENEFITS SET FORTH
IN THIS PROSPECTUS. IT IS THEREFORE IMPORTANT THAT YOU RETAIN THIS PROSPECTUS
FOR FUTURE REFERENCE. All Plans established prior to March 1, 1995 are governed
by the rules, rights, privileges and benefits set forth in the applicable Plan
Certificate.
The value of the shares of the Fund is subject to fluctuation due to
changes in the values of the securities in the Fund's portfolio. A Plan calls
for monthly investments at regular intervals regardless of the value of the
Fund's shares.
As indicated by the accompanying Prospectus of the Fund, the Fund is an
open-end, diversified investment company whose objective is capital growth.
Although the Fund may purchase income-producing securities, income will
generally not be a consideration in the selection of securities for the Fund's
portfolio. Ownership of Fund shares through a Plan provides an investor with
several advantages:
(1) Diversification -- By pooling the money invested by many
investors, the Fund will be able to reduce (but not eliminate) risk by
diversifying its holdings among many securities in order to minimize the
portfolio impact of any single investment.
(2) Economics of Size -- Purchases and sales of securities often
entail disproportionately large unit costs on small transactions. The size
and volume of the Fund's portfolio transactions should enable it to effect
such transactions at better net unit prices than an individual could
achieve.
(3) Professional Management -- Ownership of many securities requires
the full-time skill and attention of professional managers.
The Plans contain a Creation and Sales Charge equal to as much as 50% of
the first 12 investments and lesser amounts of subsequent investments. In
addition to the Creation and Sales Charge, Planholders must pay custodian fees
and incidental service fees to the Custodian and service charges to the Sponsor.
See "Custodian and Sponsor Charges."
For Plans established after May 1, 1993, a Plan may be terminated by the
Custodian or Sponsor if the Planholder fails to make investments under his Plan
for a period of 6 months. For Plans established prior to May 1, 1993, a Plan may
be terminated by the Custodian or Sponsor if the Planholder fails to make
investments under his Plan for a period of 12 months. Both types of Plans may be
terminated if Fund shares are not available and a substitution is not made. See
"Termination of a Plan" at page 19.
3
<PAGE> 5
ALLOCATION OF INVESTMENTS AND DEDUCTIONS
15 YEAR PLANS
<TABLE>
<CAPTION>
CREATION AND SALES CHARGES
------------------------------------------------ CUSTODIAN FEE
MONTHLY PER PER % OF -------------------
INVEST- TOTAL INVEST- INVEST- TOTAL PER TOTAL
MENT INVEST- MENT MENT INVEST- INVEST- DEDUCTIONS
UNIT MENTS 1 THRU 12 13 THRU 180 TOTAL MENTS MENT TOTAL(A) (A)(B)
--------- ------------- -------- -------- ----------- ------ ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 9,000.00 $25.00 $ 2.77 $ 765.36 8.50% $1.50 $270.00 $ 1,035.36
75.00 13,500.00 37.50 4.15 1,147.20 8.50 1.50 270.00 1,417.20
93.75 16,875.00 46.88 4.69 1,350.48 8.00 1.50 270.00 1,620.48
100.00 18,000.00 50.00 5.00 1,440.00 8.00 1.50 270.00 1,710.00
125.00 22,500.00 62.50 6.25 1,800.00 8.00 1.50 270.00 2,070.00
150.00 27,000.00 75.00 5.89 1,889.52 7.00 1.50 270.00 2,159.52
166.66 29,998.80 83.33 6.54 2,098.68 7.00 1.50 270.00 2,368.68
200.00 36,000.00 100.00 7.86 2,520.48 7.00 1.50 270.00 2,790.48
250.00 45,000.00 125.00 9.82 3,149.76 7.00 1.50 270.00 3,419.76
300.00 54,000.00 150.00 5.36 2,700.48 5.00 1.50 270.00 2,970.48
350.00 63,000.00 175.00 5.31 2,992.08 4.75 1.50 270.00 3,262.08
400.00 72,000.00 200.00 5.00 3,240.00 4.50 1.50 270.00 3,510.00
500.00 90,000.00 225.00 5.36 3,600.48 4.00 1.50 270.00 3,870.48
600.00 108,000.00 260.00 6.62 4,232.16 3.92 1.50 270.00 4,502.16
750.00 135,000.00 300.00 8.70 5,061.60 3.75 1.50 270.00 5,331.60
1,000.00 180,000.00 350.00 12.50 6,300.00 3.50 1.50 270.00 6,570.00
1,500.00 270,000.00 375.00 13.39 6,749.52 2.50 1.50 270.00 7,019.52
3,000.00 540,000.00 450.00 16.07 8,099.76 1.50 1.50 270.00 8,369.76
6,000.00 1,080,000.00 600.00 21.43 10,800.24 1.00 1.50 270.00 11,070.24
<CAPTION>
% OF TOTAL
DEDUCTIONS
-------------------
NET TO NET
INVEST- TO INVEST-
MENT TOTAL MENT
IN FUND INVEST- IN FUND
SHARES(C) MENTS SHARES
------------- ------- -------
<C> <C> <C>
$ 7,964.64 11.50% 13.00%
12,082.80 10.50 11.73
15,254.52 9.60 10.62
16,290.00 9.50 10.50
20,430.00 9.20 10.13
24,840.48 8.00 8.70
27,630.12 7.90 8.57
33,209.52 7.75 8.40
41,580.24 7.60 8.22
51,029.52 5.50 5.82
59,737.92 5.18 5.46
68,490.00 4.88 5.12
86,129.52 4.30 4.49
103,497.84 4.17 4.35
129,668.40 3.95 4.11
173,430.00 3.65 3.79
262,980.48 2.60 2.67
531,630.24 1.55 1.57
1,068,927.76 1.03 1.04
</TABLE>
NOTES:
(A) Does not include an annual $12 Custodian Fee (for completed Plans or
for incomplete, inactive Plans only), payable to the Custodian first
from dividends and distributions and then, if necessary, from
principal.
(B) Does not include a Service Charge, not to exceed $10 per year, payable
first from dividends and distributions and then, if necessary, from
principal, to cover certain administrative expenses actually incurred.
The amount of such charge will be determined annually by pro-rating
the Plans' administrative costs over the total number of Plan accounts.
The Service Charge on Plans established prior to June 1, 1983 shall be
as specified in the Plan Certificate.
(C) Dividends and distributions received on Fund shares during the periods
shown above have not been included or reflected in any way in the
amounts shown in the table. Amounts available for dividends and
distributions take into account expenses of the Fund.
4
<PAGE> 6
TOTAL 25 YEAR ALLOCATIONS OF INVESTMENTS AND DEDUCTIONS WHEN
EXTENDED INVESTMENT OPTION IS USED
(Please see page 10 for a description of the Extended Investment Option.)
<TABLE>
<CAPTION>
CREATION
AND SALES
CHARGES NET
MONTHLY CREATION AS % CUSTODIAN TOTAL INVESTMENT
INVESTMENT TOTAL AND SALES OF TOTAL FEE DEDUCTIONS IN FUND
UNIT INVESTMENTS CHARGES INVESTMENTS (A)(B) (A)(B) SHARES(C)
---------- ------------ ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 15,000.00 $ 1,097.76 7.32% $450.00 $ 1,547.76 $ 13,452.24
75.00 22,500.00 1,645.20 7.31 450.00 2,095.20 20,404.80
93.75 28,125.00 1,913.28 6.80 450.00 2,363.28 25,761.72
100.00 30,000.00 2,040.00 6.80 450.00 2,490.00 27,510.00
125.00 37,500.00 2,550.00 6.80 450.00 3,000.00 34,500.00
150.00 45,000.00 2,596.32 5.77 450.00 3,046.32 41,753.68
166.66 49,998.00 2,883.48 5.77 450.00 3,333.48 46,664.52
200.00 60,000.00 3,463.68 5.77 450.00 3,913.68 56,086.32
250.00 75,000.00 4,328.16 5.77 450.00 4,778.16 70,221.84
300.00 90,000.00 3,343.68 3.72 450.00 3,793.68 86,206.32
350.00 105,000.00 3,629.28 3.46 450.00 4,079.28 100,920.72
400.00 120,000.00 3,840.00 3.20 450.00 4,290.00 115,710.00
500.00 150,000.00 4,243.68 2.83 450.00 4,693.68 145,306.32
600.00 180,000.00 5,026.56 2.79 450.00 5,476.56 174,523.44
750.00 225,000.00 6,105.60 2.71 450.00 6,555.60 218,444.40
1,000.00 300,000.00 7,800.00 2.60 450.00 8,250.00 291,750.00
1,500.00 450,000.00 5,356.32 1.86 450.00 8,806.32 441,193.68
3,000.00 900,000.00 10,028.16 1.11 450.00 10,478.16 889,521.84
6,000.00 1,800,000.00 13,371.84 0.74 450.00 13,821.84 1,786,178.16
<CAPTION>
% OF TOTAL DEDUCTIONS
---------------------------------
TO TO NET
TOTAL INVESTMENT IN
INVESTMENTS FUND SHARES
----------- -----------
<C> <C>
10.32% 11.51%
9.30 10.27
8.40 9.17
8.30 9.10
8.00 8.70
6.80 7.26
6.67 7.14
6.52 6.98
6.37 6.80
4.22 4.40
3.89 4.04
3.58 3.71
3.13 3.23
3.04 3.14
2.91 3.00
2.75 2.83
1.96 2.00
1.16 1.18
0.77 0.77
</TABLE>
NOTES:
(A) Does not include an annual $12 Custodian Fee (for completed Plans or
for incomplete, inactive Plans only), payable to the Custodian first
from dividends and distributions and then, if necessary, from principal.
(B) Does not include a Service Charge, not to exceed $10 per year, payable
first from dividends and distributions and then, if necessary, from
principal, to cover certain administrative expenses actually incurred.
The amount of such charge will be determined annually by pro-rating
the Plan's administrative costs over the total number of Plan accounts.
The Service Charge on Plans established prior to June 1, 1983 shall be
as specified in the Plan Certificate.
(C) Dividends and distributions received on Fund shares during the periods
shown above have not been included or reflected in any way in the
amounts shown in the table. Amounts available for dividends and
distributions take into account expenses of the Fund.
5
<PAGE> 7
A TYPICAL $50 MONTHLY INVESTMENT PLAN
(ASSUMING THAT ALL INVESTMENTS ARE MADE IN ACCORDANCE WITH THE TERMS OF THE
PLAN)
<TABLE>
<CAPTION>
AT THE END OF AT THE END OF AT THE END OF
6 MONTHS 1 YEAR 2 YEARS
(6 INVESTMENTS) (12 INVESTMENTS) (24 INVESTMENTS)
--------------------- --------------------- ---------------------
% OF TOTAL % OF TOTAL % OF TOTAL % OF TOTAL
AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS AMOUNT INVESTMENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15 YEARS (180 INVESTMENTS)
--------------------------
Total Investments............... $ 9,000.00 100.00% $300.00 100.00% $600.00 100.00% $1,200.00 100.00%
Deduct:
Creation and Sales Charge... 765.36 8.50 150.00 50.00 300.00 50.00 333.24 27.77
Custodian Fee............... 270.00 3.00 9.00 3.00 18.00 3.00 36.00 3.00
Total Deductions(A)......... 1,035.36 11.50 159.00 53.00 318.00 53.00 369.24 30.77
Net Amount Invested Under Plan.. 7,964.64 88.50 141.00 47.00 282.00 47.00 830.76 69.23
25 YEARS (300 INVESTMENTS)
--------------------------
Total Investments (B)........... $15,000.00 100.00% $300.00 100.00% $600.00 100.00% $1,200.00 100.00%
Deduct:
Creation and Sales Charges.. 1,097.76 7.32 150.00 50.00 300.00 50.00 333.24 27.77
Custodian Fee............... 450.00 3.00 9.00 3.00 18.00 3.00 36.00 3.00
Total Deductions(A)......... 1,547.76 10.32 159.00 53.00 318.00 53.00 369.24 30.77
Net Amount Invested Under Plan.. 13,452.24 89.68 141.00 47.00 282.00 47.00 830.76 69.23
</TABLE>
NOTES:
(A) Does not include a Service Charge, not to exceed $10 per year, payable
first from dividends and distributions and then, if necessary, from
principal, to cover certain administrative expenses actually incurred. The
amount of such charge will be determined annually by pro-rating the Plan's
administrative costs over the total number of Plan accounts. The Service
Charge on Plans established prior to June 1, 1983 shall be as specified in
the Plan.
(B) The 25-year investment schedule reflects the charges applicable to a
15-year Plan which is continued under the Extended Investment Option. The
Custodian Fee may be increased as set forth on Page 10.
Dividends and distributions received on Fund shares during the periods
shown above have not been included or reflected in any way in the amounts shown
in the table. Amounts available for dividends and distributions take into
account expenses of the Fund.
After the first twelve payments, the Creation and Sales Charge deducted
from any investment will not exceed 5.86% of the net investment in Fund shares
(before deduction of Custodian Fee).
The amounts shown are also subject to an additional Custodian Charge of
$2.50 (plus transfer taxes, if any) if the Plan is terminated prior to
completion of all Plan investments.
6
<PAGE> 8
HOW TO START A SUMMIT INVESTORS PLAN
To start a Plan, an investor must complete an application and mail it to
AIM Distributors, together with a check, in the amount of the initial monthly
investment unit, payable to State Street Bank and Trust Company, Custodian.
After the application has been accepted by AIM Distributors, the investor will
be issued a Plan and receive a statement showing the number of whole and
fractional Fund shares purchased for the investor's account. The investor will
then send regular monthly investments, made payable to the Custodian, directly
to the Custodian's administrative service agent, Boston Financial Data Services,
Inc. ("BFDS"), P.O. Box 8300, Boston, Massachusetts 02266-8300. Investments,
after applicable deductions, will be applied toward the purchase of Fund shares
at their net asset value.
RIGHTS AND PRIVILEGES OF PLANHOLDERS
All Plans are registered in the name of the Planholder at the time of
issuance and constitute an individual agreement among the Planholder, the
Sponsor and the Custodian. No agent or other person has the authority to modify,
alter or otherwise change the terms of the Plan, or to bind the Sponsor, BFDS,
the Custodian or the issuer of the Fund shares by any statement, written or
oral, not contained in this Prospectus. Under the terms of the Plan, Planholders
enjoy certain rights, privileges and options which are described as follows:
1. REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Unless otherwise directed by the Planholder, all income dividends and
capital gains distributions, in whatever form received and after applicable
deductions, are automatically used to purchase additional Fund shares at net
asset value. No sales charge is made on any such reinvestment. The Planholder
may instruct BFDS by written notice, received at least seven days prior to the
record date of an income dividend or capital gains distribution, to remit the
net amount of such dividend or distribution to the Planholder. These
instructions may be changed at any time. Dividends and distributions for
qualified retirement plans, including IRAs, must be reinvested.
Dividends and distributions paid by the Fund are reportable by Planholders
for income tax purposes regardless of whether they are invested in additional
Fund shares or paid in cash. (Qualified retirement plans, including Individual
Retirement Accounts ("IRAs"), may be entitled to defer taxes until some later
date.)
2. RIGHTS OF ACCUMULATION
The face amounts of two or more Plans purchased at one time by "any person"
may be combined to take advantage of the lower Creation and Sales Charges
available on larger sized investments. The term "any person" includes an
individual, his or her spouse and children under the age of 21, and a trustee or
other fiduciary of a single trust estate or a single fiduciary account
(including a pension, profit-sharing or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Internal Revenue Code)
even though more than one beneficiary is involved. The term "any person" shall
not include a group of individuals whose funds are combined, directly or
indirectly, for the purchase of redeemable securities of a registered investment
company whether jointly or through a trustee, agent, custodian or other
representative for such a group of individuals.
7
<PAGE> 9
To qualify for the reduced Creation and Sales Charges, all of the
applications for the Plans involved must be submitted at the same time together
with a letter from the Planholder (or his dealer) requesting that the face
amounts of such Plans be aggregated for the purpose of determining the
applicable Creation and Sales Charges. In the event investments under one or
more of such Plans are discontinued, the remaining Creation and Sales Charges
will be changed to reflect the charges applicable to the Plans that remain in
effect.
When purchasing any new Plan(s), "any person" (as defined above) may
qualify for a reduced Creation and Sales Charge by combining the face amount of
any existing Plan(s) on which investments are current with the face amount of
the new purchase. When increasing the face amount of any existing Plan(s) on
which investments are current, "any person" (as defined above) may qualify for a
reduced Creation and Sales Charge applicable to the value of the changed Plan.
For rights of accumulation, a Plan is considered to be current if: (a) it has
been completed and not redeemed; (b) it has not been completed but investments
are current; or (c) it is a qualified retirement plan, including an IRA. The
reduced Creation and Sales Charges apply to payments made after the Sponsor has
been notified of the eligibility of such Plans for reduced Creation and Sales
Charges and has received the information necessary to confirm such eligibility.
In the case of existing IRA Plans at the $93.75 per month or the $166.66 per
month level, the reduced Creation and Sales Charges will apply to payments made
on both the existing Plan and the new Plan.
3. FEDERAL INCOME TAX WITHHOLDING
As an additional service, BFDS may withhold 28% of any income dividend or
capital gains distribution by the Fund and send that amount to the Internal
Revenue Service as a credit against the Planholder's tax liability, if any. The
amount withheld may or may not be equal to the additional taxes the Planholder
may owe due to the dividend or distribution. If the Planholder elects to
authorize this withholding, the number of Fund shares purchased with the
remainder of the income dividend or capital gains distribution will be less than
would have otherwise been the case.
This service is available with respect to all Plans except qualified
retirement plans, including IRAs. This option can be initiated upon written
request to BFDS; and, once initiated, remains in effect until BFDS is notified
in writing to terminate the withholding.
4. VOTING RIGHTS
Planholders will receive a notice and related proxy statement for each
meeting of the Fund's shareholders. The Custodian will vote the shares held in a
Planholder's account as instructed by the Planholder on the voting instructions
card which will accompany the notice and proxy statement. If the voting
instructions card is validly executed and returned without specification of a
choice, the shares will be voted in favor of the proposals of the Fund's
management. The Custodian will vote shares for which no valid voting
instructions have been received in the same proportion as it votes shares for
which it has received instructions. Planholders may attend any such meetings,
and if a Planholder desires to vote in person the shares held in the
Planholder's account, the Planholder may make a written request to the Custodian
prior to the meeting for a proxy which will permit the shares to be voted in
person.
8
<PAGE> 10
5. STATEMENTS, REPORTS AND NOTICES
BFDS will mail to each Planholder a statement for each investment stating
the price per Fund share purchased after applicable deductions and the total
number of Fund shares held for the Planholder's account. A notice of the next
investment due is also included. Planholders will also receive at least annually
a current Fund prospectus and audited financial statements of the Fund,
including a complete list of all securities held in the Fund's portfolio, and
copies of all other reports sent by the Fund to its shareholders. Planholders
will also be sent notices of all income dividends and capital gains
distributions made with respect to Fund shares, together with tax reporting
information relating to such dividends and distributions. Any notices, reports
or documents required or authorized to be given or sent to a Planholder under
this Prospectus will be conclusively deemed to have been given or sent upon
mailing to the Planholder's address of record, and the date of such mailing
shall be deemed the date of the giving of such notice.
6. RETIREMENT PLANS
A Plan may be used by individuals who wish to establish tax-deferred
qualified retirement plans such as IRAs, IRA-SEPs, Profit Sharing Plans and
Money Purchase Plans. Detailed information concerning such plans is available
from the Sponsor. The information sets forth the additional service fees charged
for such retirement plans. The annual maintenance fee charged by the Custodian
for plans offered by the Sponsor is $10.00. In addition, IRA rollover or
transfer contributions can be accepted into a Plan from qualified individuals.
7. PRE-AUTHORIZED CHECK INVESTMENT PROGRAM
If a Planholder wishes to have investments in his Plan made automatically
without having to write a check each month, the Planholder may request that
investments be made by means of pre-authorized checks. Under this program, each
month BFDS will draft the Planholder's bank account in the amount of the monthly
payment. The proceeds of the draft (less applicable Creation and Sales Charges
and other applicable fees and charges) will be invested in the Planholder's
account.
To initiate a Pre-Authorized Check Investment Program, the Planholder
should complete the Pre-Authorized Check Form and send it along with a voided
blank check to BFDS. The Planholder may terminate a Pre-Authorized Check
Investment Program at any time by written notice to BFDS at least five days
prior to the date of the next scheduled draft.
8. TRANSFER OR ASSIGNMENT
To secure a loan, a Planholder may assign his right, title and interest in
a Plan to a bank or other lending institution. (Qualified retirement plans,
including IRAs, are required by federal tax law to be non-assignable.) The bank
or other lending institution, however, will not be entitled to exercise the
right of partial withdrawal or partial liquidation. During the term of the
assignment, the Planholder will be entitled to all dividends and distributions
on Fund shares. In addition, a Planholder may:
(a) transfer his right, title and interest to another person whose
only right shall be the privilege of complete withdrawal from the Plan; or
(b) transfer his right, title and interest to another person, trustee
or custodian acceptable to the Sponsor, who has made application to the
Sponsor for a similar Plan.
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A charge of $2.50 is made for each such transaction plus transfer taxes,
where applicable.
The Custodian will, at the request of the assignee, record an assignment
until such time as the assignee notifies BFDS that the assignment has been
released. No such assignment will be binding on the Custodian until it is
recorded. Until the Custodian and the Sponsor have permitted such assignment to
be recorded, they may treat the Planholder as the sole and absolute owner of the
Plan and the related Fund shares.
9. ACCELERATION OF INVESTMENTS
A Planholder may complete a Plan ahead of schedule by making investments in
advance of scheduled dates, but the Planholder may normally not make more than
24 investments in any 12 month period (including the current investment). In
addition to these investments made in advance of their scheduled dates, a
Planholder may make an additional 24 investments during the life of a Plan.
Advance investments do not change the normal sequence of the dates for scheduled
Plan investments; i.e., a Plan does not become "delinquent" in its investments
until all advance investments have been credited for the month in which
investments would have normally been made or applied. There is no reduction in
the Creation and Sales Charges for any advance investments. On multiple
investments, however, the Custodian's fee cannot exceed $5.00. See "Custodian
Fees."
The Sponsor may waive the limitation on advance investments for Plans
established in connection with qualified retirement plans, including IRAs. The
Sponsor may also waive the limitation on advance investments so that the estate
or beneficiary of a Planholder may complete remaining investments in a single
investment.
10. CHANGING THE FACE AMOUNT OF A PLAN
A Planholder may increase the amount of a Plan at any time. In addition,
prior to making the sixth investment under a Plan, the Planholder may decrease
the amount of a Plan by as much as 50% of the face amount. Requests for changes
in the face amount of a Plan should be sent to AIM Distributors and should be
accompanied by a completed Plan application for the new face amount. The new
Plan must be in one of the denominations listed on page 4. An increase in a Plan
amount does not create new cancellation and refund rights that are created when
a new Plan is issued. The Creation and Sales Charges already paid on the
existing Plan will be recomputed and applied as a credit to the Creation and
Sales Charges due on the new Plan at the time that it is established. Any
additional Creation and Sales Charges due on the new Plan will be obtained from
a liquidation of Fund shares. A charge of $2.50 will be made by the Custodian
for any change in a Plan denomination; charges will also be made by the
Custodian for any applicable transfer taxes. For a period of six months
following a face change increase, the Planholder may decrease the increased Plan
to a smaller plan size, but not smaller than the original Plan prior to the
increase. Investments already made will be credited to the new Plan.
11. EXTENDED INVESTMENT OPTION
Planholders may continue making monthly investments pursuant to the
Extended Investment Option after completing all scheduled investments under a
Plan. Investments under this option are subject to the same deductions as
applied to the last scheduled investment (except that the
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<PAGE> 12
Custodian reserves the right to increase the Custodian Fee applicable during
this period to the rate then being charged for new Plans of the same
denomination, provided, however, that such new rate shall not be more than 75%
higher than the Custodian Fees detailed in this Prospectus). A Planholder may
stop all future investments under this option by notifying BFDS in writing,
after which no additional investments will be permitted and the Plan will be
deemed completed. If under this option a Planholder fails to make regularly
scheduled investments for six consecutive months after being credited for any
advance investments made under the option, he forfeits the right to make
additional investments, and for Plans established after May 1, 1993 the Plan may
be terminated by the Sponsor or the Custodian. For Plans established prior to
May 1, 1993, failure to make regularly scheduled investments for 12 consecutive
months may result in termination of the Plan. The Sponsor and Custodian will not
require termination of an Extended Investment Option until the 300th payment
under a Plan has been made even if such payment is more than 25 years from the
issuance date.
When the Extended Investment Option expires either through failure to make
required monthly investments or upon written notice of termination to BFDS or
for any other reason, the Custodian has the right to increase its fee to the
rate currently being charged for new Plans of the same denomination. In no case,
however, will this new rate be more than 75% higher than the current annual rate
of the Custodian Fees.
12. SYSTEMATIC WITHDRAWAL PROGRAM
When all regularly scheduled investments are completed, a Planholder may
elect to establish a Systematic Withdrawal Program. Planholders holding Plans in
IRAs, Keogh plans, or other retirement plans may elect to establish a Systematic
Withdrawal Program by notifying the Sponsor that the Planholder does not intend
to make any further Plan payments. Under this program, the Planholder can elect
to receive monthly or quarterly checks in any amount of $50 or more. To provide
funds for these payments, the Custodian, as agent for the Planholder, will
redeem shares held in the Planholder's account at the net asset value of the
Fund in effect at the time of each such redemption. The Planholder may change
the amount of payments made to him under a Systematic Withdrawal Program or
discontinue a Systematic Withdrawal Program at any time.
While a Systematic Withdrawal Program is in effect, the Planholder may not
elect to receive, in cash, dividends and distributions on Fund shares held in
his account. A Planholder may not simultaneously maintain an uncompleted Plan
and a Systematic Withdrawal Program.
Payments received by a Planholder under a Systematic Withdrawal Program are
treated as derived from a taxable transaction. Since such payments are funded by
the redemption of shares of the Fund, they will be treated for tax purposes as a
sale or exchange of a capital asset, resulting in the recognition of a capital
gain or loss, rather than as ordinary income.
A charge of $1.00 per check will be made for each payment under a
Systematic Withdrawal Program. This charge is collected by redeeming the
necessary fractional shares. For any payment made ten years after the issuance
of a Plan, the charge may be increased to the amount specified in the then
current Prospectus. However, this charge may not exceed $1.75. The Sponsor
reserves the right (upon 90 days' notice to Planholders) to discontinue offering
Systematic Withdrawal Programs.
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13. CANCELLATION AND REFUND RIGHTS
Planholders have certain rights of cancellation. Within 60 days after
issuance of the Plan, the Sponsor will send to the Planholder a notice regarding
his cancellation rights. If the Planholder elects to cancel his Plan, a written
request must be submitted to BFDS so that it is received within 45 days after
the mailing of that notice. The Planholder will receive a cash refund equal to
the sum of (1) the total current net asset value of the Fund shares credited to
his Plan account on the date that the cancellation request is received by BFDS
and (2) an amount equal to the difference between the total investments made
under the Plan and the net amount invested in Fund shares.
In addition, a Planholder may submit a written request to BFDS at any time
within an 18-month period beginning on the date of the issuance of the Plan and
receive from the Sponsor a cash payment equal to the sum of (1) the total
current net asset value of the Fund shares credited to the account on the date
of redemption and (2) an amount by which the Creation and Sales Charges deducted
from the Planholder's total investments exceed 15% of the investments made up to
the date of redemption. Custodian Fees and Service Charges are not subject to
refund.
In order to receive the above refunds, the Planholder's request should be
sent in writing, with the signature guaranteed, as required by the Custodian, to
Boston Financial Data Services, Inc., P.O. Box 8300, Boston, Massachusetts
02266-8300.
For Plans established after May 1, 1993, the Sponsor will send the
Planholder a written notice of the 18-month right of cancellation if either of
the following occurs: (a) if during the first 15 months after the date of
issuance of the Plan, the Planholder has missed three investments or more; or
(b) if following the first 15 months after the date of issuance of the Plan (but
prior to 18 months after such date), the Planholder has missed one investment or
more. In the event the Sponsor has previously sent a notice in connection with
event (a) above, a second notice will not be sent even if additional investments
are missed. These notices will inform Planholders of their Plan cancellation
rights as set forth above, and also will include the value of the account and
the amount the Planholder would be entitled to receive upon cancellation, as of
the date of the notice.
For Plans established prior to May 1, 1993, the Sponsor will send the
Planholder a notice within 30 days following the expiration of 15 months after
the date of the issuance of the Plan Certificate if the Planholder has missed
three investments or more. The Sponsor will also send the Planholder a notice
(described above) if he has missed one investment or more after the expiration
of the 15 month period but prior to the expiration of the 18 month period. These
notices will inform the Planholder of his rights of cancellation as set forth
above, of the value of his account at the time the notice is sent and of the
amount to which he is entitled if he chooses to redeem his Plan.
14. PARTIAL WITHDRAWAL OR PARTIAL LIQUIDATION WITHOUT TERMINATION
If a Planholder wishes to withdraw part of his investment in his Plan
without terminating his Plan, he may do so, subject to the restrictions
specified below.
If a Planholder wishes to receive cash instead of Fund shares, he may
direct the Custodian, acting as his agent, to withdraw and then redeem
(liquidate) part of his shares and remit the net proceeds to him, again subject
to the restrictions specified below. When a partial liquidation has been
effected through the redemption of Fund shares by the Custodian, the Planholder
may, but is
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not required to, restore the value of his Plan by remitting to BFDS an amount
equal to the cash withdrawal, which amount will be used to purchase Fund shares
for his account at the next determined net asset value of the Fund shares. This
restoration cannot be made earlier than 90 days (45 days for Individual
Retirement Accounts) following a partial liquidation. All reinvestments must be
at least 25% of the amount withdrawn or $2,000, whichever is less. There may be
federal income tax consequences upon a partial liquidation of Fund shares;
restoration of a partial liquidation of IRA shares must be made within 60 days
in order to avoid tax consequences, including early withdrawal penalties. See
"Taxes." A Planholder may, however, make a partial withdrawal and reinvestment
in a manner which complies with the Internal Revenue Code rules relating to IRA
rollovers.
The partial liquidation and restoration privilege is intended to facilitate
the temporary use for emergency purposes of funds invested in a Plan. The
Sponsor reserves the right to limit a Planholder to exercising the partial
liquidation and restoration privilege once during the period of a calendar year,
although the Sponsor currently does not enforce this limit. The Sponsor reserves
the right to impose such additional restrictions as, in its judgment, are
necessary to conform to the requirements of Section 26 of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
A partial withdrawal or liquidation will only be allowed if the Planholder
has owned his Plan for at least 45 days. The number of Fund shares involved
cannot exceed 90% of the shares in his account and the amount involved must be
at least $100. A charge of $2.50 will be made by the Custodian for each partial
withdrawal, liquidation or restoration, and the Planholder will be liable for
any transfer taxes that may be required. Restorations of amounts withdrawn by a
Planholder as a partial liquidation should be clearly identified as such, in
order to distinguish them from additional payments. A partial withdrawal or
liquidation will not affect the total number of Plan investments, the period in
which such investments are to be made, or the unpaid balance of Plan investments
under the Plan.
See "Complete Withdrawal or Termination" below for information concerning
the method of instructing the Custodian to effect a partial withdrawal or
liquidation and the circumstances under which the redemption of shares may be
delayed.
15. COMPLETE WITHDRAWAL OR TERMINATION
A Planholder may terminate his Plan at any time upon written request to
BFDS. In terminating his Plan he may request the Custodian to deliver to him in
certificate form the Fund shares he has accumulated (properly registered in his
name) or he may direct the Custodian, as his agent, to withdraw his shares,
redeem (liquidate) them and send him the proceeds. A charge of $2.50 will be
made by the Custodian for a complete withdrawal, and the Planholder will be
liable for any transfer taxes that may be required. If the Planholder directs
the delivery of his Fund shares, sufficient shares will be redeemed to pay
authorized deductions and transfer taxes and leave no fractional shares, with
any net balance to be paid in cash. The redemption of Fund shares is a taxable
event. See "Taxes."
Instructions for both partial or full liquidation of Fund shares held in a
Plan must be in the form of a letter signed by the Planholder with the signature
guaranteed, as required by the Custodian. A signature guarantee is designed to
protect the Planholder, the Plan, the Sponsor and the Custodian.
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<PAGE> 15
Acceptable guarantors are banks, broker-dealers, savings and loan associations,
credit unions, national securities exchanges and any other "eligible guarantor
institution" as defined in rules adopted by the United States Securities and
Exchange Commission (the "SEC"). A notary public is not an acceptable guarantor.
It is the present policy of the Sponsor not to require signature guarantees for
liquidation requests of under $50,000 unless the proceeds are to be paid to a
person other than the record owner or are to be sent to an address other than
the one of record. Upon notice to the Planholder, this policy may be changed.
Currently, in addition to these requirements, if a Planholder has invested in
the Plan to establish an IRA, he should include the following information along
with his written request for either partial or full liquidation of Fund shares:
(a) a statement as to whether or not he has attained age 59 1/2; (b) a statement
as to whether or not he is legally disabled; (c) a statement as to whether or
not he elects to have federal income tax withheld from the proceeds of the
liquidation; and (d) his Social Security number along with the following
statement: "I certify under penalties of perjury that the Social Security number
provided is correct and that I am not subject to backup withholding either
because I am exempt from backup withholding, I have not been notified by the
Internal Revenue Service that I am subject to backup withholding, or the
Internal Revenue Service has notified me that I am no longer subject to backup
withholding." If a Planholder has been notified by the Internal Revenue Service
that he is currently subject to backup withholding, then the preceding statement
should be modified accordingly. Even if he elects not to have federal income tax
withheld, he is liable for federal income tax on the taxable portion of the
liquidation. He may also be subject to tax penalties under the estimated tax
payment rules if his payments of estimated tax and withholding, if any, are not
adequate. All documents must be in proper order before any liquidation can be
executed. Liquidation requests should be sent to BFDS. The redemption price will
be the net asset value of Fund shares next determined after such documents in
proper order have been received by AIM Distributors or BFDS.
Except as set forth below, the Planholder will be sent the proceeds of a
partial or complete liquidation within seven days after receipt by BFDS of all
necessary documents in proper order. However, BFDS will not mail redemption
proceeds to the Planholder until checks received for any shares purchased by the
Planholder have cleared. The payment period may be extended if the Custodian's
right to redeem shares of the Fund has been suspended or restricted because: (a)
trading on the New York Stock Exchange is restricted, as determined by the
applicable rules and regulations of the SEC; (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings; (c) the SEC has by
order permitted such suspension; or (d) an emergency as determined by the SEC
exists making disposition of portfolio securities or the valuation of the net
assets of the Fund not reasonably practicable.
16. PLAN REINSTATEMENT PRIVILEGE
A Planholder may, within 60 days after he has completely terminated his
Plan as described in paragraph 15 above, by written request to BFDS, reinstate
his Plan without any sales charge, subject to certain restrictions:
A. By including with the request an amount equal to or less than the
redemption proceeds, if no refunded sales charges were provided in the
termination.
B. By including with the request the full amount of all refunded sales
charges, plus an amount equal to or less than the redemption proceeds, if
the termination was done under the privileges described in paragraph 13,
page 12.
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A Planholder may not reinstate a terminated plan if he has ever exercised
the privilege previously. If the Plan Reinstatement Privilege is exercised,
neither the total number of monthly investments to be made nor the unpaid
balance of monthly Plan investments under the Plan will be affected.
The complete termination of a Plan will normally result in the realization
of gain or loss for federal income tax purposes depending upon the Planholder's
basis for his terminated Plan. Any gain will be recognized and subject to the
applicable capital gains tax; however, if a loss were realized, reinstatement of
the Plan could effect a "wash sale," in which event the loss will not be
recognized for tax purposes. The amount of the non-recognized loss will however,
be added to the cost of the reinstated Plan to determine the Planholder's basis
for tax purposes.
In addition to the Plan Reinstatement Privilege described above, the
Sponsor may from time to time permit Planholders who have previously terminated
their Plans to establish new Plans on the following terms:
1. The Planholder must open the new Plan with an investment equal to
or less than the amount of the redemption proceeds received upon
liquidation of the former Plan. No Creation and Sales Charges or Custodian
fees will be subtracted from the initial investment.
2. The number of the next payment due on the new Plan will be the
number of the next payment due on the former Plan at the time it was
terminated.
3. Creation and Sales Charges on the new Plan will be the Creation and
Sales Charges that would currently be applicable to the former Plan.
The ability to establish such new Plans will not be generally available,
but will be available only during such limited time periods as may be specified
by the Sponsor from time to time.
17. CONTINUATION OF CUSTODIANSHIP
If, after the Planholder has completed his Plan investments, the Planholder
does not elect a complete or partial withdrawal of his investment in his Plan or
termination of his Plan, then the Custodian will retain custody of the Fund
shares (provided there is no substitution of Fund shares, as discussed below)
and will continue to perform all of its services until after the 300th payment
under the Plan has been made. The Planholder may, however, elect to continue the
Custodianship after the 300th payment under the Plan, subject to the right of
the Sponsor or Custodian to terminate the Plan.
CUSTODIAN AND SPONSOR CHARGES
CREATION AND SALES CHARGES
The Sponsor receives the Creation and Sales Charges as compensation for its
services and costs in creating the Plans and arranging for their administration,
for making the Fund shares available to Planholders at their net asset value and
for all selling expenses and commissions with respect to the Plans. These
charges are deducted from each investment and are larger on the first year's
investments than on subsequent investments. For example, on a $50 per month
Plan, $25.00
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<PAGE> 17
is deducted from each of the first 12 investments during the first year. After
the first year, the charge drops to $2.77 per investment.
During the fiscal year ended October 31, 1994, the fiscal period ended
October 31, 1993 and the fiscal year ended December 31, 1992, total investments
made by all Planholders amounted to $114,796,966, $99,330,877 and $108,773,679,
respectively. The amount of Creation and Sales Charges deducted from these
investments was $7,193,650, $8,613,680 and $11,040,974, respectively, of which
amount $529,672, $654,287 and $840,776, respectively, was retained by the
Sponsor and $6,663,978, $7,959,393 and $10,200,198, respectively, was paid to
investment dealers who participated in the sale of Plans.
Plans may be purchased directly from the Sponsor and investments may be
made thereunder without deduction of Creation and Sales Charges by directors,
officers and full-time employees of the Fund and the Sponsor and its affiliates.
The Sponsor foregoes the Creation and Sales Charges on Plans purchased by such
persons because any expenses incurred by it in connection with such purchases
are expected to be minimal.
CUSTODIAN FEES AND SERVICE CHARGES
For its services under a Plan, the Custodian deducts $1.50 per investment
as a service fee. This fee is deducted from Plan investments prior to the
purchase of Fund shares. The Custodian's fee charged at any one time may not
exceed $5.00. Thus, if a Planholder submits four or more investments at one
time, the aggregate Custodian Fee deducted from all such investments will be
$5.00.
After the completion of all Plan investments, or, if investments have been
made in advance, after the expiration of 15 years from the date of the Plan
(provided the Planholder has not exercised the Extended Investment Option), the
Custodian receives for its services an annual fee of $12.00. The Custodian also
deducts this fee on Plans on which no investment has been made for a 12-month
period. This fee will normally be deducted from the first combined income
dividend and capital gains distribution in each year, but the Custodian is
authorized to collect these fees from the proceeds of the sale of Fund shares
held for the Planholder's account, if necessary.
The aggregate amount of Custodian Fees deducted by the Custodian with
respect to all Plans during the fiscal year ended October 31, 1994 was
$1,456,849.
Each year the Custodian will deduct from each Planholder's account an
amount necessary to reimburse actual expenses (such as postage, forms and
envelopes) incurred by the Sponsor during the previous year in performing
certain administrative duties, but in no event will this deduction exceed $10.00
per year. These duties include the mailing to Planholders of required periodic
reports, dividend statements and tax notices; the arranging for periodic audits
of the Custodian's records by independent certified public accountants; and the
preparation and filing of federal and state reports essential to the continuance
of the Custodianship. This amount is payable from income dividends and capital
gains distributions, but if these dividends and distributions are insufficient,
the amount is collectible by the Custodian from the proceeds of the sale of Fund
shares held for the Planholder's account. The amount of the Service Charge will
be determined annually by pro-rating the Plans' administrative costs over the
total number of Plan accounts. The Service Charge on Plans established prior to
June 1, 1983 shall be as specified in the Plan Certificate.
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<PAGE> 18
The aggregate annual charges and deductions for maintenance and other
expenses assessed to Planholders for the fiscal years ended October 31, 1994 and
December 31, 1992, stated as a percentage of total distributions (includes
dividends and capital gains) from Fund shares for such period or years, were
0.92% and 0.80%, respectively. No ratio is given for the ten month fiscal period
ended October 31, 1993 as no distributions were declared by the Fund during such
period. Distributions, if any, are normally declared in December of each year.
The aggregate annual charges and deductions for maintenance and other expenses
assessed to Planholders for the fiscal year of the Sponsor ended December 31,
1994 was $460,258.
INCIDENTAL SERVICE FEES
A Custodian charge of $2.50, in addition to the amount of any applicable
transfer taxes, is made in the case of each transfer of title, each change in a
Plan denomination, each partial or complete liquidation, each restoration, each
declaration of trust (other than one filed concurrently with the application for
the Plan), each recording of an assignment, each reissuance of a Plan, and each
termination of a Plan prior to completion. A charge of $1.00 is made for each
payment under a Systematic Withdrawal Program, and a charge of $3.00 per account
per year is made for the preparation of a complete transcript of a Planholder's
account. A charge of $5.00 is made for any check or pre-authorized check which
is not honored by the bank on which it is drawn. The incidental service fees
described above will be paid by the Sponsor. Although it has no current
intention of doing so, the Sponsor reserves the right to reimpose these fees at
some future date.
Except as specifically provided in this Prospectus, there will be no
deductions, charges, or fees of any kind on Plan payments, Fund shares held for
the Planholder's account, or dividends or distributions paid by the Fund.
TAXES
Under the Internal Revenue Code of 1986, as amended (the "Code"), each
Planholder is deemed for federal income tax purposes to be the owner of the
underlying Fund shares accumulated in his account. Dividends and distributions
on such shares paid to the Planholder used to pay the Custodian Fee or Service
Charge or reinvested in additional Fund shares are taxable to the Planholder.
See "Dividends, Distributions and Tax Matters" in the accompanying Fund
prospectus for a discussion of the tax treatment of such dividends and
distributions. As soon as practicable after the close of each calendar year, the
Planholder will be advised of the amount and nature of the ordinary income
dividends and capital gains distributions received on his behalf during such
year.
The Creation and Sales Charges deducted from a Planholder's investments in
the Plan are not deductible for tax purposes by the Planholder, but are included
in the Planholder's tax basis for the Fund shares in his account. The Custodian
Fee and Service Charge paid by a Planholder (whether as a deduction from the
Planholder's investments in the Plan or as a deduction from the distributions
made on the Fund shares in the Planholder's account) are deductible for tax
purposes by the Planholder only if he itemizes deductions and then only to the
extent that the Custodian Fee and Service Charge, together with the Planholder's
other miscellaneous itemized deductions, exceed 2% of the Planholder's adjusted
gross income. Further, certain itemized deductions of the Planholder (including
any portion of miscellaneous itemized deductions which exceeds the 2% floor,
state and local income and property taxes, home mortgage interest, and
charitable contributions) will be reduced (but not by more than 80% thereof) by
3% of the Planholder's adjusted gross income in
17
<PAGE> 19
excess of $114,700 (for tax years beginning in 1995 and as annually adjusted for
inflation). This amount is calculated differently for married persons filing
separate income tax returns.
Under provisions of the Code, the Custodian may be required to withhold
from dividends and liquidations 31% of all amounts otherwise payable to
Planholders who have not provided the Custodian with a correct certified social
security number or tax identification number or those who have been notified by
the Internal Revenue Service that they are subject to "backup withholding"
because of underreporting of reportable payments. The amounts withheld will be
credited against the Planholder's federal income tax liability, and, if
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
Neither the Custodian, BFDS, nor the Sponsor bears any taxes arising from
the custody of the Fund shares or the operations of the Custodianship under the
Plans. The Custodian, BFDS, and the Sponsor are authorized to incur any expenses
deemed necessary or appropriate in connection with any claim or possible claim
for taxes against the Custodianship or the accounts of Planholders. The Sponsor
or the Custodian may, in its discretion, deduct charges against the account of
the Planholder on a pro rata basis (determined by reference to the total number
of Fund shares affected) in order to pay or set up reserves for such claims and
related expenses.
SUBSTITUTION OF SHARES
Shares of the Fund have been the underlying investment for the Plans since
their inception. The Sponsor may substitute shares of another investment medium
as the underlying investment if it deems such action to be in the best interests
of the Planholders. Such substituted investment shall be generally comparable in
character and quality to the Fund's shares, and shall be registered with the SEC
under the Securities Act of 1933, as amended. Before any substitution can be
effected, the Sponsor must:
(a) Obtain an order from the SEC approving such substitution under the
provisions of Section 26(b) of the Investment Company Act of 1940, as
amended (the "1940 Act");
(b) Give written notice of the proposed substitution to the Custodian;
(c) Give written notice of the proposed substitution to each
Planholder, giving a reasonable description of the substituted fund shares,
with the advice that, unless the Planholder responds within 30 days of the
date of mailing of such notice, the Planholder will be considered to have
agreed to bear his pro rata share of expenses and taxes in connection with
the substitution. The pro rata share of expenses and taxes are payable from
any income dividends and any capital gains distributions, but if such
dividends and distributions are insufficient, the pro rata share of
expenses and taxes are collectable by the Custodian from the proceeds of
the sale of Fund shares held for the Planholder's account; and
(d) Provide the Custodian with a signed certificate stating that such
notice has been given to the Planholders.
If no response is received within the 30-day notice period, the Custodian
shall purchase shares of the substituted fund with subsequent investments
received from the Planholder and any dividends and distributions which may be
reinvested for his account. If shares of the substituted fund are also to be
substituted for the shares already held, the Sponsor must arrange for the
Custodian to be
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<PAGE> 20
furnished, without payment of a sales charge of any kind, with shares of the
substituted fund having an aggregate value equal to the value of shares of the
Fund for which they are to be exchanged.
If Fund shares are not available for purchase for a period of 90 days or
longer, and the Sponsor fails to substitute other shares, the Custodian may, but
is not required to, select another underlying investment. If the Custodian
selects a substitute investment, it shall first obtain an order from the SEC
approving such substitution as specified above and then shall notify the
Planholder, and if, within 30 days after mailing such notice, the Planholder
gives his written approval of the substitution and agrees to bear his pro rata
share of actual expenses, including any tax liability sustained by the
Custodian, the Custodian may thereafter purchase such substituted shares. The
Planholder's failure to give such written approval within the 30-day period
shall give the Custodian authority to terminate his Plan.
If Fund shares are not available for purchase for a period of 90 days or
longer, and neither the Sponsor nor the Custodian substitutes other shares, the
Custodian shall have the authority, without further action on its part, to
terminate the Plans.
TERMINATION OF A PLAN
A Plan will normally remain in existence until the Planholder has made 300
investment units into the Plan. Neither the Sponsor nor the Custodian can
terminate a Plan established after May 1, 1993 sooner unless the Planholder has
failed to make investments under his Plan for a period of 6 consecutive months
(12 consecutive months for Plans established prior to May 1, 1993) from the
scheduled due date of the last investment made (including any investments made
in advance of their scheduled due dates). For example, the post-May 1, 1993 Plan
of a Planholder who has made all investments due under his Plan through June
30th of a given year (regardless of when such investments were made) and who
makes no further investments, may not be terminated prior to December 31st of
that same year. Any scheduled investment made prior to the termination of a Plan
extends the due dates of all future investments for a period equal to the period
during which no investments were made. Accordingly, a Planholder need only make
one investment during each 6-month period (or 12-month period for Plans
established prior to May 1, 1993) to prevent his Plan from being terminated.
A Plan may also be terminated prior to the accumulation of 300 investment
units if shares of the Fund are not available and a substitution is not made.
After 300 investment units have been made, or on the happening of any of the
other events justifying termination, the Sponsor or the Custodian has the right
to terminate a Plan 60 days after mailing written notice of the termination to
the Planholder.
On termination, the Custodian, acting as the Planholder's agent, must
withdraw the shares from the Custodianship and, as the Planholder's agent, may
surrender for liquidation all of the Fund shares credited to the account of the
Planholder, or sufficient Fund shares to pay all authorized deductions and leave
no fractional shares. Any adjustment in Creation and Sales Charges or other
charges occasioned by virtue of the termination by the Planholder through the
exercise of one of the refund privileges will be made at the same time. The
shares and/or cash, after payment of all authorized deductions, will be held by
the Custodian as agent for the Planholder for delivery to the Planholder upon
instruction by the Planholder. No interest will be paid on any cash balances
held. If a response is not received within 60 days after mailing the notice of
termination to the Planholder,
19
<PAGE> 21
the Custodian, in its discretion, may mail the shares, and its check payable to
the former Planholder, to the last known address of record of the Planholder,
and the Planholder will be deemed to have no further rights under the Plan. In
all events, terminated Plans will not be resold. Undeliverable shares and funds
will be held by the Custodian in trust for the account of the Planholder to whom
they belong, subject to the abandoned property laws of The Commonwealth of
Massachusetts.
THE CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02101, acts as Custodian for the Plans pursuant to a custodian
agreement, dated September 24, 1982, as amended and restated on June 1, 1983,
the ("Custodian Agreement") with respect to Plans issued on or after such date.
The Custodian is a corporation organized under the laws of the State of
Massachusetts. The Internal Revenue Service Employer Identification Number of
the Custodian is 04-1867445. The Custodian also acts as custodian and transfer
agent for the Fund.
The duties of the Custodian under the Custodian Agreement include the
receipt of all investments from Planholders and income dividends and capital
gain distributions on Fund shares, the processing of all authorized deductions
therefrom and the purchase and retention of Fund shares for the Planholders'
accounts. The Custodian also effects partial or complete liquidations of Plans
in connection with withdrawals or terminations and the various other functions
heretofore discussed.
The Custodian receives and holds in trust without interest all cash and
Fund shares held by a Plan until completion and/or termination of the Plan. BFDS
keeps a complete record of each Planholder's account and mails receipts for each
Planholder's investments showing the number of shares held for the Planholder's
account, notices (including distribution notices and tax statements), reports to
shareholders, prospectuses and proxy material. The Custodian causes periodic
audits to be taken of the records maintained by it relating to the Plans, unless
such audits are arranged for by the Sponsor, and prepares and files tax returns
and other reports required by law. The Custodian has assumed only those
responsibilities specifically imposed on it under its Custodian Agreement with
the Sponsor. The Custodian has no responsibility for the choice of the
underlying investment, for the investment policies and practices of the
management of the Fund, for the acts or omissions of the Sponsor, for compliance
by the Sponsor with the laws of the United States, any state or other
jurisdiction relating to the sale, registration or qualification of securities,
or for compliance by the Sponsor with any rules, regulations or orders of any
regulatory agencies or commissions, for the validity of written designations of
beneficiaries executed by Planholders, or for signatures guaranteed by persons
other than banks or members of national securities exchanges.
The Custodian is authorized to commingle only those payments, dividends and
certificates of Fund shares which are held for or received from the various
Planholders of Plans which are subject to this Prospectus. The Custodian is also
authorized to cause all Plan certificates issued prior to March 1, 1995 to be
registered in its name or in the name of its nominees. While the custodian does
not assert a lien in general terms on the property held by it, the authorization
conferred on the Custodian to make the various deductions heretofore discussed,
and in certain cases to sell Fund shares, may be considered authorization to the
Custodian to create liens upon the property held by it.
The Custodian Agreement cannot be amended to affect the rights and
privileges of any Planholder without his written consent.
20
<PAGE> 22
Under certain circumstances as provided in the Custodian Agreement, the
Sponsor or the Custodian has the right to terminate the services of the
Custodian. However, no such termination or resignation may be made as to the
Plans then in force unless all Fund shares have been liquidated and the proceeds
distributed to the Planholders, or unless a successor custodian has been
designated and has accepted the custodianship. Any successor custodian must be a
bank or trust company having at all times aggregate capital, surplus and
undivided profits in excess of $1,000,000. Notice of such a change will be sent
to Planholders, but their consent is not required.
THE SPONSOR
A I M Distributors, Inc., (11 Greenway Plaza, Houston, Texas, 77046) the
Sponsor and principal underwriter of the Plans offered by this Prospectus, was
incorporated under the laws of the State of Delaware on November 18, 1976. It is
a wholly owned subsidiary of A I M Advisors, Inc. and a member of the National
Association of Securities Dealers, Inc. The Sponsor's directors and principal
officers are listed below. The Internal Revenue Service Employer Identification
Number of A I M Distributors, Inc. is 74-1894784.
Charles T. Bauer is Director and Chairman and Chief Executive Officer,
A I M Management Group Inc.; Chairman of the Board of Directors, A I M Advisors,
Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc., A I M Global Associates, Inc., A I M Global Holdings, Inc.,
A I M Institutional Fund Services, Inc., and Fund Management Company; and
Director, AIM Global Advisors Limited, A I M Global Management Company Limited
and AIM Global Ventures Co.
Michael J. Cemo is Director and President, A I M Distributors, Inc.;
Director and Senior Vice President, A I M Management Group Inc.; and Director,
A I M Fund Services, Inc.
Robert H. Graham is Director, President and Chief Operating Officer, A I M
Management Group Inc.; Director and President, A I M Advisors, Inc.; Director
and Executive Vice President, A I M Distributors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures Co.,
A I M Institutional Fund Services, Inc. and Fund Management Company; and Senior
Vice President, AIM Global Advisors Limited.
Gary T. Crum is Director and President, A I M Capital Management, Inc.;
Director and Senior Vice President, A I M Management Group Inc., A I M Advisors,
Inc., AIM Global Advisors Limited, A I M Global Associates, Inc., A I M Global
Holdings, Inc., and AIM Global Ventures Co.; and Director, A I M Distributors,
Inc.
W. Gary Littlepage is Senior Vice President, A I M Distributors, Inc.
James L. Salners is Director and Senior Vice President, A I M Distributors,
Inc.
John Caldwell is Senior Vice President, A I M Distributors, Inc.; Vice
President, A I M Management Group Inc.; Director and President, A I M Fund
Services, Inc.; and Director and Vice President, A I M Institutional Fund
Services, Inc.
Gordon J. Sprague is Senior Vice President, A I M Distributors, Inc.
Michael C. Vessels is Senior Vice President, A I M Distributors, Inc.
Lawrence E. Manierre is First Vice President, A I M Distributors, Inc.
21
<PAGE> 23
James E. Stueve is First Vice President, A I M Distributors, Inc.
Carol F. Relihan is Vice President, General Counsel and Secretary, A I M
Advisors, Inc., A I M Fund Services, Inc., A I M Institutional Fund Services,
Inc., A I M Management Group Inc. and Fund Management Company; Vice President
and Secretary, A I M Distributors, Inc., A I M Global Associates, Inc., and
A I M Global Holdings, Inc.; Vice President and Assistant Secretary, AIM Global
Advisors Limited and AIM Global Ventures Co.; and Secretary, A I M Capital
Management, Inc.
John J. Arthur is Senior Vice President and Treasurer, A I M Advisors,
Inc.; Vice President and Treasurer, A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Institutional Fund Services, Inc. and Fund Management Company; and Vice
President, AIM Global Advisors Limited, A I M Global Associates, Inc., A I M
Global Holdings, Inc., and AIM Global Ventures Co.
Charles R. Dewey is Vice President, A I M Distributors, Inc.
Sidney M. Dilgren is Vice President, A I M Distributors, Inc. and A I M
Fund Services, Inc.
William H. Kleh is Director, Chairman and President, AIM Global Ventures
Co.; Director and Managing Director, A I M Global Advisors Limited; Director
and President, A I M Global Associates, Inc. and A I M Global Holdings, Inc.;
Director and Senior Vice President, A I M Advisors, Inc.; Director and Vice
President, A I M Capital Management, Inc. and Fund Management Company;
Director, A I M Global Management Company Limited; Senior Vice President, A I M
Management Group Inc.; and Vice President, A I M Distributors, Inc. and A I M
Fund Services, Inc.
Frank V. Serebrin is Vice President, A I M Distributors, Inc.
B. J. Thompson is Vice President, A I M Distributors, Inc.
Mr. Bauer and Mr. Graham are directors of, and Messrs. Bauer, Graham, Kleh,
Arthur and Ms. Relihan are officers of, some or all of the investment companies
advised or managed by A I M Advisors, Inc. ("AIM"). As of February 22, 1995, Mr.
Bauer owned of record .0046% of the Plans, which represented beneficial
ownership of 3,872.67 shares of the Fund and Mr. Graham owned of record .0188%
of the Plans, which represented beneficial ownership of 15,837.97 shares of the
Fund. Directors of the Sponsor do not receive any compensation for their
services. Officers and employees of the Sponsor receive no compensation from the
Sponsor, but are compensated by A I M Management Group Inc. ("AIM Management").
All officers and employees of the Sponsor are currently covered by a fidelity
bond in the amount of $35,000,000. AIM, a wholly owned subsidiary of AIM
Management, acts as investment advisor of the Fund and receives a fee from the
Fund for its services.
The Sponsor is the principal underwriter of the Fund and of the following
other open-end investment companies advised or managed by AIM: AIM Equity Funds,
Inc., AIM Funds Group, AIM International Funds, AIM Investment Securities Funds
(Limited Maturity Treasury Portfolio-AIM Limited Maturity Treasury Shares), AIM
Summit Fund, Inc., AIM Tax-Exempt Funds, Inc., AIM Variable Insurance Funds,
Inc., and Summit Investors Plans. AIM serves as investment advisor to each of
such investment companies. For information concerning these investment companies
and AIM Management, AIM and A I M Capital Management, Inc., and the investment
management and
22
<PAGE> 24
investment advisory fees received by AIM from the Fund, see "Management of the
Fund -- The Investment Advisor" in the attached prospectus of the Fund.
GENERAL
The Plans are organized under and are governed by the laws of The
Commonwealth of Massachusetts, except that the laws of the State of New York
govern the substantive legal rights of Planholders holding Plans issued prior to
June 1, 1983. The Plans are considered to be a unit investment trust under the
1940 Act and are so registered with the SEC. Such registration does not imply
supervision of management or investment practices or policies by the SEC.
Since the Custodian Agreement does not provide for the amendment of
outstanding Plans, no changes will be made in the terms or conditions of Plans
once they have been issued; therefore, the consent of Planholders to changes in
Plans issued thereafter is not required. The Sponsor will give the Planholders
notice of any changes in any indenture or agreement relating to the Plans and
affecting them or in the identity of the Sponsor or Custodian, but such changes
do not require their consent.
The Plans are distributed by authorized investment brokers and mutual fund
dealers who are members of the National Association of Securities Dealers, Inc.,
and who have executed dealer agreements with the Sponsor. Commissions of up to
93% of the total Creation and Sales Charges will be paid to such authorized
investment brokers and mutual fund dealers. These dealers and investment brokers
are independent contractors. Nothing herein or in other literature and
confirmations issued by the Sponsor or the Custodian, including the words
"representative" or "commission," shall constitute any dealer or investment
broker, a partner, employee or agent of the Sponsor or the Custodian. Neither
the Sponsor nor the Custodian shall be liable for any acts or obligations of any
such dealer or investment broker. Dealers who receive 90% or more of the
Creation and Sales Charges applicable to Plan payments may be deemed to be
underwriters under the Securities Act of 1933 and may, therefore, be subject to
certain liabilities imposed upon underwriters by such Act. In the event the
broker or dealer of record designated for a Plan is changed after the
establishment of the Plan, such change will appear on the Sponsor's records;
however, payment of commissions on future investments by the Planholder will
continue to be made to the original broker or dealer of record notwithstanding
such change.
Summit Investors Plans are presently offered in all states.
This Prospectus omits certain of the information contained in the
registration statement on file with the SEC. Copies of the registration
statement, including items omitted herein, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
23
<PAGE> 25
ILLUSTRATION OF A HYPOTHETICAL $50 MONTHLY
SUMMIT INVESTORS PLAN
FOR INVESTMENT IN SHARES OF AIM SUMMIT FUND, INC.
This table shows results of an assumed investment of $50 per month (the
minimum monthly investment Plan) for the period from the beginning of Summit
Investors Plans, November 1, 1982, to December 31, 1994. The results assume the
reinvestment of capital gains distributions and income dividends in additional
shares of AIM Summit Fund, Inc.
The results shown in this table should not be considered as a
representation of the dividend income or capital gain or loss in a Plan today. A
Plan cannot assure a profit or protect against depreciation in declining
markets. Common stock prices fluctuate widely over time.
<TABLE>
<CAPTION>
DEDUCTIONS(c) CUMULATIVE
------------------------- NET NET
YEAR DIVIDENDS CREATION AMOUNT AMOUNT
ENDED MONTHLY INVESTMENTS FROM NET TOTAL AND INVESTED INVESTED IN
12/31 ------------------------- INVESTMENT CUMULATIVE SALES CUSTODIAN IN FUND FUND
(a) ANNUALLY CUMULATIVE INCOME COST(b) CHARGES FEE(d) SHARES SHARES
--------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1982
(2 mos.) $100.00 $ 100.00 $ -- $ 100.00 $ 50.00 $ 3.00 $ 47.00 $ 47.00
1983 600.00 700.00 -- 700.00 255.54 18.00 326.46 373.46
1984 600.00 1,300.00 1.75 1,301.75 33.24 18.00 550.51 923.97
1985 600.00 1,900.00 6.91 1,908.66 33.24 18.00 555.67 1,479.64
1986 600.00 2,500.00 36.47 2,545.13 33.24 18.00 585.23 2,064.87
1987 600.00 3,100.00 53.22 3,198.35 33.24 18.00 601.98 2,666.85
1988 600.00 3,700.00 81.11 3,879.46 33.24 18.00 629.87 3,296.72
1989 600.00 4,300.00 318.37 4,797.83 33.24 18.00 867.13 4,163.85
1990 600.00 4,900.00 128.25 5,526.08 33.24 18.00 677.01 4,840.86
1991 600.00 5,500.00 339.23 6,465.31 33.24 18.00 887.99 5,728.85
1992 600.00 6,100.00 107.51 7,172.82 33.24 18.00 656.27 6,385.12
1993 600.00 6,700.00 114.24 7,887.06 33.24 18.00 663.00 7,048.12
1994 600.00 7,300.00 135.18 8,622.24 33.24 18.00 683.94 7,732.06
------- -------
$671.18 $219.00
<CAPTION>
CAPITAL TOTAL VALUE OF
GAINS SHARES ACCUMULATED
REINVESTED OWNED(e) SHARES(f)
---------- ---------- -----------
<C> <C> <C>
$ -- 9.428 $ 46.48
-- 68.444 370.97
.62 180.052 905.68
2.76 277.847 1,803.23
200.48 390.732 2,610.09
254.88 515.282 2,937.11
-- 613.217 4,028.84
229.36 755.981 5,889.09
119.97 860.497 6,505.36
368.73 992.132 10,010.61
839.09 1,147.268 11,059.66
769.61 1,294.014 12,551.94
520.43 1,426.949 12,742.66
----------
$3,305.93
</TABLE>
NOTES:
(a) The fiscal year end of Summit Investors Plans and the Fund for each year
after 1992 was changed from December 31 to October 31. All data reflect
calendar years ended December 31.
(b) Reflects the total amount of monthly investments plus the cumulative
amount of income dividends reinvested.
(c) The total deductions for the first 12 months of the hypothetical Plan
equal $318.00 or 53% of total investments. If all of the investments of a
15-year Plan were made monthly, total deductions would be $1,035.36 or
11.5% of the total investment.
(d) Does not include a Service Charge, not to exceed $10 per year, payable
first from dividends and distributions and then, if necessary, from
principal, to cover certain administrative expenses actually incurred.
The amount of such charge will be determined annually by pro-rating the
Plans' administrative costs over the total number of Plan accounts. The
Service Charge on Plans established prior to June 1, 1983 shall be as
specified in the Plan Certificate.
(e) Assumes that monthly investments were made on the first business day of
each month.
(f) Based on the Fund's year-end net asset value.
No adjustments have been made for any income taxes payable by investors on
reinvested capital gains distributions and reinvested dividends.
24
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
A I M Distributors, Inc. and Planholders
of Summit Investors Plans:
We have audited the accompanying statement of assets and liabilities of Summit
Investors Plans as of October 31, 1994, and the related statement of operations
for the year then ended and the statement of changes in net assets for the year
ended October 31, 1994, the ten-month period ended October 31, 1993 and the year
ended December 31, 1992. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held as trust property as of October 31, 1994 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Summit Investors Plans as of
October 31, 1994, and the results of its operations for the year then ended, and
the changes in its net assets for the year ended October 31, 1994, the ten-month
period ended October 31, 1993 and the year ended December 31, 1992, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Houston, Texas
December 14, 1994
25
<PAGE> 27
SUMMIT INVESTORS PLANS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
<TABLE>
<S> <C>
ASSETS:
AIM Summit Fund, Inc. shares, at value
(Plans' investment $672,633,101)........................................ $ 763,448,692
Cash....................................................................... 129,013
Due from AIM Summit Fund, Inc.............................................. 7,010
-------------
Total assets............................................................ 763,584,715
-------------
LIABILITIES:
Creation and Sales Charges payable......................................... 134,516
Custodian charges payable.................................................. 1,507
-------------
Total liabilities....................................................... 136,023
-------------
NET ASSETS (Equivalent to $9.78 per share based on 78,062,238
shares of capital stock owned on outstanding plans)........................ $ 763,448,692
=============
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1994
<TABLE>
<S> <C>
Investment income:
Dividends received on shares of AIM Summit Fund, Inc....................... $ 50,292,297
Expenses..................................................................... (462,577)
-------------
Net investment income........................................................ 49,829,720
-------------
Realized and unrealized gain on investments:
Net realized gain on plan liquidations..................................... 6,235,277
Unrealized appreciation (depreciation) of investments...................... (50,525,944)
-------------
Net increase in net assets resulting from operations......................... $ 5,539,053
=============
</TABLE>
See Notes to Financial Statements.
26
<PAGE> 28
SUMMIT INVESTORS PLANS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1994,
THE TEN MONTHS ENDED OCTOBER 31, 1993
AND THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
OCTOBER 31, 1994 OCTOBER 31, 1993 DECEMBER 31, 1992
--------------------------- -------------------------- ---------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period........ $704,307,938 67,333,455 $603,747,180 62,629,376 $517,250,501 51,263,677
Planholders investments:
Additions from Planholder
Payments................. 114,796,966 99,330,877 108,773,679
Less:
Creation and Sales
Charges............... 7,193,650 8,613,680 11,040,974
Custodian charges........ 1,456,849 896,735 1,362,944
------------ ------------ ------------
Amount invested in
AIM Summit Fund, Inc.
shares................... 106,146,467 11,007,439 89,820,462 9,112,464 96,369,761 9,975,756
Net investment
income reinvested:
Net investment income...... 49,829,720 -- 51,377,558
Less: Amount paid
in cash.................. 311,622 -- 245,663
------------ ------------ ------------
49,518,098 5,126,097 -- 51,131,895 5,315,165
Net realized gain on plan
liquidations............... 6,235,277 7,191,329 7,230,442
Unrealized market
appreciation (depreciation)
of investments............. (50,525,944) 46,943,295 (30,427,537)
Planholder liquidations...... (52,233,144) (5,404,753) (43,394,328) (4,408,385) (37,807,882) (3,925,222)
------------ ----------- ------------ ----------- ------------ -----------
Net asset value at end of
period..................... $763,448,692 78,062,238 $704,307,938 67,333,455 $603,747,180 62,629,376
============ ========== ============ ========== ============ ==========
</TABLE>
See Notes to Financial Statements.
27
<PAGE> 29
SUMMIT INVESTORS PLANS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Summit Investors Plans is a unit investment trust registered under the
Investment Company Act of 1940 with the Securities and Exchange Commission. The
following significant accounting policies are in conformity with generally
accepted accounting principles for unit investment trusts.
A. Security Valuation:
The investment, which consists exclusively of shares of AIM Summit Fund,
Inc., is valued at the net asset value of AIM Summit Fund, Inc. shares on
October 31, 1994.
B. Federal Income Taxes:
No provision is made for Federal income taxes as all income dividends
and capital gain distributions received by Planholders are treated as if
received directly from the underlying Fund.
C. Transaction Dates:
Share transactions are recorded on a trade date basis. Dividend income
and capital gain distributions are recorded on the ex-dividend date.
NOTE 2 -- PLANHOLDERS' COST OF AIM SUMMIT FUND, INC. AND VALUE OF PLANS
OUTSTANDING
The investment in AIM Summit Fund, Inc. is carried at identified cost,
which represents the amount available for investment (including reinvested
dividends of net investment income and realized gains) in such shares after
deduction of sales charges and custodian fees, if applicable, and unrealized
market appreciation. The net value of Plans outstanding is as follows:
PLANS OUTSTANDING
OCTOBER 31, 1994
<TABLE>
<S> <C>
Total payments made by Planholders on Plans outstanding
(net of liquidations).............................................. $578,843,391
Net investment income dividends reinvested........................... 191,783,916
------------
Total...................................................... 770,627,307
Less:
Creation and Sales Charges......................................... 88,778,130
Custodian charges.................................................. 9,216,076
------------
Net investment in AIM Summit Fund, Inc. shares (identified cost)..... 672,633,101
Unrealized market appreciation of investments........................ 90,815,591
------------
Value of Plans outstanding........................................... $763,448,692
============
</TABLE>
28
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
The Board of Directors
A I M Distributors, Inc.:
We have audited the accompanying balance sheet of A I M Distributors, Inc. (the
Company) as of December 31, 1994, and the related statement of operations,
changes in stockholder's equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of A I M Distributors, Inc. as
of December 31, 1994, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
February 17, 1995
29
<PAGE> 31
THE FINANCIAL STATEMENTS SHOWN ON THIS AND THE FOLLOWING PAGES ARE THE SPONSOR'S
AND NOT THOSE OF SUMMIT INVESTORS PLANS. THEY ARE INCLUDED IN THE PROSPECTUS FOR
THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL RESPONSIBILITY OF THE
SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL OBLIGATIONS.
A I M DISTRIBUTORS, INC.
BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
ASSETS
Money market fund accounts (affiliated registered investment companies)............ $ 6,300,774
Accounts receivable:
Due from dealers for sales of capital stock of affiliated registered
investment companies.............................................. 951,237
Due from affiliated registered investment companies................. 2,497,407
Other accounts receivable........................................... 594,546 4,043,190
============
State income taxes refundable...................................................... 8,967
Prepaid expenses................................................................... 429,049
Segregated trust account........................................................... 682,990
Insurance deposit.................................................................. 21,804
-----------
$11,486,774
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Due to affiliated registered investment companies for sales of
their capital stock........................................................... $ 947,427
Due to affiliated companies...................................................... 3,157,451
Accounts payable and accrued expenses............................................ 247,847
Deferred federal income taxes payable............................................ 262,988
Due to dealers for redemptions from affiliated registered investment companies... 570,075
-----------
Total liabilities........................................................ 5,185,788
Stockholder's equity:
Common stock of $1 par value per share. Authorized 1,000
shares; issued and outstanding 10 shares......................... $ 10
Additional paid-in capital.......................................... 1,378,990
Retained earnings................................................... 4,921,986
============
Total stockholder's equity............................................... 6,300,986
-----------
$11,486,774
===========
</TABLE>
See accompanying Notes to Financial Statements.
30
<PAGE> 32
A I M DISTRIBUTORS, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
Income:
Underwriting income, net of dealers' commissions........................... $17,510,853
Marketing servicing fees................................................... 22,000,000
Distribution fees.......................................................... 6,922,135
Sponsor fees on periodic payment investment plans,
net of commissions paid................................................. 528,531
Other...................................................................... 531,005
Investment income.......................................................... 200,413
-----------
Total income....................................................... 47,692,937
-----------
Expenses:
Allocation from parent company............................... 29,229,114
Distribution expense......................................... 7,149,517
Compensation allocation from parent company.................. 1,397,857
Other operating expenses..................................... 3,766,536
Interest allocations from parent company..................... 1,806,678
============
Total expenses..................................................... 43,349,702
-----------
Income before federal and state income taxes....................... 4,343,235
Federal and state income taxes:
Current...................................................... 1,651,484
Deferred..................................................... 20,418 1,671,902
============
-----------
Net income......................................................... $ 2,671,333
===========
</TABLE>
A I M DISTRIBUTORS, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
----- ------- -------- ------
<S> <C> <C> <C> <C>
Balance at December 31, 1993.......... $10 $1,378,990 $5,532,627 $6,911,627
Net income............................ -- -- 2,671,333 2,671,333
Dividends paid........................ -- -- (3,281,974) (3,281,974)
--- ---------- ---------- ----------
Balance at December 31, 1994.......... $10 $1,378,990 $4,921,986 $6,300,986
=== ========== ========== ==========
</TABLE>
See accompanying Notes to Financial Statements.
31
<PAGE> 33
A I M DISTRIBUTORS, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 2,671,333
Adjustments to reconcile net income to net cash provided by
operating activities:
Decrease in accounts receivable................................. $ 3,233,083
Decrease in state income taxes refundable....................... 32,914
Decrease in prepaid expenses.................................... 346,844
Decrease in segregated trust account............................ 437,025
Decrease in amounts due to affiliated registered investment
companies for sales of their capital stock.................... (1,362,406)
Increase in amounts due to affiliated companies................. 2,577,753
Decrease in accounts payable and accrued expenses............... (499,656)
Increase in deferred income taxes payable....................... 20,418
Decrease in due to dealers for redemptions from affiliated
registered investment companies............................... (1,170,069)
============
Total adjustments..................................... 3,615,906
-----------
Net cash provided by operating activities............. 6,287,239
-----------
Cash flows used in financing activities -- dividends paid............ (3,281,974)
-----------
Net increase in cash and cash equivalents............. 3,005,265
Cash and cash equivalents at beginning of year.................. 3,295,509
-----------
Cash and cash equivalents at end of year........................ $ 6,300,774
==========
</TABLE>
See accompanying Notes to Financial Statements.
32
<PAGE> 34
A I M DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
A I M Distributors, Inc. (the "Company") is a wholly-owned subsidiary of
A I M Advisors, Inc. (the "Parent Company"). The Company acts as the principal
underwriter and distributor to affiliated registered investment companies. The
Company depends on its Parent Company for funding portions of its operations.
(b) Securities Transactions
Securities transactions are recorded on a settlement date basis which is
normally the fifth business day following the trade date (settlement date basis
as compared to trade date basis has no material effect on the Company's
financial position or results of operations). The Company accounts for its
investments at fair market value or, if applicable, amortized cost.
(c) Federal Income Taxes
For federal income tax purposes, the Company's income is included in the
consolidated income tax return filed by A I M Management Group Inc., the parent
company of A I M Advisors, Inc. Deferred and current taxes are provided at the
statutory rate in effect during the year (35%) by the members of the
consolidated group based on the amount that the respective member would pay or
have refunded if it were to file a separate return. The primary components of
the net deferred tax liability at December 31, 1994 relate to prepaid expenses
and deferred state tax expense.
(d) Allocations From Affiliated Companies
The Company is allocated expenses by an affiliated company based upon
estimates of time devoted to the operations of the Company by personnel of the
parent company and usage of shared facilities. The Company is also allocated
income from affiliated companies for services performed in marketing efforts for
affiliated registered investment companies sponsored by those companies and for
performing certain related shareholder servicing activities.
(e) Distribution Fees
The Company receives fees from affiliated registered investment companies
pursuant to 12b-1 plans (Investment Company Act of 1940) adopted by the
registered investment companies. Such fees are paid to the Company as
compensation for expenses incurred by the company for the distribution of shares
of the registered investment companies. The fees are based on a specified annual
percentage of a fund's average daily net assets.
33
<PAGE> 35
A I M DISTRIBUTORS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(f) Segregated Trust Account
The segregated trust account represents primarily U.S. Government Agency
discount note deposit in a segregated trust account as required by the
Investment Company Act of 1940. Such amount is determined in accordance with the
requirements of the Investment Company Act of 1940 to provide cash reserves for
refunds that may be required if investors in a unit investment trust exercise
their right to surrender or withdraw.
(g) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid assets such as cash in banks and amounts in money market funds to
be cash equivalents.
(2) NET CAPITAL REQUIREMENTS
In accordance with regulations of the Securities and Exchange Commission,
the Company must maintain minimum net capital and a ratio of aggregate
indebtedness to net capital, both as defined, that does not exceed 15 to 1. At
December 31, 1994, the Company had net capital of $2,975,932, which exceeded
required net capital of $274,499 by $2,701,433. The ratio of aggregate
indebtedness to net capital was 1.38 to 1 at December 31, 1994.
(3) SUBORDINATED DEBT
The Company had no subordinated debt at December 31, 1994 or at any time
during the year then ended.
(4) COMMITMENTS
The Company, as well as other affiliated companies, is a member of the ICI
Mutual Insurance Company (ICIM). Insurance coverage offered by ICIM requires, in
addition to an annual premium, a reserve premium deposit of $21,804 and a
commitment to provide additional funds, if needed. In accordance with the
funding requirements of the ICIM, the Company is obligated under an irrevocable
letter of credit in favor of ICIM in an amount of $41,944.
34
<PAGE> 36
PROSPECTUS
MARCH 1, 1995
AS REVISED
SEPTEMBER 22, 1995
AIM SUMMIT FUND, INC.
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 995-4246
AIM Summit Fund, Inc. (the "Fund") is a diversified, open-end investment
company whose objective is capital growth. Although the Fund may purchase
income-producing securities, income will generally not be a consideration in the
selection of securities for the Fund's portfolio.
Shares of the Fund are offered to and may be purchased by the general
public only through Summit Investors Plans, a unit investment trust. Details of
Summit Investors Plans, including the creation and sales charges and the
custodian charges applicable to Summit Investors Plans, may be found in the
Summit Investors Plans Prospectus which, along with this Prospectus of the Fund,
should be read and retained by the investor for future reference.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT INVESTORS SHOULD KNOW
ABOUT THE FUND PRIOR TO INVESTING AND SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 1995 HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS HEREBY INCORPORATED BY
REFERENCE. IT IS AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY WRITING OR CALLING
A I M DISTRIBUTORS, INC. AT (800) 995-4246.
------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
PAGE PAGE
Summary............................... A-2 Determining Net Asset Value........... A-10
Table of Fees and Expenses............ A-3 Sales of Shares....................... A-11
Financial Highlights.................. A-4 Redemption of Shares.................. A-11
Investment Program.................... A-5 Open Account.......................... A-12
Dividends, Distributions and Tax Management of the Fund................ A-13
Matters............................. A-9 General Information................... A-15
</TABLE>
A-1
<PAGE> 37
SUMMARY
INVESTMENT OBJECTIVE
AIM Summit Fund, Inc. (the "Fund") is a diversified, open-end investment
company whose objective is capital growth. Although the Fund may purchase
income-producing securities, income will generally not be a consideration in the
selection of securities for the Fund's portfolio. There can be no assurance that
the Fund will achieve its investment objective. See "Investment Program."
SALES OF SHARES
The principal underwriter of the Fund's shares is A I M Distributors, Inc.
Shares of the Fund's common stock offered by this Prospectus are available to
the general public only by means of an investment in Summit Investors Plans.
Investors should consult the Summit Investors Plans Prospectus for information
regarding minimum initial and subsequent investments and creation and sales
charges applicable to Summit Investors Plans. See "Sales of Shares."
REDEMPTION OF SHARES
Planholders of Summit Investors Plans should consult the Summit Investors
Plans Prospectus for information concerning the redemption or repurchase of Fund
shares held in Plans. Investors who hold shares of the Fund directly may at any
time redeem all or a portion of their shares at net asset value without charge.
See "Redemption of Shares."
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income and distributions from net capital
gains are paid annually. Dividends and distributions will be automatically
reinvested at net asset value without charge unless the shareholder has elected
to receive such payments in cash. See "Dividends, Distributions and Tax
Matters."
MANAGEMENT OF THE FUND
A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 1919, Houston, Texas
77046, acts as investment advisor to the Fund and in such capacity supervises
all aspects of management of the Fund, including the provision for the Fund of a
continuous investment program. AIM is primarily engaged in the business of
acting as investment advisor or manager to investment companies. AIM has entered
into a sub-advisory agreement with NationsBank of Texas, N.A. ("NationsBank
Texas") which furnishes AIM with investment research and advisory services
concerning a portion of the Fund's investment program. See "Management of the
Fund."
SPECIAL CONSIDERATIONS
Shares of the Fund are available to the general public only through
investment in a Summit Investors Plan which calls for fixed monthly investments.
Investments in a continuous investment plan may involve special risks not
usually associated with an investment in other investment companies. As
securities are subject to market fluctuations, an investor who liquidates his
investment when the market value of his accumulated shares is less than his
cost, including creation and sales charges, will incur a loss. Investments in a
continuous investment plan do not eliminate this risk. The Fund is designed for
investors who are seeking the accumulation of capital through
A-2
<PAGE> 38
systematic investments over a period of 15 or more years. The net proceeds of
systematic investments will be received and invested, and additional Fund shares
will be issued, during periods of varying economic and market conditions. The
investment objective and policies of the Fund may not be appropriate for an
investor who may have to liquidate his investment after a relatively short
period of time. Investors should therefore consider their financial ability to
continue regular monthly investments in a Plan. See the Summit Investors Plans
Prospectus for further information.
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets):
Management Fees.................................................................... .65%
Other Expenses..................................................................... .07%
Total Fund Operating Expenses...................................................... .72%
</TABLE>
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor in the Fund would pay the following
expenses on a $1,000 investment, assuming (1) a
5% annual return and (2) redemption at the end of each
time period: $7 $23 $40 $89
</TABLE>
The purpose of the foregoing Table of Fees and Expenses is to assist an
investor in understanding the various costs and expenses that an investor in the
Fund will bear directly and indirectly. (For a more complete description of the
various costs and expenses, see "Management of the Fund," below.) The
information in the foregoing Table of Fees and Expenses should be read in
conjunction with the information appearing elsewhere in the prospectus of Summit
Investors Plans, particularly with respect to the Creation and Sales Charges
imposed in connection with the purchase of Summit Investors Plans. These and
other charges relating to the purchase of Summit Investors Plans are in addition
to the expenses shown in the foregoing Table of Fees and Expenses. (See
"Allocation of Investments and Deductions," "Rights and Privileges of
Planholders" and "Custodian and Sponsor Charges" sections of the attached Summit
Investors Plans prospectus immediately preceding the Fund prospectus.)
THE EXAMPLE SHOWN IN THE TABLE ABOVE SHOULD NOT BE CONSIDERED TO BE A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE AND EXPENSES; ACTUAL PERFORMANCE
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
------------------------
A-3
<PAGE> 39
FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the Fund
outstanding during the year ended October 31, 1994, the ten months ended October
31, 1993 and each of the years in the eight-year period ended December 31, 1992.
A copy of the auditor's report is contained in the Fund's Statement of
Additional Information which is available upon request and without charge from
A I M Distributors, Inc.
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
---------------------- ---------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988(a) 1987
-------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.46 $ 9.64 $ 10.09 $ 7.56 $ 7.79 $ 6.57 $ 5.70 $ 6.68
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.10 0.09 0.11 0.14 0.15 0.16 0.16 0.09
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on
securities (both realized
and unrealized) (0.04) 0.73 0.35 3.16 (0.08) 1.86 0.84 (0.40)
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.06 0.82 0.46 3.30 0.07 2.02 1.00 (0.31)
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.10) -- (0.11) (0.13) (0.16) (0.16) (0.13) (0.10)
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Distributions from capital
gains (0.64) -- (0.80) (0.64) (0.14) (0.64) -- (0.57)
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.74) -- (0.91) (0.77) (0.30) (0.80) (0.13) (0.67)
----------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 9.78 $ 10.46 $ 9.64 $ 10.09 $ 7.56 $ 7.79 $ 6.57 $ 5.70
============================= ======== ======== ======== ======== ======== ======== ======== ========
Total return(b) 0.61% 8.51% 4.50% 43.64% 0.93% 30.92% 17.65% (4.66)%
============================= ======== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $765,073 $705,580 $604,329 $517,835 $316,043 $262,655 $164,996 $101,541
============================= ======== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets 0.72%(c) 0.79%(d) 0.76% 0.75% 0.80% 0.82% 1.04% 0.98%
============================= ======== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets 1.04%(c) 1.13%(d) 1.09% 1.48% 2.02% 2.14% 2.57% 1.06%
============================= ======== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 121.69% 115.76% 97.41% 109.04% 142.60% 97.26% 114.94% 81.99%
============================= ======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
1986 1985
-------- --------
<S> <C> <C>
Net asset value, beginning of
period $ 6.49 $ 5.03
----------------------------- ------- -------
Income from investment
operations:
Net investment income 0.08 0.06
----------------------------- ------- -------
Net gains (losses) on
securities (both realized
and unrealized) 0.82 1.45
----------------------------- ------- -------
Total from investment
operations 0.90 1.51
----------------------------- ------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.04)
----------------------------- ------- -------
Distributions from capital
gains (0.66) (0.01)
----------------------------- ------- -------
Total distributions (0.71) (0.05)
----------------------------- ------- -------
Net asset value, end of
period $ 6.68 $ 6.49
============================= ======= =======
Total return(b) 14.05% 30.15%
============================= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $72,458 $38,469
============================= ======= =======
Ratio of expenses to average
net assets 1.16% 1.48%
============================= ======= =======
Ratio of net investment
income to average net
assets 1.15% 2.88%
============================= ======= =======
Portfolio turnover rate 118.23% 92.90%
============================= ======= =======
</TABLE>
(a) The Fund changed investment advisers on October 5, 1988.
(b) For periods less than one year, total return is not annualized.
(c) Ratios are based on average net assets of $720,031,149.
(d) Annualized.
A-4
<PAGE> 40
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE
The investment objective of the Fund is capital growth. Although the Fund
may purchase income-producing securities, income will generally not be a
consideration in the selection of securities for the Fund's portfolio. There can
be no assurance that the Fund will achieve its investment objective.
The Fund will invest primarily in three types of securities:
1. Core Stocks -- These are securities issued by companies which have
established a long-term record of earnings growth and which are believed by
AIM, as the Fund's advisor, to be capable of sustaining such growth in the
future. Generally (but not always) the common stocks of these companies
will be listed on a national securities exchange.
2. Emerging Growth Stocks -- These securities are issued by smaller
growth-oriented companies. The securities of a number of such companies are
traded only in the over-the-counter market. Such securities may not have
widespread interest among institutional investors. Accordingly, such
securities may present increased opportunity for gain if significant
institutional investor interest subsequently develops, but may also involve
additional risk of loss in the event of adverse developments because of the
limited market for such securities. The business prospects and earnings of
emerging growth companies may be subject to more rapid or unanticipated
changes than in the case of larger, better established concerns.
3. Value-Oriented Stocks -- These are stocks which are believed to be
currently undervalued relative to other available investments. Since this
belief may be based upon projections made by the Fund's advisor or
sub-advisor of earnings, dividends or price-earnings ratios (which
projections may differ significantly from similar projections made by other
investors), the Fund's ability to realize capital appreciation on
value-oriented stocks may be more dependent upon the advisor's and
sub-advisor's capabilities than is the case with other types of securities
in which the Fund may invest.
It is anticipated that approximately 50% of the Fund's investments will be
in core stocks, while the remaining 50% will be in emerging growth and
value-oriented stocks. However, these percentages may be changed by AIM from
time to time in response to current market conditions. The Fund does not
concentrate its investments in any particular industry or group of industries,
but diversifies its holdings among as many different companies and industries as
seems appropriate to the advisor in light of the monetary, economic and stock
market conditions prevailing at any given time.
Although the investment emphasis of the Fund is on common stocks, the Fund
may also invest in other securities believed by AIM to have capital appreciation
potential, including but not limited to, preferred stocks, bonds, debentures,
notes and other debt securities, and warrants and rights to acquire securities.
Consistent with the Fund's objective of capital growth, the Fund's assets will
tend to be fully invested in the securities listed above. However, pending
investment of the proceeds from the sale of the Fund's shares, or if market
conditions are believed to warrant a more conservative or defensive investment
strategy, the Fund's assets may be invested without limit in money market
instruments chosen by AIM or retained in cash. Such money market instruments
will
A-5
<PAGE> 41
consist of obligations of, or guaranteed by, the United States Government or its
agencies or instrumentalities; certificates of deposit, bankers' acceptances and
other obligations of domestic banks having total assets of at least $500
million; and commercial paper rated in the highest category by a nationally
recognized statistical rating organization.
The Fund may make short sales or maintain a short position in securities if
at all times when such a short position is open the Fund owns at least an equal
amount of such securities or securities convertible into or exchangeable for at
least an equal amount of such securities.
The receipt by the Fund of new money primarily through the medium of
continuing investments under systematic investment plans may tend to produce a
more even rate of influx than is the case with other funds. This may furnish a
base for a gradual and planned accumulation of positions in individual portfolio
securities when such a program is deemed to be appropriate. One example of how
this concept could be employed is through a program of "dollar-cost averaging"
in the purchase of securities for the Fund. "Dollar-cost averaging" involves the
purchase of a fixed dollar amount of stock of a company at regular intervals.
The number of shares of stock obtained upon each purchase will therefore vary
with the price of the stock, with more shares being obtained as the price of the
stock declines and fewer shares being obtained as the price of the stock
increases. Such a program could be hampered by increased redemptions of the
Fund's shares which would reduce amounts available for investment by the Fund.
CERTAIN INVESTMENT STRATEGIES AND POLICIES
LENDING OF FUND SECURITIES. The Fund may also lend its portfolio
securities in amounts up to 33 1/3% of its total assets to financial
institutions in accordance with the investment restrictions of the Fund. Such
loans would involve risks of delay in receiving additional collateral in the
event the value of the collateral decreased below the value of the securities
loaned or of delay in recovering the securities loaned or even loss of rights in
the collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers deemed by AIM to be of good standing and
only when, in AIM's judgment, the income to be earned from the loans justifies
the attendant risks.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities that are illiquid. Illiquid securities include securities that have
no readily available market quotations and cannot be disposed of promptly
(within seven days) in the normal course of business at a price at which they
are valued. Illiquid securities may include securities that are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933. Restricted securities may, in certain circumstances, be
resold pursuant to Rule 144A, and thus may or may not constitute illiquid
securities. The Fund's Board of Directors is responsible for developing and
establishing guidelines and procedures for determining the liquidity of Rule
144A restricted securities on behalf of the Fund and monitoring AIM's
implementation of the guidelines and procedures. Limitations on the resale of
restricted securities may have an adverse effect on their marketability, which
may prevent the Fund from disposing of them promptly at reasonable prices. The
Fund may have to bear the expense of registering such securities for resale, and
the risk of substantial delays in effecting such registrations.
INVESTMENTS IN FOREIGN SECURITIES. The Fund may invest up to 20% of its
total assets in Canadian and other foreign securities. These securities will be
marketable equity securities
A-6
<PAGE> 42
(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, with their predecessors, have been in continuous
operation for three years or more and which generally are listed on a recognized
foreign securities exchange or traded in a foreign over-the-counter market. The
Fund may also invest in foreign securities listed on recognized U.S. securities
exchanges or traded in the U.S. over-the-counter market. 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. The Fund may also
purchase securities of foreign issuers which are in the form of American
Depository Receipts ("ADRs"), European Depository Receipts ("EDRs"), or other
securities representing underlying securities of foreign issuers. ADRs, EDRs,
and other securities representing underlying securities of foreign issuers are
included in the percentage limitations applicable to the Fund's investments in
foreign securities. To the extent it invests in securities denominated in
foreign currencies, the Fund bears the risks of changes in the exchange rates
between U.S. currency and the foreign currency, as well as the availability and
status of foreign securities markets. For a discussion of the risks pertaining
to investments in foreign securities, see "Risk Factors Regarding Foreign
Securities" below.
RISK FACTORS REGARDING FOREIGN SECURITIES. Investments by the Fund in
foreign securities, whether denominated in U.S. dollars or foreign currencies
including Eurodollar, Yankee dollar and other foreign obligations, may entail
some or all of the risks set forth below. Investments by the Fund in ADRs and
EDRs may entail certain political and economic risks and regulatory risks
described below.
Currency Risk. The value of the Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated, and increases when the
value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in
which the Fund may invest are not as developed as the United States economy and
may be subject to significantly different economic and political forces.
Political or social instability, expropriation or confiscatory taxation, and
limitations on the removal of funds or other assets could also adversely affect
the value of the Fund's investments.
Regulatory Risk. Foreign companies are not registered with the United
States Securities and Exchange Commission (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. In addition, income from foreign securities owned by the
Fund may be reduced by a withholding tax at the source, which tax would reduce
dividend income payable to the Fund's shareholders.
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<PAGE> 43
Market Risk. The securities markets in many of the countries in which the
Fund may 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.
STOCK INDEX FUTURES CONTRACTS AND RELATED CALL OPTIONS. The Fund may
purchase and sell stock index futures contracts as a hedge against changes in
market conditions. A stock index futures contract is an agreement pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock index value at
the close of the last trading day of the contract and the price at which the
futures contract is originally struck. No physical delivery of the underlying
stocks in the index is made. The Fund will only enter into domestic stock index
futures. The Fund will only enter into stock index futures contracts or write
call options thereon as a hedge against changes resulting from market conditions
in the values of the portfolio securities held or which the Fund intends to
purchase. Generally, the Fund may elect to close a position in a futures
contract by taking an opposite position which will operate to terminate the
Fund's position in the futures contract. The Fund may also write call options
with respect to such futures contracts. As the writer of a call option on a
futures contract, the Fund would be required to assume a short position in a
futures contract at a specified exercise price if the option is exercised during
the option period. If the option is exercised on the last trading date prior to
the expiration date of the option, the settlement of the option will be made
entirely in cash equal to the difference between the exercise price of the
option and the closing price of the underlying futures contract on the
expiration date. See the Statement of Additional Information for a description
of the Fund's investments in futures contracts including certain related risks.
The Fund may purchase or sell futures contracts if, immediately thereafter, the
sum of the amount of margin deposits and premiums on open positions with respect
to futures contracts and related call options would not exceed 5% of the market
value of the Fund's total assets.
PORTFOLIO TURNOVER
Consistent with its objective of capital growth, the Fund does not intend
to engage in substantial short-term trading. However, the Fund reserves the
right to dispose of any security without regard to the period of time it has
been held and to take short-term or long-term profits when such action is
consistent with its investment program. The Fund's historical portfolio turnover
rates are included in the Financial Highlights table on page A-4. A higher rate
of portfolio turnover may result in higher transaction costs, including
brokerage commissions. The Fund's turnover may vary greatly from year to year
and may exceed 100% during years when the Fund has taken a significant defensive
position or otherwise makes changes in the investment strategies which it
pursues consistent with its overall investment objective.
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<PAGE> 44
INVESTMENT RESTRICTIONS
The Fund's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize (but cannot
eliminate) certain risks associated with investing in specified types of
securities or engaging in certain transactions and to limit the amount of the
Fund's assets which may be invested in any specific industry or issuer. The most
significant of these restrictions provide that the Fund will not purchase a
security if as a result of such purchase:
(1) More than 25% of the value of the Fund's total assets would be
invested in the securities of issuers primarily engaged in the same
industry, except that this restriction does not apply to obligations issued
or guaranteed by the United States Government or its agencies or
instrumentalities;
(2) More than 5% of the value of the Fund's total assets would be
invested in the securities of a single issuer, except that this restriction
does not apply to obligations issued or guaranteed by the United States
Government or its agencies or instrumentalities, or repurchase agreements
pertaining to such securities; or
(3) The Fund would own more than 10% of the outstanding voting
securities of any issuer or more than 10% of any class of securities of an
issuer, with the debt and preferred stock of an issuer each considered to
be a separate single class for this purpose.
The foregoing percentage limitations will be calculated by giving effect to
such purchase and will be based upon values at the time of purchase. The Fund
may retain any security purchased by it notwithstanding changes in the value of
its assets occurring subsequent to the time of any such purchase.
The Fund's investment objective as described under "Investment Objective,"
the policy relating to lending of securities as described under "Certain
Investment Strategies and Policies -- Lending of Fund Securities," and the
foregoing investment restrictions are matters of fundamental policy which may
not be changed without the vote of a majority of the Fund's outstanding shares,
as defined in "General Information -- Organization and Description of Common
Stock."
Information concerning other investment restrictions and policies of the
Fund is contained in the Statement of Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
It is the present policy of the Fund to declare and pay annually net
investment income dividends and capital gains distributions. It is the Fund's
intention to distribute substantially all of its net investment income and
capital gains by the end of the calendar year. In determining the amount of
capital gains, if any, available for distribution, net capital gains will be
offset against available net capital losses, if any, carried forward from
previous fiscal periods. All dividends and distributions will be automatically
reinvested at the net asset value determined on the record date in full and
fractional shares of the Fund unless the shareholder has elected prior to the
record date, by written notice to Boston Financial Data Services, Inc. ("BFDS"),
P.O. Box 8300, Boston, Massachusetts 02266-8300, Attention: AIM Summit Fund,
Inc., to receive all such payments in cash. Such
A-9
<PAGE> 45
reinvestments will not be subject to sales charges and shares so purchased will
be automatically credited to the account of the shareholder.
Changes in the form of dividend and distribution payments may be made by
the shareholder at any time and will be effective as to any subsequent payment
if such notice is received by BFDS prior to the applicable record date. Any
dividend and distribution election will remain in effect until BFDS receives a
revised written election by the shareholder.
The Fund has qualified and intends to continue to qualify for treatment as
a regulated investment company under Subchapter M of the Internal Revenue Code
of 1986 (the "Code"). Because the Fund intends to distribute substantially all
of its net investment income and net realized capital gains to shareholders, it
is not expected that the Fund will be required to pay any federal income tax.
The Fund intends to meet the distribution requirements of the Code to avoid the
imposition of a 4% excise tax. However, shareholders normally are subject to
federal income taxes and any applicable state and local income taxes, on the
dividends and distributions from the Fund, whether received in cash or
reinvested in shares of the Fund. Shareholders are notified annually of the
federal income tax status of dividends and capital gains distributions. To avoid
being subject to a 31% federal backup withholding on dividends, distributions
and redemption payments a shareholder must furnish the Fund with his taxpayer
identification number and certify under penalties of perjury that the number
provided is correct and that he is not subject to backup withholding for any
reason.
Any dividend or distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-dividend date by the amount of the
dividend or distribution. Therefore, a dividend or distribution paid shortly
after a purchase of shares by an investor would represent, in substance, a
return of capital to the shareholder (to the extent it is paid on the shares so
purchased), even though it would be subject to income taxes, as discussed
herein.
Distributions may be subject to state and local taxes, and the treatment
thereof may differ from the federal income tax consequences discussed herein.
Additional information about taxes is set forth in the Statement of Additional
Information.
DETERMINING NET ASSET VALUE
The net asset value of a Fund share is determined once daily as of 4:15
p.m. Eastern Time on each business day of the Fund (defined as any day on which
the New York Stock Exchange is open for business) by dividing the value of the
Fund's assets, less all of its liabilities, by the number of shares outstanding.
In the event the New York Stock Exchange 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 15 minutes following the close of the New York Stock Exchange on such
day. Determination of the Fund's net asset value per share is made in accordance
with generally accepted accounting principles. Portfolio securities are valued
using market values, if available. Securities for which market quotations are
not readily available and any other assets of the Fund are valued at fair value
as determined in good faith by or under the supervision of the Fund's officers
in a manner specifically authorized by the Board of Directors of the Fund.
Notwithstanding the above, short-term obligations with maturities of 60 days or
less are valued at amortized cost as reflecting fair value. Additional
information concerning the valuation of the Fund's shares is contained in the
Statement of Additional Information.
A-10
<PAGE> 46
SALES OF SHARES
The Fund has entered into a Distribution Agreement (the "Agreement") with
A I M Distributors, Inc. ("AIM Distributors"), a registered broker-dealer and a
wholly owned subsidiary of AIM, which in turn is a wholly owned subsidiary of
A I M Management Group Inc. ("AIM Management"), under which the Fund will issue
shares at net asset value to State Street Bank and Trust Company, as custodian
for Summit Investors Plans ("State Street Bank" or the "Custodian"). The address
of AIM Distributors is P.O. Box 4264, Houston, Texas 77210-4264. AIM
Distributors acts as sponsor and principal underwriter of Summit Investors
Plans. The terms of offering of Summit Investors Plans are contained in the
Prospectus of Summit Investors Plans. AIM Distributors does not receive any fee
from the Fund pursuant to the Agreement. Certain directors and officers of the
Fund are affiliated with AIM Distributors and AIM Management. More information
concerning the directors and officers of the Fund and their affiliation may be
found in the Statement of Additional Information.
THE FUND WILL NOT OFFER ITS SHARES TO THE GENERAL PUBLIC EXCEPT THROUGH
SUMMIT INVESTORS PLANS. However, the following persons may purchase shares of
the Fund directly through AIM Distributors at net asset value: (a) any current
or retired officer, trustee, director, or employee, or any member of the
immediate family (spouse, minor children, parents and parents of spouse) of any
such person, of AIM Management or its affiliates, or of any investment company
managed or advised by AIM; or (b) any employee benefit plan established for
employees of AIM Management or its affiliates.
REDEMPTION OF SHARES
THE FOLLOWING DISCUSSION RELATES ONLY TO THOSE INVESTORS WHO HOLD SHARES OF
THE FUND DIRECTLY. PLANHOLDERS SHOULD CONSULT THEIR SUMMIT INVESTORS PLANS
PROSPECTUS FOR THE REQUIREMENTS FOR REDEMPTION OF FUND SHARES HELD IN A SUMMIT
INVESTORS PLAN.
A shareholder may redeem his shares of the Fund at any time without charge.
Upon receipt by BFDS of a proper request, the Fund will redeem shares in cash at
the next determined net asset value. All redemption requests must be in writing
and directed to BFDS, P.O. Box 8300, Boston, Massachusetts 02266-8300,
Attention: AIM Summit Fund, Inc. Any written request sent to the Fund will be
forwarded to BFDS and the effective date of the redemption request will be when
the request is received by AIM Distributors or BFDS.
Requests for redemption must include the following: (a) signatures of each
registered owner exactly as the shares are registered; (b) the account number
and number of shares to be redeemed; (c) stock certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of State Street Bank; (d) signature guarantees, as described below; and
(e) any additional documents required for redemption by corporations,
partnerships, trusts or other fiduciaries.
To assure proper redemption, and to protect the shareholder, the Fund, AIM
Distributors and the Custodian, the Fund requires that the signature of each
registered shareholder be guaranteed. Acceptable guarantors are banks,
broker-dealers, savings and loan associations, credit unions, national
securities exchanges and any other "eligible guarantor institution" as defined
in rules adopted by the SEC. A notary public is not an acceptable guarantor. The
signature guarantee(s)
A-11
<PAGE> 47
must appear either: (a) on the written request for redemption, which must
clearly identify the exact name(s) in which the account is registered, the
account number and the number of shares or the dollar amount to be redeemed; (b)
on a stock power, which may be obtained from AIM Distributors, State Street Bank
or from most banks and stockbrokers; or (c) on all share certificates tendered
for redemption, in which case the signature guarantee(s) must also appear on the
written request or a stock power if shares held by State Street Bank are also
being redeemed. It is the present policy of the Fund not to require signature
guarantees for redemption requests of under $50,000 unless the proceeds are to
be paid to a person other than the record owner or are to be sent to an address
other than the one of record. Upon notice to the shareholders, this policy may
be changed. Currently, in addition to these requirements, if a Planholder has
invested in the Fund to establish an IRA, he should include the following
information along with his written request for either partial or full
liquidation of Fund shares: (a) a statement as to whether or not he has attained
age 59 1/2; (b) a statement as to whether or not he is legally disabled; (c) a
statement as to whether or not he elects to have federal income tax withheld
from the proceeds of his redemption, and (d) his Social Security number along
with the following statement: "I certify under penalties of perjury that the
Social Security number provided is correct and that I am not subject to backup
withholding either because I am exempt from backup withholding, I have not been
notified by the Internal Revenue Service that I am subject to backup
withholding, or the Internal Revenue Service has notified me that I am no longer
subject to backup withholding." If the Planholder has been notified by the
Internal Revenue Service that he is currently subject to backup withholding,
then the preceding statement should be modified accordingly. Even if he elects
not to have federal income tax withheld, he is liable for federal income tax on
the taxable portion of his redemption proceeds. He may also be subject to tax
penalties under the estimated tax payment rules if his payments of estimated tax
and withholding, if any, are not adequate.
Upon receipt of a proper request for redemption, payment is made as soon as
practicable, but in any event within seven days after presentation of all
required redemption documents in good order.
OPEN ACCOUNT
THE FOLLOWING DISCUSSION OF AN OPEN ACCOUNT IS APPLICABLE ONLY TO THOSE
SHAREHOLDERS WHO HOLD SHARES OF THE FUND DIRECTLY.
The Fund maintains an open account for each shareholder, under which
additional Fund shares acquired through reinvestment of dividends and capital
gains distributions are held by State Street Bank for the shareholder's account
unless the shareholder elects to receive stock certificates or to obtain
dividends and distributions in cash. Stock certificates (in full shares only)
are issued without charge (but only on written request) and may be redeposited
at any time. It is anticipated that as a matter of convenience most shareholders
will not request certificates. A shareholder receives a statement from BFDS
after each acquisition or redemption of Fund shares, and after each dividend or
capital gains distribution.
A-12
<PAGE> 48
MANAGEMENT OF THE FUND
THE BOARD OF DIRECTORS
The overall management of the business and affairs of the Fund is vested
with the Board of Directors. The Board of Directors approves all significant
agreements between the Fund and persons or companies furnishing services to the
Fund, including the Fund's agreements with the Fund's advisor, sub-advisor,
distributor, custodian and transfer agent. The day-to-day operations of the Fund
are delegated to the Fund's officers and to AIM, subject always to the
investment objective and policies of the Fund and to the general supervision of
the Fund's Board of Directors. Information concerning the Board of Directors may
be found in the Statement of Additional Information.
THE INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM"), 11 Greenway Plaza, Suite 1919, Houston, Texas
77046, serves as the Fund's investment advisor pursuant to an Investment
Advisory Agreement, dated October 18, 1993 (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises 37
investment company portfolios (including the Fund). AIM is a wholly owned
subsidiary of AIM Management. Certain of the directors and officers of AIM are
also executive officers of the Fund and their affiliations are set forth in
detail in the Statement of Additional Information. As of February 3, 1995, the
total assets of such investment company portfolios advised or managed by AIM and
its affiliates were approximately $27.6 billion.
Pursuant to the terms of the Advisory Agreement, AIM supervises all aspects
of the Fund's operations, including the investment and reinvestment of the cash,
securities or other properties comprising the Fund, subject at all times to the
policies and control of the Fund's Board of Directors. AIM obtains and evaluates
economic, statistical and financial information to formulate and implement
investment programs for the Funds. AIM may delegate to a sub-advisor certain of
its duties; however, AIM must supervise the performance of any such sub-advisor.
AIM has entered into a sub-advisory agreement with NationsBank of Texas, N.A.
("NationsBank Texas"), as described below. AIM maintains a trading desk and
selects the core stocks which generally comprise approximately 50% of the Fund's
portfolio and the emerging growth stocks which generally comprise 25% of the
Fund's portfolio. The remainder of the Fund's portfolio is invested in value-
oriented stocks selected by the sub-advisor.
The portion of the Fund's portfolio invested in core stocks and in emerging
growth and value oriented stocks is determined by AIM.
The Advisory Agreement also provides that, upon the request of the Fund's
Board of Directors, AIM may perform or arrange for the performance of certain
accounting, shareholder servicing and other administrative services not required
to be performed by AIM under the Advisory Agreement. For such services, pursuant
to an administrative service agreement with the Fund, AIM is entitled to receive
from the Fund reimbursement of its costs or such reasonable compensation as may
be agreed upon between AIM and the Fund's Board of Directors, upon a finding by
the Board of Directors that the provision of such services is in the best
interests of the Fund and its shareholders. The Board of Directors has made such
a finding and, accordingly, has entered into an Administrative Services
Agreement dated October 18, 1993 with AIM (the "Administrative Services
Agreement"). Under the Administrative Services Agreement, AIM is currently
reimbursed for the services of a
A-13
<PAGE> 49
principal financial officer and his staff, who maintain the financial accounts
and books and records of the Fund, including the calculation of the daily net
asset value of the Fund, and prepare tax returns and financial statements for
the Fund and is also reimbursed for any expenses related to providing such
services, as well as the services of staff responding to various shareholder
inquiries.
AIM may in its discretion from time to time agree to waive voluntarily all
or any portion of its advisory fee and/or assume certain expenses of the Fund
but will retain its ability to be reimbursed prior to the end of the fiscal
year. Fee waivers or reductions and waivers of expense reimbursements, other
than those set forth in the Advisory Agreement, may be rescinded at any time
without notice to investors.
For the fiscal year ended October 31, 1994, AIM received fees from the Fund
that amounted to 0.65% of the Fund's average daily net assets. For the fiscal
year ended October 31, 1994, NationsBank Texas received fees from AIM that
amounted to 0.25% of the Fund's average daily net assets for sub-advisory
services. For the fiscal year ended October 31, 1994, the Fund paid 0.006% of
its average daily net assets to AIM for reimbursement for administrative
services.
THE SUB-ADVISOR
NationsBank Texas, 901 Main Street, Dallas, Texas 75202, serves as the
Fund's sub-advisor pursuant to a Sub-Advisory Agreement dated October 18, 1993
(the "Sub-Advisory Agreement"). NationsBank Corp. (formerly, NCNB Corporation),
a bank holding company headquartered in Charlotte, North Carolina, holds 100% of
the voting stock of NationsBank Texas.
Pursuant to the terms of the Sub-Advisory Agreement, AIM has appointed
NationsBank Texas to provide certain investment advisory services including
economic, statistical and financial research and securities analysis to the
Fund, subject to overall supervision by AIM and the Fund's Board of Directors.
Pursuant to the terms of the Sub-Advisory Agreement, AIM will determine the core
stocks and the emerging growth stocks to be purchased or sold by the Fund, while
NationsBank Texas, under AIM's supervision, will determine the value-oriented
stocks to be purchased or sold by the Fund. It is anticipated that
approximately, 25% of the Fund's portfolio will be invested in value-oriented
stocks, although that percentage may change from time to time as deemed
advisable by AIM based upon current market conditions.
For the fiscal year ended October 31, 1994, the expenses of the Fund borne
by the Fund, including the fees paid under the Advisory Agreement, amounted to
0.72% of the Fund's average daily net assets. The advisory fee rate paid by the
Fund is higher than that paid by some other investment companies. However, many
of those investment companies are a different size or have different objectives
than the Fund. The effective rate of fees and expenses paid by the Fund at its
current size is lower than that for many other funds with similar investment
objectives.
PORTFOLIO MANAGERS
AIM uses a team approach and disciplined investment strategy in providing
investment advisory services to all its accounts, including the Fund. AIM's
investment staff consists of 87 individuals. While individual members of AIM's
investment staff are assigned primary responsibility for the day-to-day
management of each of AIM's accounts, all accounts are reviewed on a regular
basis by AIM's Investment Policy Committee to ensure that they are being
invested in accordance with the accounts' and AIM's investment policies. The
individuals on the investment team primarily responsi-
A-14
<PAGE> 50
ble for the day-to-day management of the Fund are David P. Barnard, Robert M.
Kippes and Jonathan C. Schoolar. Messrs. Barnard, Kippes and Schoolar have had
responsibility for the Fund since March 1, 1995. Steve S. Smith is Senior Vice
President of NationsBank Texas, the Fund's sub-advisor, and has been responsible
for the Fund since January 1, 1992.
David P. Barnard is Vice President of A I M Capital Management, Inc. ("AIM
Capital") a wholly-owned subsidiary of AIM. Mr. Barnard has been associated with
AIM and/or its affiliates since 1982 and has 21 years experience as an
investment professional.
Mr. Kippes is Vice President of AIM Capital. Mr. Kippes has been associated
with AIM and/or its affiliates since 1989 and has six years experience as an
investment professional.
Mr. Schoolar is Senior Vice President and Director of AIM Capital and is
Vice President of AIM and the Fund. Mr. Schoolar has been associated with AIM
and/or its affiliates since 1986 and has 12 years experience as an investment
professional.
Mr. Smith has been associated with NationsBank Texas since 1990 and has 20
years experience as an investment professional.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Fund's Board of Directors, AIM is
responsible for the selection of broker/dealers to effect transactions for the
Fund and for the negotiation of brokerage commission rates with such
broker/dealers. AIM's primary consideration in effecting a security transaction
will be execution at the most favorable price. When selecting a broker/dealer to
execute each particular transaction, AIM will take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker/dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker/dealer to the investment performance of the Fund on a continuing basis.
Portfolio transactions placed through dealers serving as primary market makers
are effected at net prices, without commissions as such, but which include
compensation in the form of mark up or mark down. In certain instances, the Fund
makes purchases of underwritten issues at prices which include underwriting
fees.
Broker/dealers selected by AIM may furnish AIM, or any sub-advisor to AIM
with statistical, research and other information or services which are deemed by
them to be beneficial to the Fund's investment program. Certain research
services furnished by broker/dealers may be useful to AIM or any sub-advisor
with clients other than the Fund. AIM may cause the Fund to pay a higher price
for securities or higher commissions in recognition of research services
furnished by broker/dealers. AIM may also consider sales of shares of the Fund
and of the other open-end investment companies managed or advised by AIM as a
factor in the selection of broker/dealers to execute portfolio transactions for
the Fund, subject to the requirements of best price and execution.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund is an open-end, diversified management investment company
organized as a corporation under the laws of the State of Maryland on February
17, 1982, and has an authorized capital of 1,000,000,000 shares of common stock,
par value $.01 per share. The shares of common stock of the Fund have equal
rights with respect to voting, dividends, distributions, redemption and
A-15
<PAGE> 51
liquidation. Fractional shares have the same rights as full shares to the extent
of their proportionate interest. Shareholders of the Fund do not have cumulative
voting rights. There are no preemptive or conversion rights applicable to any of
the Fund's shares. The Fund's shares, when issued, are fully paid and
non-assessable.
Shares are redeemable at the net asset value thereof at the option of the
holders thereof. In the event of any dissolution or liquidation of the Fund, and
subject to the rights of creditors, the holders of the Fund's shares are
entitled to receive the assets of the Fund available for distribution in
proportion to the number of shares held by such holders.
As used in this Prospectus, the term "majority vote" means the affirmative
vote of (a) more than 50% of the outstanding shares of the Fund or (b) 67% or
more of the shares present at a meeting if more than 50% of the outstanding
shares of the Fund are represented at the meeting in person or by proxy,
whichever is less.
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, 02110, serves as transfer agent for the Fund's shares and as
custodian for the Fund's portfolio securities and cash. The custodian's
administrative duties have been delegated by State Street Bank to its partially
owned affiliate, Boston Financial Data Services, Inc., P.O. Box 8300, Boston,
Massachusetts 02266-8300. State Street Bank and BFDS will receive such
compensation from the Fund for their services in such capacities as may be
agreed to from time to time by State Street Bank and the Fund.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania, serves as counsel to the Fund and has passed upon the legality of
the shares of the Fund offered pursuant to this Prospectus.
FINANCIAL STATEMENTS
The financial statements of the Fund, including a report of the Fund's
auditors, are contained in the Statement of Additional Information.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to AIM Distributors.
OTHER INFORMATION
This Prospectus omits certain information contained in the registration
statement filed with the SEC. Copies of the registration statement, including
items omitted herein, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations. From time to time, Fund sales
literature and/or advertisements may disclose top holdings included in the
Fund's portfolio. Information regarding the Fund's performance is contained in
the annual report to shareholders, which is available upon request without
charge.
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[AIM LOGO APPEARS HERE]
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SPONSOR
A I M DISTRIBUTORS, INC.
P.O. BOX 4264
HOUSTON, TEXAS 77210-4264
(800) 995-4246
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
225 FRANKLIN STREET
BOSTON, MASSACHUSETTS 02110
CUSTODIAN'S AGENT
BOSTON FINANCIAL DATA SERVICES, INC.
P.O. BOX 8300
BOSTON, MASSACHUSETTS 02266-8300
(617) 328-5000
AUDITORS
KPMG PEAT MARWICK LLP
700 LOUISIANA
NATIONSBANK BUILDING
HOUSTON, TEXAS 77002
