<PAGE> 1
As filed with the Securities and Exchange Commission on December 29, 1998
-----------------
1933 Act Registration No. 2-76909
1940 Act Registration No. 811-3443
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
-------
Post-Effective Amendment No. 22
------ X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23 X
----- ---
(Check appropriate box or boxes)
AIM SUMMIT FUND, INC.
----------------------
(formerly Summit Investors Fund, Inc.)
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
---------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
---------------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
<TABLE>
<CAPTION>
<S> <C>
Stephen I. Winer, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
</TABLE>
Approximate Date of Proposed Public Offering: March 1, 1999
-------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
- -------
on (date) pursuant to paragraph (b)
- -------
60 days after filing pursuant to paragraph (a)(1)
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X on March 1, 1999 pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of rule 485.
- -------
(Continued on Next Page)
<PAGE> 2
If appropriate, check the following box:
- ------- this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Title of Securities Being Registered: Common Stock
<PAGE> 3
[AIM LOGO]
AIM Summit Fund, Inc.
Class I Shares
Prospectus
March 1, 1999
AIM Summit Fund, Inc. seeks to provide growth of capital.
Class I Shares of the fund are offered to and may be purchased by the general
public only through Summit Investors Plans I, a unit investment trust. Details
of Summit Investors Plans I, including the creation and sales charges and the
custodian charges applicable to Summit Investors Plans I, are found in the
Summit Investors Plans I Prospectus. You should read both this Prospectus and
the Prospectus of Summit Investors Plans I and keep these Prospectuses for
future reference.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES....................................................................A-1
PRINCIPAL RISKS OF INVESTING IN THE FUND...............................................................A-1
PERFORMANCE INFORMATION................................................................................A-2
ANNUAL TOTAL RETURNS..............................................................................A-2
PERFORMANCE TABLE.................................................................................A-3
FEE TABLE AND EXPENSE EXAMPLE..........................................................................A-4
FEE TABLE.........................................................................................A-4
EXPENSE EXAMPLE...................................................................................A-4
FUND MANAGEMENT........................................................................................A-5
THE ADVISOR AND SUBADVISOR........................................................................A-5
ADVISOR COMPENSATION..............................................................................A-5
PORTFOLIO MANAGERS................................................................................A-5
OTHER INFORMATION......................................................................................A-6
DIVIDENDS AND DISTRIBUTIONS.......................................................................A-6
FINANCIAL HIGHLIGHTS...................................................................................A-7
SHAREHOLDER INFORMATION................................................................................A-8
PRICING OF SHARES.................................................................................A-8
SALES OF SHARES...................................................................................A-8
REDEMPTION OF SHARES..............................................................................A-8
OPEN ACCOUNT.....................................................................................A-10
EXCHANGING SHARES................................................................................A-10
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
A-i
<PAGE> 5
CLASS I SHARES
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is growth of capital.
The fund attempts to meet its objective by investing primarily in common stocks
of companies that the fund's portfolio managers believe have the potential for
growth in earnings, including small-sized growth companies, and in common
stocks believed to be under-valued relative to other available investments.
The fund's portfolio managers purchase securities of companies that they
believe have the potential for growth. The fund's portfolio managers usually
sell a particular security when they believe the securities no longer have that
potential.
In anticipation of or in response to adverse market conditions or for cash
management purposes, the fund may hold all or a portion of its assets in cash,
money market securities, bonds or other debt securities. As a result, the fund
may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
fluctuates in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stocks of smaller
companies, whose prices may go up and down more than common stocks of larger,
more-established companies. Also, since common stocks of smaller companies may
not be traded as often as common stocks of larger, more-established companies,
it may be difficult or impossible for the fund to sell securities at a desired
price.
The fund also may invest in common stock issued by foreign companies, which
have additional risks, including exchange rate changes, political and economic
upheaval, relatively low market liquidity, the relative lack of information
about these companies and the potential lack of strict financial and accounting
controls and standards.
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of
correcting and testing those systems that may have such problem. This problem,
if not corrected, may adversely affect the services provided to the fund or may
affect companies in which the fund may invest and, therefore, may lower the
value of your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
A-1
<PAGE> 6
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's Class I
Shares from year to year over a 10-year period.
SUMMIT FUND
<TABLE>
<CAPTION>
Annual
Total
Year Ended December 31 Returns
---------------------- -------
<S> <C>
1989............................................ 30.92%
1990............................................ 0.93%
1991............................................ 43.64%
1992............................................ 4.50%
1993............................................ 8.28%
1994............................................ -2.82%
1995............................................ 35.14%
1996............................................ 19.87%
1997............................................ 24.22%
1998............................................ %
</TABLE>
During the 10-year period shown in the bar chart, the highest quarterly return
was __________% (quarter ended _________) and the lowest quarterly return was
____________% (quarter ended ___________________).
A-2
<PAGE> 7
PERFORMANCE TABLE
The following performance table shows how the fund's average annual returns for
one, five and 10 years compare to those of a broad-based securities market
index.
<TABLE>
<CAPTION>
===============================================================================
Average Annual Total Returns
for the periods ending
December 31, 1998)
1 Year 5 Years 10 Years
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Class I Shares % % %
------ ------ ------
- -------------------------------------------------------------------------------
S & P 500*
------ ------ ------
===============================================================================
</TABLE>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks, a widely
recognized, unmanaged index of common stock prices.
A-3
<PAGE> 8
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
<S> <C>
Management Fees %
-----
Other Expenses
-----
Total Annual Fund Operating Expenses
-----
</TABLE>
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in
different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class I Shares $ $ $ $
----- ----- ------ -----
</TABLE>
A-4
<PAGE> 9
FUND MANAGEMENT
THE ADVISOR AND SUBADVISOR
A I M Advisors, Inc. (the advisor), 11 Greenway Plaza, Suite 100, Houston, TX
77046, serves as the fund's investment adviser. TradeStreet Investment
Associates, Inc. (the subadvisor), 101 South Tryon Street, Suite 1000,
Charlotte, North Carolina 28255, a wholly-owned subsidiary of NationsBank
Corp., is the fund's subadviser and provides certain investment advisory
services to the Fund, subject to the overall supervision by the advisor and the
Fund's Board of Directors. The advisors supervise all aspects of the fund's
operations and provide investment advisory services to the fund, including
obtaining and evaluating economic, statistical and financial information to
formulate and implement investment programs for the fund.
The advisor has acted as an investment adviser since its organization in 1976,
and together with its subsidiaries, advises or manages over 90 investment
portfolios, including the fund, encompassing a broad range of investment
objectives.
The subadvisor is a registered investment adviser managing in excess of $53
billion in assets. The subadvisor provides separate account management of
domestic equity, fixed income, balanced and cash portfolio for more than 140
institutional clients.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of % of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, the first three of whom are officers of A I M Capital
Management, Inc., a wholly owned subsidiary of the advisor, are:
o David P. Barnard, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor
and/or its affiliates since 1982.
o Robert M. Kippes, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor
and/or its affiliates since 1989.
o Jonathan C. Schoolar, Senior Portfolio Manager, who has been
responsible for the fund since 1995 and has been associated with the
advisor and/or its affiliates since 1986.
o Jeffrey C. Moser, Senior Product Manager with the subadvisor, who has
been responsible for the fund since 1995 and has been associated with
NationsBank Texas since 1990, and the subadvisor since 1996.
A-5
<PAGE> 10
OTHER INFORMATION
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains
(including any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
A-6
<PAGE> 11
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by KPMG Peat Marwick LLP, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
<TABLE>
<CAPTION>
Class I Shares
--------------------------------------------------------------------
Year Ended October 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
Income from investment operations:
Net investment income (loss) (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Net gains on securities (both realized
and unrealized) (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Total from investment operations (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Less distributions: (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Dividends from net investment income: (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Distributions from net realized gains: (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Total distributions (x.xx) (x.xx) (x.xx) (x.xx) (x.xx)
Net asset value, end of period $ xx.xx $ xx.xx $ xx.xx $ xx.xx $ xx.xx
Total return (a) (x.xx)% (x.xx)% (x.xx)% (x.xx)% (x.xx)%
Ratios/supplemental data:
Net assets, end of period (000s omitted) $xx,xxx $xx,xxx $xx,xxx $xx,xxx $xx,xxx
Ratio of expenses to average net assets x.xx% (b) x.xx% x.xx% x.xx% x.xx%
Ratio of net investment income (loss)
to average net assets (x.xx)% (x.xx)% (x.xx)% (x.xx)% (x.xx)%
Portfolio turnover rate xx% xx% xx% xx% xx%
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $x,xxx,xxx,xxx.
A-7
<PAGE> 12
SHAREHOLDER INFORMATION
Pricing of Shares
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at
market value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day. In addition, if between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the fund's Board of Directors. The effect of using fair value
pricing is that the fund's net asset value will be subject to the judgment of
the Board of Directors or its designee instead of being determined by the
market. Because the fund may invest in securities that are primarily listed on
foreign exchanges, the value of the fund's shares may change on days when you
will not be able to purchase or redeem shares.
The fund determines the net asset value of its shares as of the close of the
NYSE on each day the NYSE is open for business. The fund prices purchase,
exchange and redemption orders at the net asset value calculated after the
transfer agent receives an order in good form.
Sales of Shares
The terms of offering of Summit Investors Plans I are contained in the
Prospectus of Summit Investors Plans I. The fund will not offer its shares to
the general public except through Summit Investors Plans I. 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, children,
parents and parents of spouse) of any such person, of AIM Management or its
subsidiaries, or of any investment company managed or advised by AIM; or (b)
any employee benefit plan established for employees of AIM Management or its
subsidiaries. The fund reserves the right to reject any purchase order.
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 I
Prospectus for the requirements for redemption of fund shares held in a Summit
Investors Plans I.
You may redeem your shares of the fund at any time without charge, either by a
written request to BFDS, or by calling BFDS at (617) 483-5000, subject to the
restrictions specified below. Upon receipt by BFDS of a proper request, the
fund will redeem shares in cash at the next determined net asset value. All
written redemption requests must be 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.
Written 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 you, the fund, AIM Distributors and
the Custodian, the fund requires that the signature of each registered
shareholder be guaranteed. Acceptable guarantors are banks,
A-8
<PAGE> 13
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) 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 $50,000
or less unless the proceeds are to be paid to a person other than the record
owner or are to be sent to an address other than the one of record. Upon notice
to you, this policy may be changed. Currently, in addition to these
requirements, if you have invested in the fund to establish an IRA, you should
include the following information along with your written request for either
partial or full liquidation of fund shares: (a) a statement as to whether or
not you have attained age 59-1/2; (b) a statement as to whether or not you are
legally disabled; (c) a statement as to whether or not you elect to have
federal income tax withheld from the proceeds of your redemption, and (d) your
Social Security number along with the following statement: "I certify under
penalties of perjury that the Social Security number provided is correct and
that I am not subject to backup withholding either because I am exempt from
backup withholding, I have not been notified by the Internal Revenue Service
that I am subject to backup withholding, or the Internal Revenue Service has
notified me that I am no longer subject to backup withholding." If you have
been notified by the Internal Revenue Service that you are currently subject to
backup withholding, then the preceding statement should be modified
accordingly. Even if you elect not to have federal income tax withheld, you are
liable for federal income tax on the taxable portion of your redemption
proceeds. You may also be subject to tax penalties under the estimated tax
payment rules if your payments of estimated tax and withholding, if any, are
not adequate.
You may also request redemptions by telephone by calling BFDS at (617)
483-5000. If you do not wish to allow redemptions by telephone by any person in
your account, you should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the proceeds are made
payable to the shareholder of record and mailed to the address of record; (b)
there has been no change of address of record on the account within the
preceding 30 days; (c) the shares to be redeemed are not in certificate form;
(d) the person requesting withdrawal can provide proper identification
information; and (e) the proceeds of the withdrawal do not exceed $50,000.
Shares held in retirement plans (such as IRA and IRA/SEP) or 403(b) plans may
not be redeemed by telephone. AIM Distributors has made arrangements with
certain dealers to accept telephone instructions for the redemption of shares.
AIM Distributors reserves the right to impose conditions on these dealers,
including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The fund , AIM Distributors, the Custodian, and BFDS will not be
liable for any loss, expense or cost arising out of any telephone redemption
request effected in accordance with the authorization set forth at that item of
the account application if they reasonably believe such request to be genuine,
but may in certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recording of
telephone transactions, requests for confirmation of your Social Security
Number and current address, and mailings of confirmations promptly after the
transaction.
Shares redeemed by telephone are redeemed at their net asset value next
determined after a request for redemption in proper form is received by BFDS.
Orders for the redemption of shares received in proper form prior to the NYSE
close on any business day of the fund will be confirmed at the price determined
as of the close of that day. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE close on any
business day of the fund and will be confirmed at the price determined as of
the close of that day. No telephone redemption request will be accepted which
specifies a particular date for redemption or which specify and special
conditions.
A-9
<PAGE> 14
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. However, in the event of a
redemption of shares purchased by check, redemption proceeds will not be mailed
until the check has cleared.
Taxes
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund
holds its assets. Different tax rates apply to ordinary income and long-term
capital gain distributions. Every year, an account statement showing the amount
of dividends and distributions you received from the fund during the prior year
will be sent to you. Any long-term or short-term capital gains realized from
redemptions or shares of the fund will be subject to federal income tax.
The foreign, state and local tax consequences of investing in shares of the
fund may differ materially from the federal income tax consequences described
above. You should consult your tax advisor before investing.
Exchanging Shares
You may, under certain circumstances, exchange Class I Shares for Class II
Shares. Class II Shares cannot be exchanged for Class I Shares.
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-10
<PAGE> 15
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds(R) or your account, or wish to obtain free copies of the fund's current
SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 995-4246
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to
the SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call
the SEC at 1-800-SEC-0330 for information about the Public Reference Room.
AIM Summit Fund, Inc.
SEC 1940 Act file number: 811-3443
A-11
<PAGE> 16
[AIM LOGO]
AIM Summit Fund, Inc.
Class II Shares
Prospectus
March 1, 1999
AIM Summit Fund, Inc. seeks to provide growth of capital.
Class II Shares of the fund are offered to and may be purchased by the general
public only through Summit Investors Plans II, a unit investment trust and
certain other Plans as may be offered from time to time. Details of Summit
Investors Plans II, including the creation and sales charges and the custodian
charges applicable to Summit Investors Plans II, are found in the Summit
Investors Plans II Prospectus. You should read both this Prospectus and the
Prospectus of Summit Investors Plans II and keep these Prospectuses for future
reference.
AS WITH ALL OTHER MUTUAL FUND SECURITIES, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THE INFORMATION IN THIS PROSPECTUS IS ADEQUATE OR ACCURATE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.
<PAGE> 17
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES....................................................................A-1
PRINCIPAL RISKS OF INVESTING IN THE FUND...............................................................A-1
FEE TABLE AND EXPENSE EXAMPLE..........................................................................A-2
FEE TABLE.........................................................................................A-2
EXPENSE EXAMPLE...................................................................................A-2
FUND MANAGEMENT........................................................................................A-3
THE ADVISOR AND SUBADVISOR........................................................................A-3
ADVISOR COMPENSATION..............................................................................A-3
PORTFOLIO MANAGERS................................................................................A-3
OTHER INFORMATION......................................................................................A-4
DIVIDENDS AND DISTRIBUTIONS.......................................................................A-4
SHAREHOLDER INFORMATION................................................................................A-5
PRICING OF SHARES.................................................................................A-5
SALES OF SHARES...................................................................................A-5
REDEMPTION OF SHARES..............................................................................A-5
OPEN ACCOUNT......................................................................................A-7
EXCHANGING SHARES.................................................................................A-7
DISTRIBUTION AND SERVICE (12B-1) FEES.............................................................A-7
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
A-i
<PAGE> 18
CLASS II SHARES
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is growth of capital.
The fund attempts to meet its objective by investing primarily in common stocks
of companies that the fund's portfolio managers believe have the potential for
growth in earnings, including small-sized growth companies, and in common
stocks believed to be under-valued relative to other available investments.
The fund's portfolio managers purchase securities of companies that they
believe have the potential for growth. The fund's portfolio managers usually
sell a particular security when they believe the securities no longer have that
potential.
In anticipation of or in response to adverse market conditions or for cash
management purposes, the fund may hold all or a portion of its assets in cash,
money market securities, bonds or other debt securities. As a result, the fund
may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The price of common stock
fluctuates in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stocks of smaller
companies, whose prices may go up and down more than common stocks of larger,
more-established companies. Also, since common stocks of smaller companies may
not be traded as often as common stocks of larger, more-established companies,
it may be difficult or impossible for the fund to sell securities at a desired
price.
The fund also may invest in common stock issued by foreign companies, which
have additional risks, including exchange rate changes, political and economic
upheaval, relatively low market liquidity, the relative lack of information
about these companies and the potential lack of strict financial and accounting
controls and standards.
Many software systems are unable to distinguish the year 2000 from the year
1900. The fund's investment advisor, together with independent technology
consultants, has completed its determination as to whether any software systems
the fund uses or depends on has that problem and is in the process of
correcting and testing those systems that may have such problem. This problem,
if not corrected, may adversely affect the services provided to the fund or may
affect companies in which the fund may invest and, therefore, may lower the
value of your shares.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
entity.
A-1
<PAGE> 19
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
Annual Fund Operating Expenses (expenses that are deducted from fund assets)*
<TABLE>
<CAPTION>
<S> <C>
Management Fees %
-------
Distribution and/or Service (12b-1) Fees
-------
Other Expenses
-------
Total Annual Fund Operating Expenses
=======
</TABLE>
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
* The expenses set forth in the table are based on estimated average net assets
of $xxx,xxx,xxx during the Fund's current fiscal year.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in
different classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that
the fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Class II Shares $ $
---- ----
</TABLE>
A-2
<PAGE> 20
FUND MANAGEMENT
THE ADVISOR AND SUBADVISOR
A I M Advisors, Inc. (the advisor), 11 Greenway Plaza, Suite 100, Houston, TX
77046, serves as the fund's investment adviser. TradeStreet Investment
Associates, Inc. (the subadvisor), 101 South Tryon Street, Suite 1000,
Charlotte, North Carolina 28255, a wholly-owned subsidiary of NationsBank
Corp., is the fund's subadviser and provides certain investment advisory
services to the Fund, subject to the overall supervision by the advisor and the
Fund's Board of Directors. The advisors supervise all aspects of the fund's
operations and provide investment advisory services to the fund, including
obtaining and evaluating economic, statistical and financial information to
formulate and implement investment programs for the fund.
The advisor has acted as an investment adviser since its organization in 1976,
and together with its subsidiaries, advises or manages over 90 investment
portfolios, including the fund, encompassing a broad range of investment
objectives.
The subadvisor is a registered investment adviser managing in excess of $53
billion in assets. The subadvisor provides separate account management of
domestic equity, fixed income, balanced and cash portfolio for more than 140
institutional clients.
ADVISOR COMPENSATION
During the fund's last fiscal year ended October 31, 1998, the fund paid the
advisor advisory fees of % of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio the first three of whom are officers of A I M Capital
Management, Inc., a wholly owned subsidiary of the advisor are
o David P. Barnard, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor
and/or its affiliates since 1982.
o Robert M. Kippes, Senior Portfolio Manager, who has been responsible
for the fund since 1995 and has been associated with the advisor
and/or its affiliates since 1989.
o Jonathan C. Schoolar, Senior Portfolio Manager, who has been
responsible for the fund since 1995 and has been associated with the
advisor and/or its affiliates since 1986.
o Jeffrey C. Moser, Senior Product Manager with the subadvisor, who has
been responsible for the fund since 1995 and has been associated with
NationsBank Texas since 1990, and the subadvisor since 1996.
A-3
<PAGE> 21
OTHER INFORMATION
DIVIDENDS AND DISTRIBUTIONS
Capital Gains Distributions
The fund generally distributes long-term and short-term capital gains
(including any net gains from foreign currency transactions), if any, annually.
Dividends
The fund generally declares and pays dividends, if any, annually.
A-4
<PAGE> 22
SHAREHOLDER INFORMATION
Pricing of Shares
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at
market value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted
in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day. In addition, if between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the fund's Board of Directors. The effect of using fair value
pricing is that the fund's net asset value will be subject to the judgment of
the Board of Directors or its designee instead of being determined by the
market. Because the fund may invest in securities that are primarily listed on
foreign exchanges, the value of the fund's shares may change on days when you
will not be able to purchase or redeem shares.
The fund determines the net asset value of its shares as of the close of the
NYSE on each day the NYSE is open for business. The fund prices purchase,
exchange and redemption orders at the net asset value calculated after the
transfer agent receives an order in good form.
Sales of Shares
The terms of offering of Summit Investors Plans II are contained in the
Prospectus of Summit Investors Plans II. The fund will not offer its Class II
Shares to the general public except through Summit Investors Plans II and
certain other Plans as may be offered from time to time. The fund reserves the
right to reject any purchase order.
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 II
Prospectus for the requirements for redemption of fund shares held in a Summit
Investors Plans II.
You may redeem your shares of the fund at any time without charge, either by a
written request to BFDS, or by calling BFDS at (617) 483-5000, subject to the
restrictions specified below. Upon receipt by BFDS of a proper request, the
fund will redeem shares in cash at the next determined net asset value. All
written redemption requests must be 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.
Written 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 you, 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)
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 $50,000 or less unless
the proceeds are to be paid to a person other than the record owner or are to
be sent to an address other than the one of record. Upon notice to you, this
policy may be
A-5
<PAGE> 23
changed. Currently, in addition to these requirements, if you have invested in
the fund to establish an IRA, you should include the following information
along with your written request for either partial or full liquidation of fund
shares: (a) a statement as to whether or not you have attained age 59-1/2; (b)
a statement as to whether or not you are legally disabled; (c) a statement as
to whether or not you elects to have federal income tax withheld from the
proceeds of your redemption, and (d) your Social Security number along with the
following statement: "I certify under penalties of perjury that the Social
Security number provided is correct and that I am not subject to backup
withholding either because I am exempt from backup withholding, I have not been
notified by the Internal Revenue Service that I am subject to backup
withholding, or the Internal Revenue Service has notified me that I am no
longer subject to backup withholding." If you have been notified by the
Internal Revenue Service that you are currently subject to backup withholding,
then the preceding statement should be modified accordingly. Even if you elect
not to have federal income tax withheld, you are liable for federal income tax
on the taxable portion of your redemption proceeds. You may also be subject to
tax penalties under the estimated tax payment rules if your payments of
estimated tax and withholding, if any, are not adequate.
You may also request redemptions by telephone by calling BFDS at (617)
483-5000. If you do not wish to allow redemptions by telephone by any person in
your account, you should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the proceeds are made
payable to the shareholder of record and mailed to the address of record; (b)
there has been no change of address of record on the account within the
preceding 30 days; (c) the shares to be redeemed are not in certificate form;
(d) the person requesting withdrawal can provide proper identification
information; and (e) the proceeds of the withdrawal do not exceed $50,000.
Shares held in retirement plans (such as IRA and IRA/SEP) or 403(b) plans may
not be redeemed by telephone. AIM Distributors has made arrangements with
certain dealers to accept telephone instructions for the redemption of shares.
AIM Distributors reserves the right to impose conditions on these dealers,
including the condition that they enter into agreements (which contain
additional conditions with respect to the redemption of shares) with AIM
Distributors. The fund , AIM Distributors, the Custodian, and BFDS will not be
liable for any loss, expense or cost arising out of any telephone redemption
request effected in accordance with the authorization set forth at that item of
the account application if they reasonably believe such request to be genuine,
but may in certain cases be liable for losses due to unauthorized or fraudulent
transactions if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures may include recording of
telephone transactions, requests for confirmation of your Social Security
Number and current address, and mailings of confirmations promptly after the
transaction.
Shares redeemed by telephone are redeemed at their net asset value next
determined after a request for redemption in proper form is received by BFDS.
Orders for the redemption of shares received in proper form prior to the NYSE
close on any business day of the fund will be confirmed at the price determined
as of the close of that day. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE close on any
business day of the fund and will be confirmed at the price determined as of
the close of that day. No telephone redemption request will be accepted which
specifies a particular date for redemption or which specify and special
conditions.
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. However, in the event of a
redemption of shares purchased by check, redemption proceeds will not be mailed
until the check has cleared.
Taxes
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund
holds its assets. Different tax rates apply to ordinary income and long-term
capital gain distributions. Every year, an account statement showing the amount
of dividends and distributions you received from the fund during the prior year
will be sent to you. Any long-term or short-term capital gains realized from
redemptions of shares of the fund will be subject to federal income tax.
A-6
<PAGE> 24
The foreign, state and local tax consequences of investing in shares of the
fund may differ materially from the federal income tax consequences described
above. You should consult your tax advisor before investing.
Exchanging Shares
You may, under certain circumstances, exchange Class I Shares for Class II
Shares. Class II Shares cannot be exchanged for Class I Shares.
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 A I M Fund Services, Inc. (AFS) 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 AFS after each acquisition or redemption of fund shares, and after each
dividend or capital gains distribution.
Distribution and Service (12b-1) Fees
The fund on behalf of the Class II Shares has adopted a 12b-1 plan that allows
the Class to pay distribution fees to A I M Distributors, Inc. (the
distributor) for the sale and distribution of its shares and fees for services
provided to shareholders, all or a substantial portion of which are paid to the
dealer of record. Because the Class pays these fees out of its assets on an
ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
A-7
<PAGE> 25
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
United States Securities and Exchange Commission (SEC), contains more details
about the fund and is incorporated by reference into the prospectus (is legally
a part of this prospectus). Annual and semi-annual reports to shareholders
contain additional information about the fund's investments. The fund's annual
report also discusses the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds(R) or your account, or wish to obtain free copies of the fund's current
SAI or annual or semi-annual reports, please contact us:
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 995-4246
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to
the SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call
the SEC at 1-800-SEC-0330 for information about the Public Reference Room.
AIM Summit Fund, Inc.
SEC 1940 Act file number: 811-3443
A-8
<PAGE> 26
STATEMENT OF ADDITIONAL INFORMATION
AIM SUMMIT FUND, INC.
CLASS I SHARES
AND
CLASS II SHARES
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT
A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION
WITH A PROSPECTUS OF THE ABOVE-NAMED FUND,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE FROM
AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4264,
HOUSTON, TEXAS 77210-4264.
-----------------
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 1999
RELATING TO THE CLASS I SHARES PROSPECTUS DATED MARCH 1, 1999
AND THE CLASS II SHARES PROSPECTUS DATED MARCH 1, 1999
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INTRODUCTION.....................................................................................................................1
PERFORMANCE INFORMATION..........................................................................................................1
Total Return Quotations.................................................................................................3
GENERAL INFORMATION ABOUT THE FUND...............................................................................................4
The Fund and its Capital Stock..........................................................................................4
MANAGEMENT OF THE FUND...........................................................................................................5
Directors and Officers..................................................................................................5
The Investment Advisor.................................................................................................11
The Sub-Advisor........................................................................................................13
Expenses ..............................................................................................................14
Transfer Agent and Custodian...........................................................................................14
Reports ..............................................................................................................14
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS........................................................................................15
Reinvestment of Dividends and Distributions............................................................................15
Qualification as a Regulated Investment Company........................................................................15
Determination of Taxable Income of a Regulated Investment Company......................................................16
Excise Tax on Regulated Investment Companies...........................................................................17
Fund Distributions.....................................................................................................17
Sale or Redemption of Fund Shares......................................................................................19
Foreign Shareholders...................................................................................................20
Effect of Future Legislation; Local Tax Considerations.................................................................20
SHARE PURCHASES, REDEMPTIONS AND REPURCHASES....................................................................................20
Purchases and Redemptions..............................................................................................20
Suspension of Right of Redemption......................................................................................21
Valuation of Shares....................................................................................................21
The Distribution Plan..................................................................................................21
The Distribution Agreement.............................................................................................23
INVESTMENT STRATEGIES AND RISKS.................................................................................................24
Investment Program.....................................................................................................24
Common Stocks..........................................................................................................24
Preferred Stocks.......................................................................................................24
Convertible Securities.................................................................................................24
Corporate Debt Securities..............................................................................................25
U.S. Government Securities.............................................................................................25
Real Estate Investment Trusts ("REITs")................................................................................25
Warrants ..............................................................................................................26
Foreign Securities.....................................................................................................26
Foreign Exchange Transactions..........................................................................................27
Repurchase Agreements..................................................................................................27
Rule 144A Securities...................................................................................................28
Illiquid Securities....................................................................................................28
Lending of Fund Securities.............................................................................................28
Futures Contracts......................................................................................................29
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
<S> <C>
Risks as to Futures Contracts and Related Call Options...................................................................30
Portfolio Turnover.......................................................................................................30
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................................................................................31
INVESTMENT RESTRICTIONS...........................................................................................................33
MISCELLANEOUS INFORMATION.........................................................................................................35
Shareholder Inquiries....................................................................................................35
Legal Matters............................................................................................................35
FINANCIAL STATEMENTS..............................................................................................................FS
</TABLE>
<PAGE> 29
INTRODUCTION
AIM Summit Fund, Inc. (formerly, Summit Investors Fund, Inc.) (the
"Fund") is a mutual fund. The rules and regulations of the Securities and
Exchange Commission (the "SEC") require all mutual funds to furnish prospective
investors certain information concerning the activities of the fund being
considered for investment. This information for the Class I Shares ("Class I")
of the Fund is included in a Prospectus dated March 1, 1999 and information for
the Class II Shares (the "Class II"), of the Fund is included in a Prospectus
dated March 1, 1999, (collectively the "Classes") each of which may be obtained
without charge by written request to A I M Distributors, Inc. ("AIM
Distributors"). Investors may also call AIM Distributors at (800) 995-4246 or
dealers authorized by AIM Distributors to distribute the Fund's shares.
Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Fund. Some of
the information required to be in this Statement of Additional Information is
also included in the Fund's current prospectuses and, in order to avoid
repetition, reference will be made to sections of the Prospectuses.
Additionally, the Prospectuses and this Statement of Additional Information omit
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from the
Prospectuses and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
PERFORMANCE INFORMATION
All advertisements of the Fund will disclose the maximum creation and
sales charges, imposed by Summit Investors Plans I and Summit Investors
Plans II (the "Plans") and other fees (collectively, the "Sales Charges") on
purchases of the Fund's shares. If any advertised performance data does not
reflect the maximum Sales Charges, such advertisement will disclose that the
Sales Charges have not been deducted in computing the performance data, and
that, if reflected, the maximum Sales Charges would reduce the performance
quoted. Further information regarding the Fund's performance is contained in the
Fund's annual report to shareholders, which is available upon request and
without charge.
Total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for the
Fund's shares reflects the deduction of the Fund's maximum Sales Charges at the
time of purchase.
The Fund's total return shows its overall change in value, including
changes in share price and assuming all dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL
YEAR-BY-YEAR RESULTS. To illustrate the components of overall performance, the
Fund may separate its cumulative and average annual returns into income results
and capital gains or losses.
Total return figures for the Fund are neither fixed nor guaranteed, and
no principal is insured. Performance quotations reflect historical information
and should not be considered representative of the Fund's performance for any
period in the future. Performance is a function of a number of factors which can
be expected to fluctuate. The Fund may provide performance information in
reports, sales literature and advertisements. The Fund may also, from time to
time, quote information published or aired by publications or other media
entities which contain articles or segments relating to investment results or
other data. The following is a list of such publications or media entities:
1
<PAGE> 30
<TABLE>
<S> <C> <C>
Advertising Age Forbes Nation's Business
Barron's Fortune New York Times
Best's Review Hartford Courant Pension World
Broker World Inc. Pensions & Investments
Business Week Institutional Investor Personal Investor
Changing Times Insurance Forum Philadelphia Inquirer
Christian Science Monitor Insurance Week USA Today
Consumer Reports Investor's Daily U.S. News & World Report
Economist Journal of the American Wall Street Journal
FACS of the Week Society of CLU & ChFC Washington Post
Financial Planning Kiplinger Letter CNN
Financial Product News Money CNBC
Financial Services Week Mutual Fund Forecaster PBS
Financial World
</TABLE>
The Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper, Inc.
The Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the following:
Standard & Poor's 400 Index
Standard & Poor's 500 Stock Index Bond Buyer Index
Dow Jones Industrial Average NASDAQ
EAFE Index COFI
Consumer Price Index First Boston High Yield Index
Lehman Bond Indices
The Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 day Treasury Bills
Advertising for the Fund may from time to time include discussions of
general economic conditions and interest rates, and may also include references
to the use of the Fund as part of an individual's overall retirement investment
program. From time to time, sales literature and/or advertisements may disclose
(i) the largest holdings in the Fund's portfolio, (ii) certain selling group
members and/or (iii) certain institutional shareholders.
From time to time, the Fund's sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information about
mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money
markets, certificates of deposit, retirement, retirement plans, asset
allocation, tax-free investing, college planning, or inflation.
2
<PAGE> 31
Although performance data may be useful to prospective investors when
comparing the Fund's performance with other funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by the Fund.
Additional performance information is contained in the Fund's Annual
Report to Shareholders, which is available upon request without charge.
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
n
P(1+T) = ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the applicable
maximum sales load is deducted at the beginning of the
1, 5, or 10 year periods).
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods (or
fractional portion of such period).
</TABLE>
The average annual total return for the Class I Shares, for the one,
five and ten year periods ended October 31, 1998, was _____ %, _____% and
_____%, respectively. These average annual total returns do not include the
reinvestment of dividends and capital gains, and the effect of paying the
separate Creation and Sales Charges and Custodian Fees associated with
the purchase of Class I Shares through Summit Investors Plans I. Total
returns would be lower if Creation and Sales Charges and Custodian Fees were
taken into account. Shares of the Fund may be acquired by the general public
only through Summit Investors Plans I and Summit Investors Plans II. Investors
should consult the Prospectus of each Plan for complete information regarding
Creation and Sales Charges and Custodian Fees.
The average annual total return for Class I, for the one, five and ten
year periods ended October 31, 1998, was _____%, _____% and _____%,
respectively. These average annual total returns include change in share price,
reinvestment of dividends and capital gains, and the effects of the separate
Creation and Sales Charges and Custodian Fees assessed through Summit Investors
Plans I. The average annual total returns assume an initial $1,000 lump sum
investment at the beginning of each period shown with no subsequent Plan
investments. Because the illustrations assume lump sum investments, they do not
reflect what investors would have earned only had they made regular monthly
investments over the period. Consult the Summit Investors Plans I's Prospectus
for more complete information on applicable charges and fees.
As of October 31, 1998, Class II Shares were not available to the
public.
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) = ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment of only
a stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
</TABLE>
3
<PAGE> 32
Cumulative total return across a stated period may be calculated as
follows:
n
P(1+V) = ERV
<TABLE>
<S> <C> <C> <C>
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of all of, a
stated portion of, or none of, the applicable maximum
sales load at the beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the stated period.
</TABLE>
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS CAPITAL 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 the classes of the Fund have equal
rights and privileges. Each share of a particular class is entitled to one
vote, to participate equally in dividends and distributions declared by the
Fund's Board of Directors with respect to that class and, upon liquidation or
dissolution of the Fund, to participate proportionately in the net assets of
the Fund allocable to such class remaining after satisfaction of outstanding
liabilities of the Fund allocable to such class. 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 of the
Fund are redeemable at the net asset value thereof at the option of the
holders thereof.
The term "majority vote" means the affirmative vote of the Fund or of a
particular class of the Fund (a) more than 50% of the outstanding shares of
the Fund or class or (b) 67% or more of the shares of the Fund or such class
present at a meeting if more than 50% of the outstanding shares of the Fund or
class are represented at the meeting in person or by proxy, whichever is less.
Consistent with the Fund's objective of capital growth, the Fund's
assets will tend to be fully invested in:
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.
4
<PAGE> 33
In anticipation of or in response to adverse market conditions or for
cash management purposes, the Fund may hold all or a portion of its assets in
cash, money market securities, bond or other debt securities. As a result, the
Fund may not achieve its investment objective. Such money market instruments
will consist of obligations of, or guaranteed by, the United States Government
or its agencies or instrumentalities; certificates of deposit, bankers'
acceptances, time deposits, master notes 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
at no added cost 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 to 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.
As of December 15, 1998, no person owned of record or is known by the
Fund to own of record or beneficially 5% or more of Class I Shares' outstanding
equity securities. AIM provided the initial capitalization for Class II Shares
and, accordingly, as of the date of this Statement of Additional Information,
owned all the outstanding shares of the Class. The Fund expects that the sale of
Class II Shares to Summit Investors Plans II Prospectus will promptly reduce the
percentage of the shares owned by AIM to less than 1% of the total shares
outstanding. As of December 1, 1998, the directors and officers of the Fund as a
group owned beneficially less than 1% of the Fund's outstanding shares.
The Board of Directors of the Fund may classify or reclassify any
unissued shares into shares of any class or classes in addition to that already
authorized by setting or changing in any one or more respects, from time to
time, prior to the issuance of such shares, the preference, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualification,
or terms or conditions of redemption, of such shares. Any such classification or
reclassification will comply with the provisions of the laws of the State of
Maryland and the Investment Company Act of 1940, as amended (the "1940 Act").
MANAGEMENT OF THE FUND
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.
DIRECTORS AND OFFICERS
The directors and officers of the Fund and their principal occupations
during the last five years are set forth below. All of the Fund's executive
officers hold similar offices with some or all of the other investment companies
advised by A I M Advisors, Inc. (the "AIM Funds"). Unless otherwise indicated,
the address of each director and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173.
5
<PAGE> 34
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation(s) During,
Name, Address and Age with Registrant At Least, the Past 5 years
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*Charles T. Bauer (79) Chairman and Chairman of the Board of Directors, A I M
Director Management Group Inc., A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M Distributors,
Inc., A I M Fund Services, Inc. and Fund
Management Company; and Director and Vice
Chairman of AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------------
Bruce L. Crockett, (54) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation; and Chairman,
Board of Governors of INTELSAT (international
communications company).
- ---------------------------------------------------------------------------------------------------------------
Owen Daly II (74) Director Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation
- ---------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. (63) Director Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the
Baltimore, MD 21201 Board of Directors and President, Mercantile - Safe
Deposit & Trust Co.; and President, Mercantile
Bankshares.
- ---------------------------------------------------------------------------------------------------------------
Jack Fields (46) Director Chief Executive Officer, Texana Global, Inc.
Jetero Plaza, Suite E (foreign trading company) and Twenty-First
8810 Will Clayton Parkway Century Group, Inc. (governmental affairs
Humble, TX 77338 company). Formerly, Member of the U.S. House of
Representatives.
- ---------------------------------------------------------------------------------------------------------------
**Carl Frischling (61) Director Partner, Kramer, Levin, Naftalis & Frankel LLP (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
* A director who is an "interested person" of the Fund and A I M
Advisors, Inc. as defined in the 1940 Act.
** A director who is an "interested person" of the Fund as defined in the
1940 Act.
6
<PAGE> 35
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Position(s) Held Principal Occupation(s) During,
Name, Address and Age with Registrant At Least, the Past 5 years
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*Robert H. Graham (51) Director and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and Senior
Vice President, A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc.
and Fund Management Company; and Director,
AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis (48) Director Chief Executive Officer YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the
New York, NY 10118 Aging; and Member of the Board of Directors,
Metropolitan Transportation Authority of New York
State.
- ---------------------------------------------------------------------------------------------------------------
Lewis F. Pennock (56) Director Attorney, private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, Texas 77057
- ---------------------------------------------------------------------------------------------------------------
Ian W. Robinson (75) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, Florida 33469 Services, Inc. (provider of centralized management
services to telephone companies); Executive
Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); and Vice
President and Chief Financial Officer, Bell
Telephone Company of Pennsylvania and Diamond State
Telephone Company.
- ---------------------------------------------------------------------------------------------------------------
Louis S. Sklar (59) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, Texas 77056
- ---------------------------------------------------------------------------------------------------------------
***John J. Arthur (54) Senior Vice Director and Senior Vice President, A I M Advisors,
President and Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc.
- ---------------------------------------------------------------------------------------------------------------
Gary T. Crum (51) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc. and A I M Advisors, Inc.;
and Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------
* A director who is an "interested person" of the Fund and A I M
Advisors, Inc. as defined in the 1940 Act.
*** Mr. Arthur and Ms. Relihan are married to each other.
7
<PAGE> 36
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Position(s) Held Principal Occupation(s) During,
Name, Address and Age with Registrant At Least, the Past 5 years
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
***Carol F. Relihan (44) Senior Vice Director, Senior Vice President, General Counsel
President and and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management
Company; General Counsel and Vice President, A I M
Fund Services, Inc.; and Vice President A
I M Capital Management, Inc. and A I M
Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------------
Dana R. Sutton (39) Vice President Vice President and Fund Controller, A I M
and Assistant Advisors, Inc.; and Assistant Vice President and
Treasurer Assistant Treasurer, Fund Management Company.
- ---------------------------------------------------------------------------------------------------------------
Melville B. Cox (55) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services, Inc.
and Fund Management Company.
- ---------------------------------------------------------------------------------------------------------------
Jonathan C. Schoolar (37) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The Board of Directors has an Audit Committee, an Investments Committee,
and a Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Vice Chairman), Fields, Frischling, Pennock, Robinson (Chairman), Sklar and Ms.
Mathai-Davis. The Audit Committee is responsible for meeting with the Fund's
auditors to review audit procedures and results and to consider any matters
arising from an audit to be brought to the attention of the directors as a whole
with respect to the Fund's fund accounting or its internal accounting controls,
or for considering such matters as may from time to time be set forth in a
charter adopted by the Board of Directors and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Vice Chairman), Dunn, Fields, Frischling, Pennock, Robinson, Sklar
(Chairman) and Ms. Mathai-Davis. The Investments Committee is responsible for
reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields (Vice Chairman), Pennock, Robinson,
Sklar and Ms. Mathai-Davis. The Nominating and Compensation Committee is
responsible for considering and nominating individuals to stand for election as
directors who are not interested persons, reviewing from time to time the
compensation payable to the disinterested directors, or considering such matters
as may from time to time be set forth in a charter adopted by the board and such
committee.
8
<PAGE> 37
Remuneration of Directors
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any Committee attended. Each director
of the Fund is compensated for his or her services according to a fee schedule
which recognizes the fact that such director also serves as a director or
trustee of certain other AIM Funds. Each such director receives a fee, allocated
among the AIM Funds for which he or she serves as a director or trustee, which
consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
for each director of the Fund:
<TABLE>
<CAPTION>
==================================================================================================
DIRECTOR Estimated RETIREMENT TOTAL
-------- COMPENSATION BENEFITS COMPENSATION
FROM FUND(1) ACCRUED FROM ALL AIM
------------ BY ALL AIM FUNDS(3)
FUNDS(2)
------------- ------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------
Bruce L. Crockett [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Owen Daly II [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Edward K. Dunn [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Jack Fields [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Carl Frischling(4) [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- --------------------------------------------------------------------------------------------------
John F. Kroeger (5) [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Prema Mathai-Davis [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Lewis F. Pennock [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Ian Robinson [ ] [ ] [ ]
- --------------------------------------------------------------------------------------------------
Louis S. Sklar [ ] [ ] [ ]
==================================================================================================
</TABLE>
- ----------
(1) The total amount of compensation deferred by all Directors of the Fund
during the fiscal year ended October 31, 1998, including interest earned
thereon, was $_____.
(2) During the fiscal year ended October 31, 1998, the total amount of expenses
allocated to the Fund in respect of such retirement benefits was $______. Data
reflects compensation for the calendar year ended December 31, 1998.
(3) Each Director serves as director or trustee of a total of 12 registered
investment companies advised by AIM (comprised of over 50 portfolios). Data
reflects compensation earned during the calendar year ended December 31, 1998.
(4) During the fiscal year ended October 31, 1998, the Fund paid $_____ in legal
fees for services rendered by Kramer, Levin, Naftalis & Frankel LLP. Mr.
Frischling is a partner in such firm.
9
<PAGE> 38
(5) Mr. Kroeger was a director until June 11, 1998, when he resigned. On that
date he became a consultant to the Fund. Of the amount listed above, $_____ was
compensation for services as a director and the remainder as a consultant. Mr.
Kroeger passed away on November 26, 1998, Mr. Kroeger's widow will receive his
pension as described below under "AIM Fund Retirement Plan for Eligible
Directors/Trustees."
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not an employee of any of
the AIM Funds, A I M Management Group Inc., or any of its subsidiaries) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by A I M Advisors, Inc. ("AIM") or its
subsidiaries (the "Applicable AIM Funds"). Each eligible director is entitled to
receive an annual benefit from the Applicable AIM Funds commencing on the first
day of the calendar quarter coincident with or following his date of retirement
equal to 75% of the retainer paid or accrued by the Applicable AIM Funds for
such director during the twelve-month period immediately preceding the
director's retirement (including amounts deferred under a separate agreement
between the AIM Funds and the director) for the number of such Director's years
of service (not in excess of 10 years of service) completed with respect to any
of the Applicable AIM Funds. Such benefit is payable to each eligible director
in quarterly installments. If an eligible director dies after attaining the
normal retirement date but before receipt of any benefits under the Plan
commences, the director's surviving spouse (if any) shall receive a quarterly
survivor's benefit equal to 50% of the amount payable to the deceased director,
for no more than ten years beginning the first day of the calendar quarter
following the date of the director's death. Payments under the Plan are not
secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11, 11, 0,1, 21, 20, [21], 6, 11, 8 and
0 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
Annual Compensation Paid
By All AIM Funds
<TABLE>
<S> <C> <C>
==============================================
$80,000
Number of 10 $60,000
Years of 9 $54,000
Service With 8 $48,000
the AIM 7 $42,000
Funds 6 $36,000
5 $30,000
==============================================
</TABLE>
10
<PAGE> 39
Deferred Compensation Agreements
Messrs. [Daly, Frischling, Kroeger, Robinson and Sklar] (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Fund, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will be
paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the Agreement) beginning on the date the
deferring director's retirement benefits commence under the Plan. The Fund's
Board of Directors, in its sole discretion, may accelerate or extend the
distribution of such deferral accounts after the deferring director's
termination of service as a director of the Fund. If a deferring director dies
prior to the distribution of amounts in his deferral account, the balance of the
deferral account will be distributed to his designated beneficiary in a single
lump sum payment as soon as practicable after such deferring director's death.
The Agreements are not funded and, with respect to the payments of amounts held
in the deferral accounts, the deferring directors have the status of unsecured
creditors of the Fund and of each other AIM Fund from which they are deferring
compensation.
THE INVESTMENT ADVISOR
The Fund has entered into an Investment Advisory Agreement, (the
"Advisory Agreement") with AIM. AIM is a wholly owned subsidiary of A I M
Management Group Inc. ("AIM Management"), 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173. AIM was organized in 1976, and, together with its
subsidiaries, advises or manages over 90 investment company portfolios
encompassing a broad range of investment objectives. AIM Management is an
indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London
EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are an independent
investment management group engaged in institutional investment management and
retail mutual fund businesses in the United States, Europe and the Pacific
Region. Certain of the directors and officers of AIM are also executive officers
of the Fund and their affiliations are shown under "Directors and Officers."
AIM and the Fund have adopted a Code of Ethics which requires investment
personnel and certain other employees (a) to pre-clear all personal securities
transactions subject to the Code of Ethics; (b) to file reports or duplicate
confirmations regarding such transactions; (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security, and (iii) transactions involving securities being considered for
investment by an AIM Fund; and (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Directors reviews quarterly and annual reports (including information
on any substantial violations of the Code of Ethics). Sanctions for violations
of the Code of Ethics may include censure, monetary penalties, suspension or
termination of employment.
A I M Capital Management, Inc., ("AIM Capital") a wholly owned
subsidiary of AIM, is engaged in the business of providing investment advisory
services to investment companies, corporations, institutions and other accounts.
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, acts as principal underwriter of other registered investment companies
advised or managed by AIM.
Pursuant to the terms of the Advisory Agreement, AIM: (a) supervises all
aspects of the operations of the Fund; (b) obtains and evaluates pertinent
information about significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether affecting the economy
generally or the Fund, and whether concerning the individual issuers whose
securities are included in the Fund or the activities in which such issuers
engage, or with respect to securities which AIM considers desirable for
inclusion in the
11
<PAGE> 40
Fund; (c) determines which issuers and securities shall be represented in the
Fund's investment portfolio and regularly reports thereon to the Fund's Board of
Directors; and (d) formulates and implements continuing programs for the
purchases and sales of the securities of such issuers and regularly reports
thereon to the Fund's Board of Directors; and takes, on behalf of the Fund, all
actions which appear to the Fund necessary to carry into effect such purchase
and sale programs and supervisory functions as aforesaid, including but not
limited to the placing of orders for the purchase and sale of securities for the
Fund. Subject to the approval of the Board of Directors and the shareholders of
the Fund, AIM may delegate to a sub-advisor certain of its duties, provided that
AIM shall continue to supervise the performance of any such sub-advisor. AIM
entered into a sub-advisory agreement with TradeStreet 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 35% of the Fund's portfolio. The remainder of the Fund's
portfolio is invested in value-oriented stock selected by the sub-advisor.
As compensation for its services, AIM receives an annual fee, calculated
daily and paid monthly, at the annual rate of 1.00% of the first $10 million of
the Fund's average daily net assets, 0.75% of the next $140 million of the
Fund's average daily net assets and 0.625% of the Fund's average daily net
assets in excess of $150 million. Although the advisory fee rate paid by the
Fund is higher than that paid by other investment companies, 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 other funds with similar investment objectives.
The portion of the Fund's portfolio invested in core stocks and in
emerging growth and value oriented stocks is determined by AIM.
AIM may from to time waive or reduce its fee. Fee waivers or reductions,
other than those set forth in the Advisory Agreement, may be rescinded, however,
at any time without further notice to investors, provided, however, that the
discontinuance of each fee waiver will be approved by the Board of Directors of
AIM. The Fund will retain its ability to be reimbursed for such fee waivers
prior to the end of the fiscal year.
The Advisory Agreement will continue from year to year, provided that it
is specifically approved at least annually by (i) the Fund's Board of Directors
or the vote of a "majority of the outstanding voting securities" of the Fund (as
defined in the 1940 Act) and (ii) the affirmative vote of a majority of the
directors who are not parties to the agreement or "interested persons" of any
such party (the "Non-Interested Directors") by votes cast in person at a meeting
called for such purpose. The Fund or AIM may terminate the Advisory Agreement on
60 days' written notice without penalty. The Advisory Agreement terminates
automatically in the event of assignment, as defined in the 1940 Act.
The Advisory Agreement 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 to the Fund
that are not required to be performed by AIM under the Advisory Agreement. For
such services, AIM is entitled to receive from the Fund reimbursement of its
costs or such reasonable compensation as may be agreed upon by 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, with AIM (the "Administrative
Services Agreement"). Under the Administrative Services Agreement, AIM currently
provides the services of a 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
12
<PAGE> 41
of the Fund, and prepare tax returns and financial statements for the Fund and
also is reimbursed for any expenses related to providing such services, as well
as the services of staff responding to various shareholder inquiries. The
Administrative Services Agreement will continue year to year, provided that it
is specifically approved at least annually by (i) the Fund's Board of Directors
or the vote of a "majority of the outstanding voting securities" of the Fund (as
defined in the 1940 Act) and (ii) the affirmative vote of a majority of the
NonInterested Directors by votes cast in person at a meeting called for such
purpose. In addition, a sub-contract between AIM and A I M Fund Services, Inc.
("AFS"), a registered transfer agent and wholly owned subsidiary of AIM,
provides that AFS may perform certain shareholders services for the Fund which
are not required to be performed by AIM under the Advisory Agreement. Currently,
AFS provides certain shareholders services for the Fund. For such services,
while AFS is entitled to receive from AIM such reimbursement of its costs
associated with providing those services as may be approved by the Board of
Directors, AFS does not presently receive any such reimbursement.
During the fiscal years ended October 31, 1998, 1997 and 1996, AIM
received management and advisory fees from the Fund of $_____, $9,353,715 and
$7,360,028, respectively. See "Expenses."
For the fiscal years ended October 31, 1998, 1997 and 1996, AIM was
reimbursed $_____, $67,450 and $63,439, respectively, for costs associated with
performing administrative services.
THE SUB-ADVISOR
NationsBank of Texas, N.A. ("NationsBank Texas"), served as the Fund's
sub-advisor pursuant to a sub-advisory agreement (the "Sub-Advisory Agreement").
NationsBank Corp., a bank holding company ("NationsBank, Corp."), indirectly
holds 100% of the voting stock of NationsBank Texas. TradeStreet Investment
Associates, Inc. ("TradeStreet"), 101 South Tryon Street, Suite 1000, Charlotte,
North Carolina 28255, is a wholly owned subsidiary of NationsBank, Corp. and a
registered investment advisor.
Pursuant to the terms of the Sub-Advisory Agreement, AIM has appointed
TradeStreet, to provide certain investment advisory services to the Fund,
subject to the overall supervision by AIM and the Fund's Board of Directors. As
Sub-Advisor, TradeStreet shall: (a) obtain and evaluate pertinent information
about significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities are
included in the Fund or the activities in which such issuers engage, or with
respect to securities which it or AIM considers desirable for inclusion in the
Fund's investment portfolio; and (b) to the extent requested by AIM, determine
which issues and securities shall be represented in the Fund's investment
portfolio, formulate programs for the purchases and sales of such securities and
regularly report thereon to AIM. In performing these services, TradeStreet, is
required to comply with all applicable provisions of federal or state law,
including the applicable provisions of the 1940 Act and the Investment Advisers
Act of 1940, as amended (the "Advisers Act"). Pursuant to the terms of the
Sub-Advisory Agreement, TradeStreet, 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.
As compensation for its services, AIM pays TradeStreet an annual fee,
calculated daily and paid monthly, at an annual rate of 0.50% of the first $10
million of the Fund's average daily net assets, 0.35% of the next $140 million
of the Fund's average daily net assets, 0.225% of the Fund's average daily
net assets in excess of $150 million and less than $700 million and 0.15% of
the Fund's average daily net assets in excess of $700 million. The sub-advisor's
fee is paid to TradeStreet by AIM from the advisory fee which AIM receives
from the Fund.
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<PAGE> 42
The Sub-Advisory Agreement will continue year to year, provided that it
is specifically approved at least annually by (i) the Fund's Board of Directors
or a vote of "a majority of the outstanding voting securities" of the Fund (as
defined by the 1940 Act), and (ii) by the affirmative vote of a majority of the
Non-Interested Directors by votes cast in person at a meeting called for such
purpose.
For the period November 1, 1995 through March 31, 1996, NationsBank
Texas received fees from AIM of $958,342. For the fiscal year ended October 31,
1998 and 1997 and for the period April 1, 1996 through the fiscal year ended
October 31, 1996, TradeStreet received fees from AIM of $______, $2,921,391 and
$1,454,982, respectively. See "Expenses."
EXPENSES
All of the ordinary business expenses incurred in the operations of the
Fund and the offering of its shares shall be borne by the Fund unless
specifically provided otherwise in the Advisory Agreement. These expenses borne
by the Fund include but are not limited to brokerage commissions, taxes, legal,
auditing, or governmental fees, the cost of preparing share certificates,
custodian, transfer and shareholder service agent costs, expenses of issue,
sale, redemption and repurchase of shares, expenses of registering and
qualifying shares for sale, expenses relating to directors' and shareholders'
meetings, the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Fund in reports and
notices to shareholders, the fees and other expenses incurred by the Fund in
connection with membership in investment company organizations and the cost of
pricing copies of prospectuses and statements of additional information
distributed to the Fund's shareholders.
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company ("State Street Bank") acts as a
transfer agent for the Class I Shares. The transfer agent's administrative
duties have been delegated by State Street Bank to its partially-owned
affiliate, Boston Financial Data Services, Inc. ("BFDS"). State Street Bank and
BFDS receive such compensation from the Fund for their services in such
capacities as are agreed to from time to time by State Street Bank and the Fund.
The address of State Street Bank and of BFDS is P.O. Box 8300, Boston,
Massachusetts 02266-8300. A I M Fund Services, Inc., a wholly owned subsidiary
of AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, acts as a
transfer and dividend disbursing agent for Class II Shares. These services do
not include any supervisory function over management or provide any protection
against any possible depreciation of assets.
State Street Bank acts as custodian for the Fund's portfolio securities
and cash. The Fund pays the Custodian and the Transfer Agent such compensation
as may be agree upon from time to time.
REPORTS
The Fund will furnish shareholders semi-annually with a list of the
investments held in the Fund's portfolio and its financial statements. The
annual financial statements will be audited by the Fund's independent certified
public accountants. The Board of Directors has selected KPMG Peat Marwick LLP,
700 Louisiana, Houston, Texas 77002, as the Fund's independent certified public
accountants to audit the Fund's books and review the Fund's tax returns.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
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 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.
No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here is not
intended as a substitute for careful tax planning. Because shares of the Fund
may be purchased by individual investors, through Summit Investors Plans I and
Summit Investors Plans II or other contractual plans, the following discussion
is addressed only to individual (rather than corporate) investors.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Fund is not subject to federal income tax on
the portion of its net investment income (i.e., taxable interest, dividends and
other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by the Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement").
The Fund may use "equalization accounting" in determine the portion of
its net investment income and capital gain net income that has been distributed.
If the Fund that elects to use equalization accounting, it will allocate a
portion of its realized investment income and capital gains to redemptions of
Fund shares and will correspondingly reduce the amount of such income and gains
that it distributes in cash. However, the Fund intends to make cash
distributions for each taxable year in an aggregate amount that is sufficient to
satisfy the Distribution Requirement without taking into account its use of
equalization accounting. The Internal Revenue Service has not published any
guidance concerning the methods to be used in allocating investment income and
capital gains to redemptions of shares. In the event that the Internal Revenue
Service determines that
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<PAGE> 44
the Fund is using an improper method of allocation and has underdistributed its
net investment income and capital gain net income for any taxable year, the Fund
may be liable for additional federal income tax.
In addition to satisfying the requirements described above, the Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Fund's current and accumulated earnings
and profits.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY
In general, gain or loss recognized by the Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation unless the
Fund made an election to accrue market discount into income. In addition, under
the rules of Code Section 988, gain or loss recognized on the disposition of a
debt obligation denominated in a foreign currency or an option with respect
thereto (but only to the extent attributable to changes in foreign currency
exchange rates), and gain or loss recognized on the disposition of a foreign
currency forward contract or of foreign currency itself, will generally be
treated as ordinary income or loss.
In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (a) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (b) the asset is otherwise held by the Fund as part of a "straddle", or
(c) the asset is stock and the Fund grants certain call options with respect
thereto. In addition, a Fund may be required to defer the recognition of a loss
on the disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position. Any gain recognized by a Fund on
the lapse of, or any gain or loss recognized by a Fund from a closing
transaction with respect to, an option written by the Fund will generally be
treated as a short-term capital gain or loss. In the case of covered options,
gain or loss may be long-term.
Some of the forward foreign currency exchange contracts, options and
futures contracts that the Fund may enter into will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as if
they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss arising
as a consequence of the year-end deemed sale of such contracts) is deemed to be
60% long-term (taxable at a maximum rate of 20% for non-corporate shareholders)
and 40% short-term gain or loss. However, in the case
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<PAGE> 45
of Section 1256 contracts that are forward foreign currency exchange contracts,
the net gain or loss is separately determined and (as discussed above) generally
treated as ordinary income or loss.
Other hedging transactions that may be engaged in by the Fund (such
as short sales "against the box") may be subject to special tax treatment as
"constructive sales" under section 1259 of the Code if a Fund holds certain
"appreciated financial positions" (defined generally as any interest (including
a futures or forward contract, short sale or option) with respect to stock,
certain debt instruments, or partnership interests if there would be a gain were
such interest sold, assigned, or otherwise terminated at its fair market value).
Upon entering into a constructive sales transaction with respect to an
appreciated financial position, a Fund will be deemed to have constructively
sold such appreciated financial position and will recognize gain as if such
position were sold, assigned, or otherwise terminated at its fair market value
on the date of such constructive sale (and will take into account any gain for
the taxable year which includes such date) unless the closed transaction
exception applies.
Because application of the rules governing Section 1256 contracts and
constructive sales may affect the character of gains or losses and/or accelerate
the recognition of gains or losses from the affected investment positions, the
amount which must be distributed to shareholders and which will be taxed to
shareholders as ordinary income or long-term capital gain may be increased as
compared to a fund that did not engage in transactions involving Section 1256
contracts or constructive sales.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or, at
the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company must (1)
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for any calendar year and (2) unless it has made
a taxable year election, exclude foreign currency gains and losses incurred
after October 31 of any year in determining the amount of ordinary taxable
income for the current calendar year (and, instead, include such gains and
losses in determining ordinary taxable income for the succeeding calendar year).
The Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
in the event that the Internal Revenue Service determines that the Fund is using
an improper method of allocation for purposes of equalization accounting (as
discussed above), such Fund may be liable for excise tax. Moreover, investors
should note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will qualify for the 70% dividends received deduction for
corporations only to the extent discussed below.
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<PAGE> 46
The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain (taxable
at a maximum rate of 20%), regardless of the length of time the shareholder has
held his shares or whether such gain was recognized by the Fund prior to the
date on which the shareholder acquired his shares. If the Fund elects to use
equalization accounting, however, a shareholder will be less likely to be taxed
on gain recognized prior to the date the shareholder acquires his shares since
such gain will in many cases have been allocated to shares of the Fund that have
previously been redeemed. Conversely, if the Fund elects to retain its net
capital gain, the Fund will be taxed thereon (except to the extent of any
available capital loss carryovers) at the 35% corporate tax rate. If the Fund
elects to retain its net capital gain, it is expected that the Fund also will
elect to have shareholders treated as if each received a distribution of its pro
rata share of such gain, with the result that each shareholder will be required
to report its pro rata share of such gain on its tax return as long-term capital
gain, will receive a refundable tax credit for its pro rata share of tax paid by
the Fund on the gain, and will increase the tax basis for its shares by an
amount equal to the deemed distribution less the tax credit.
Ordinary income dividends paid by the Fund with respect to a taxable
year will qualify for the 70% dividends received deduction generally available
to corporations (other than corporations, such as "S" corporations, which are
not eligible for the deduction because of their special characteristics and
other than for purposes of special taxes such as the accumulated earnings tax
and the personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
A dividend received by the Fund will not be treated as a qualifying dividend (a)
if it has been received with respect to any share of stock that the Fund has
held for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose under the rules of Code Section 246(c)(3)and(4) (i)
any day more than 45 days (or 90 days in the case of certain preferred stock)
after the date on which the stock becomes ex-dividend, and (ii) any period
during which the Fund has an option to sell, is under a contractual obligation
to sell, has made and not closed a short sale of, has granted certain options to
buy or has otherwise diminished its risk of loss by holding other positions with
respect to, such (or substantially identical) stock; (b) to the extent that the
Fund is under an obligation (pursuant to a short sale or otherwise) to make
related payments with respect to positions in substantially similar or related
property; or (c) to the extent the stock on which the dividend is paid is
treated as debt-financed under the rules of Code Section 246A. Moreover, the
dividends received deduction for a corporate shareholder may be disallowed or
reduced (a) if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of the Fund, or (b) by application of
Code Section 246(b) which in general limits the dividends received deduction to
70% of the shareholder's taxable income (determined without regard to the
dividends received deduction and certain other items).
Alternative minimum tax ("AMT") is imposed in addition to, but only to
the extent it exceeds, the regular tax and is computed at a maximum rate of 28%
for non-corporate taxpayers and 20% for corporate taxpayers on the excess of the
taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount.
The corporate dividends received deduction is not itself an item of tax
preference that must be added back to taxable income or is otherwise disallowed
in determining a corporation's AMTI. However, corporate shareholders will
generally be required to take the full amount of any dividend received from the
Fund into account (without a dividend received deduction) in determining their
adjusted current earnings, which are used in computing an additional corporate
preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted
current earnings over its AMTI (determined without regard to this item and the
AMTI net operating loss deduction)) that is includable in AMTI. For taxable
years beginning after 1997, however, certain small corporations are wholly
exempt from the AMT.
Investment income that may be received by certain of the Funds from
sources within foreign countries may be subject to foreign taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which entitle any such Funds to a reduced rate of, or exemption from,
taxes on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of any such Fund's assets to be invested
in various countries is not known.
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<PAGE> 47
Distributions by the Fund that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund. Shareholders receiving a distribution in the form
of additional shares will be treated as receiving a distribution in an amount
equal to the fair market value of the shares received, determined as of the
reinvestment date.
In addition, if the net asset value at the time a shareholder purchases
shares of the Fund reflects undistributed net investment income or recognized
capital gain net income, or unrealized appreciation in the value of the assets
of the Fund, distributions of such amounts will be taxable to the shareholder in
the manner described above, although such distributions economically constitute
a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year
in accordance with the guidance that has been provided by the Internal Revenue
Service ("IRS").
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Fund that he is not subject to backup withholding or
that it is an "exempt recipient."
SALE OR REDEMPTION OF FUND SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of the Fund will be considered capital
gain or loss and will be long-term capital gain or loss if the shares were held
for longer than one year. Except to the extent otherwise provided in future
Treasury regulations, any long-term capital gain recognized by a non-corporate
shareholder will be subject to tax at a maximum rate of 20%. However, any
capital loss arising from the sale or redemption of shares held for six months
or less will be treated as a long-term capital loss to the extent of the amount
of capital gain dividends received on such shares. For this purpose, the special
holding period rules of Code Section 246(c)(3) and (4) generally will apply in
determining the holding period of shares. Long-term capital gains of
noncorporate taxpayers are currently taxed at a maximum rate that in some cases
may be 19.6% lower than the maximum rate applicable to ordinary income. Capital
losses in any year are deductible only to the extent of capital gains plus, in
the case of a noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (i) incurs a sales load in acquiring shares of the
Fund, (ii) disposes of such shares less than 91 days after they are acquired and
(iii) subsequently acquires shares of the same or another Fund at a reduced
sales load pursuant to a right to reinvest at such reduced sales load acquired
in connection with the acquisition of the shares disposed of, then the sales
load on the shares disposed of (to the extent of the reduction in the sales load
on the shares subsequently acquired) shall not be taken into account in
determining
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<PAGE> 48
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate ("foreign shareholder"), depends on
whether the income from the Fund is "effectively connected" with a U.S. trade or
business carried on by such shareholder. If the income from the Fund is not
effectively connected with a U.S. trade or business carried on by a foreign
shareholder, ordinary income dividends will be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend.
Such a foreign shareholder would generally be exempt from U.S. federal income
tax on gains realized on the sale of shares of the Fund, capital gain dividends
and amounts retained by the Fund that are designated as undistributed capital
gains.
If the income from the Fund is effectively connected with a U.S. trade
or business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign shareholders, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.
Foreign persons who file a United States tax return after December 31,
1996, for a U.S. Tax refund and who are not eligible to obtain a social security
number must apply to the IRS for an individual taxpayer identification number,
using IRS Form W-7. For a copy of the IRS Form W-7 and accompanying
instructions, please contact your tax advisor.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund,
including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the regulations issued thereunder as in effect on the
date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. Shareholders are urged
to consult their tax advisers as to the consequences of these and other state
and local tax rules affecting investment in the Fund.
SHARE PURCHASES, REDEMPTIONS AND REPURCHASES
PURCHASES AND REDEMPTIONS
The terms of offering of Fund shares and the methods of accomplishing
redemption are set forth in full in the Fund's Prospectuses and in Summit
Investors Plans I and Summit Investors Plans II Prospectuses.
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<PAGE> 49
SUSPENSION OF RIGHT OF REDEMPTION
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange (the "NYSE") is
restricted, as determined by applicable rules and regulations of the SEC; (b)
the NYSE is closed for other than customary weekend and holiday closings; (c)
the SEC has by order permitted such suspension; or (d) an emergency as
determined by the SEC exists making disposal of portfolio securities or the
valuation of the net assets of the Fund not reasonably practicable.
VALUATION OF SHARES
In accordance with the current rules and regulations of the SEC, the net
asset value of a Fund share is determined as of the close of trading of the NYSE
(generally 4:00 p.m. Eastern Time) on each day in which the NYSE is open for
trading. Net asset value is determined by dividing the value of the Fund's
securities, cash and other assets (including accrued expenses but excluding
capital and surplus), by the number of shares outstanding. In the event the NYSE
closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net
asset value of a Fund share is determined as of the close of the NYSE on such
day. 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. For purposes of determining net asset value
per share, futures and options contract closing prices which are available 15
minutes after the close of trading of the NYSE are generally used.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sale price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at the
closing bid price on that day. Each security traded in the over-the-counter
market (but not including securities reported on the NASDAQ National Market
System) is valued on the basis of prices provided by independent pricing
services. Each security reported on the NASDAQ National Market System is valued
at the last sale price on the valuation date, or absent a last sales price, at
the closing bid price on that day, option contracts are valued at the mean
between the closing bid and asked prices on the exchange where the contracts are
principally traded; and futures contracts are valued at final settlement price
quotations from the primary exchange on which they are traded. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the independent pricing service
may be determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as dividend rate, yield, type of issue, coupon rate and
maturity. Securities for which market quotations are not readily available or
for which market quotations are not reflective of fair market value 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 which approximates market value.
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of the Fund's shares
are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE which
will not be reflected in the computation of the Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by or under the supervision of the Board of Directors.
THE DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act relating to the Class II Shares of the Fund (the "Plan"). The Plan
provides that the Class II Shares pay 0.30% per annum of its average daily net
assets as compensation to AIM Distributors for the purpose of financing any
activity
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which is primarily intended to result in the sale of Class II Shares. The Plan
is designed to compensate AIM Distributors, on a quarterly basis, for certain
promotional and other sales-related costs, and to implement a dealer incentive
program which provides for periodic payments to selected dealers who furnish
continuing personal shareholder services to their customers who purchase and own
Class II Shares of a Fund. Payments can also be directed by AIM Distributors to
selected institutions who have entered into service agreements with respect to
Class II Shares of the Fund and who provide continuing personal services to
their customers who own Class II Shares of the Fund. The service fees payable to
selected institutions are calculated at the annual rate of 0.25% of the average
daily net asset value of those Fund shares that are held in such institution's
customers' accounts which were purchased on or after a prescribed date set forth
in the Plan. Activities appropriate for financing under the Plan include, but
are not limited to, the following: printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
overhead; preparation and distribution of advertising material and sales
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Plan.
Of the aggregate amount payable under the Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average daily net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Plan. Payments pursuant to the Plans
are subject to any applicable limitations imposed by rules of the National
Association of Securities Dealers, Inc.
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Fund's shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Fund. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Funds; assisting customers
in changing dividend options, account designations and addresses, and in
enrolling in any of several special investment plans offered in connection with
the purchase of the Fund's shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Fund's shares; and providing such other
information and services as the Fund or the customer may reasonably request.
Under a Shareholder Service Agreement, the Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment period
for each business day of the Fund during such period at the annual rate of 0.25%
of the average daily net asset value of the Fund's shares purchased or acquired
through exchange. Fees calculated in this manner shall be paid only to those
selected dealers or other institutions who are dealers or institutions of record
at the close of business on the last business day of the applicable payment
period for the account in which the Funds' shares are held.
The Plan is subject to any applicable limitations imposed from time to
time by rules of the National Association of Securities Dealers, Inc.
AIM Distributors may in its discretion from time to time agree to waive
voluntarily all or any portion of its 12b-1 fee for Class II Shares, while
retaining its ability to be reimbursed for such fee prior to the end of each
fiscal year.
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Under the Plan, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the Plan. AIM Distributors does not
act as principal, but rather as agent for the Fund, in making dealer incentive
and shareholder servicing payments under the Plan. These payments are an
obligation of the Fund and not of AIM Distributors. The Fund will obtain a
representation from such financial institutions that they will either be
licensed as dealers as required under applicable state law, or that they will
not engage in activities which would constitute acting as a "dealer" as defined
under applicable state law.
The Plan require AIM Distributors to provide the Board of Directors at
least quarterly with a written report of the amounts expended pursuant to the
Plan and the purposes for which such expenditures were made. The Board of
Directors reviews these reports in connection with their decisions with respect
to the Plan.
As required by Rule 12b-1, the Plan and related form of Shareholder
Service Agreements were approved by the Board of Directors, including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements related to the Plan ("Non-Interested
Directors"). In approving the Plan in accordance with the requirements of Rule
12b-1, the directors considered various factors and determined that there is a
reasonable likelihood that the Plan would benefit the Class II Shares of the
Fund and its respective shareholders.
The Plan does not obligate the Fund to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plan. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless the Plan is terminated earlier in accordance with its terms, the
Plan continues as long as such continuance is specifically approved at least
annually by the Board of Directors, including a majority of the Non-Interested
Directors.
The Plan may be terminated by the vote of a majority of the
Non-Interested Directors, or, by the vote of a majority of the outstanding
voting securities of that class.
Any change in the Plan that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the directors, including a majority of the Non-Interested
Directors, by votes cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plan is in effect, the selection or
nomination of the Non-Interested Directors is committed to the discretion of the
Non-Interested Directors.
THE DISTRIBUTION AGREEMENT
The Fund has entered into a Distribution Agreement (the "Distribution
Agreement") with AIM Distributors, a registered broker-dealer and a wholly owned
subsidiary of AIM, which in turn is a wholly owned subsidiary of 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 I and Summit
Investors Plans II ("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 I and Summit
Investors Plans II. AIM Distributors does not receive any fee from the Fund
pursuant to the Distribution Agreement. The Distribution Agreement provides that
AIM Distributors will pay promotional expenses, including the incremental costs
of printing prospectuses, statements of additional information, annual reports
and other periodic reports for distribution to persons who are not shareholders
of the Fund and the costs of preparing and distributing any other supplemental
sales literature. AIM Distributors has not undertaken to sell any specified
number of shares of the Fund. The Fund or AIM Distributors may
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terminate the Distribution Agreement on 60 days' written notice without penalty.
The Distribution Agreement will terminate automatically in the event of
assignment. Certain directors and officers of the Fund are affiliated with AIM
Distributors and AIM Management.
INVESTMENT STRATEGIES AND RISKS
INVESTMENT PROGRAM
The Fund's investment objective and the methods by which the Fund seeks
to achieve that objective is set forth in the Prospectus under the caption
"Investment Objectives and Strategies" and "Principle Risk of Investing in the
Fund." It is the current policy of the Fund not to purchase or own the common
stock of any company which, in the opinion of AIM, derives a substantial portion
of its revenues from the manufacture of alcoholic beverages or tobacco products
or the operation of gambling establishments. In the opinion of management based
upon current conditions, such policy will not have a significant effect on the
investment performance of the Fund. This policy may be modified or rescinded by
the Fund's Board of Directors without shareholder approval.
COMMON STOCKS
The Fund may invest in common stocks. Common stocks represent the
residual ownership interest in the issuer and are entitled to the income and
increase in the value of the assets and business of the entity after all of its
obligations and preferred stocks are satisfied. Common stocks generally have
voting rights. Common stocks fluctuate in price in response to many factors
including historical and prospective earnings of the issuer, the value of its
assets, general economic conditions, interest rates, investor perceptions and
market liquidity.
PREFERRED STOCKS
The Fund may invest in preferred stocks. Preferred stock has a
preference over common stock in liquidation (and generally dividends as well)
but is subordinated to the liabilities of the issuer in all respects. As a
general rule the market value of preferred stock with a fixed dividend rate and
no conversion element varies inversely with interest rates and perceived credit
risk, while the market price of convertible preferred stock generally also
reflects some element of conversion value. Because preferred stock is junior to
debt securities and other obligations of the issuer, deterioration in the credit
quality of the issuer will cause greater changes in the value of a preferred
stock than in a more senior debt security with similar stated yield
characteristics. Unlike interest payments on debt securities, preferred stock
dividends are payable only if declared by the issuer's board of directors.
Preferred stock also may be subject to optional or mandatory redemption
provisions.
CONVERTIBLE SECURITIES
The Fund may invest in convertible securities. A convertible security is
a bond, debenture, note, preferred stock or other security that may be converted
into or exchanged for a prescribed amount of common stock or other equity
security of the same or a different issuer within a particular period of time at
a specified price or formula. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, convertible securities have characteristics similar to
nonconvertible income securities in that they ordinarily provide a stable stream
of income with generally higher yields than those of common stocks of the same
or similar issuers. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to comparable
nonconvertible securities. Convertible securities may be subject to redemption
at the option of the issuer at a price established in the convertible security's
governing instrument. Although the Fund will only purchase convertible
securities that AIM considers to have adequate protection parameters, including
an adequate capacity to pay interest and repay principal in a timely manner, it
invests without regard to corporate bond ratings.
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CORPORATE DEBT SECURITIES
The Fund may invest in corporate debt securities. Corporations issue
debt securities of various types, including bonds and debentures (which are
long-term), notes (which may be short- or long-term), bankers acceptances
(indirectly secured borrowings to facilitate commercial transactions) and
commercial paper (short-term unsecured notes). These securities typically
provide for periodic payments of interest, at a rate which may be fixed or
adjustable, with payment of principal upon maturity and are generally not
secured by assets of the issuer or otherwise guaranteed. The values of fixed
rate income securities tend to vary inversely with changes in interest rates,
with longer-term securities generally being more volatile than shorter-term
securities. Corporate securities frequently are subject to call provisions that
entitle the issuer to repurchase such securities at a predetermined price prior
to their stated maturity. In the event that a security is called during a period
of declining interest rates, the Fund may be required to reinvest the proceeds
in securities having a lower yield. In addition, in the event that a security
was purchased at a premium over the call price, the Fund will experience a
capital loss if the security is called. Adjustable rate corporate debt
securities may have interest rate caps and floors.
U.S. GOVERNMENT SECURITIES
The Fund may invest in securities issued or guaranteed by the United
States government or its agencies or instrumentalities. These include Treasury
securities (bills, notes, bonds and other debt securities) which differ only in
their interest rates, maturities and times of issuance. U.S. Government agency
and instrumentality securities include securities which are supported by the
full faith and credit of the U.S., securities that are supported by the right of
the agency to borrow from the U.S. Treasury, securities that are supported by
the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality and securities that are supported
only by the credit of such agencies. While the U.S. Government may provide
financial support to such U.S. government-sponsored agencies or
instrumentalities, no assurance can be given that it always will do so. The U.S.
government, its' agencies and instrumentalities do not guarantee the market
value of their securities and consequently the values of such securities
fluctuate.
REAL ESTATE INVESTMENT TRUSTS ("REITs")
The Fund may invest in equity and/or debt securities issued by REITs.
Such investments will not exceed 10% of the total assets of the Fund.
REITs are trusts which sell equity or debt securities to investors and
use the proceeds to invests in real estate or interests therein. A REIT may
focus on particular projects, such as apartment complexes, or geographic
regions, such as the Southeastern United States, or both.
To the extent that the Fund has the ability to invest in REITs, the Fund
could conceivably own real estate directly as a result of a default on the
securities it owns. The Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate including difficulties in
valuing and trading real estate, declines in the value of real estate, risks
related to general and local economic condition, adverse change in the climate
for real estate, environmental liability risks, increases in property taxes and
operating expense, changes in zoning laws, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected
by and changes in the value of the underlying property owned by the trusts,
while mortgage REITs may be affected by the quality of any credit extended.
Equity and mortgage REITs are dependent upon management skill, are not
diversified, and are therefore subject to the risk of financing single or a
limited number of projects. Such trusts are also subject to heavy cash flow
dependency, defaults by borrowers, self-liquidation, and the possibility of
failing to maintain exemption from the 1940 Act. Changes in interest rates may
also affect the value of debt securities held by
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the Fund. By investing in REITs indirectly through the Fund, a shareholder will
bear not only his/her proportionate share of the expenses of the Fund, but also,
indirectly, similar expenses of the REITs.
WARRANTS
The Fund may, from time to time, invest in warrants. Warrants are, in
effect, longer-term call options. They give the holder the right to purchase a
given number of shares of a particular company at specified prices within
certain periods of time. The purchaser of a warrant expects that the market
price of the security will exceed the purchase price of the warrant plus the
exercise price of the warrant, thus giving him a profit. Of course, since the
market price may never exceed the exercise price before the expiration date of
the warrant, the purchaser of the warrant risks the loss of the entire purchase
price of the warrant. Warrants generally trade in the open market and may be
sold rather than exercised. Warrants are sometimes sold in unit form with other
securities of an issuer. Units of warrants and common stock may be employed in
financing young, unseasoned companies. The purchase price of a warrant varies
with the exercise price of a warrant, the current market value of the underlying
security, the life of the warrant and various other investment factors.
FOREIGN SECURITIES
The Fund has reserved the investment flexibility to invest up to 20% of
its total assets in foreign securities. These securities will be marketable
equity securities (including common and preferred stock, depositary receipts for
stock and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. 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.
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.
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Regulatory Risk. Foreign companies are not registered with the SEC and
are generally not subject to the regulatory controls imposed on United States
issuers and, as a consequence, there is generally less publicly available
information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. 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.
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.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EMU"). The EMU intends to establish a common European
currency for participating countries which will be known as the "euro." It is
anticipated that each participating country will supplement its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country that is a
member of the European Union and satisfies the criteria for participation in the
EMU may elect to participate in the EMU and may supplement its existing currency
with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and
uncertainties, including whether the payment and operational systems of banks
and other financial institutions will be ready by January 1, 1999; how
outstanding financial contracts will be treated after January 1, 1999; the
establishment of exchange rates for existing currencies and the euro; and the
creation of suitable clearing and settlement systems for the euro. These and
other factors could cause market disruptions before or after the introduction of
the euro and could adversely affect the value of securities held by the Fund.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with foreign
currencies, and consequently the Fund may from time to time hold cash balances
in the form of foreign currencies and multinational currency units. Such foreign
currencies and multinational currency units will usually be acquired on a spot
(i.e. cash) basis at the spot rate prevailing in foreign exchange markets and
will result in currency conversion costs to the Fund. The Fund attempts to
purchase and sell foreign currencies on as favorable a basis as practicable;
however, some price spread on foreign exchange transactions (to cover service
charges) may be incurred, particularly when the Fund changes investments from
one country to another, or when U.S. dollars are used to purchase foreign
securities. Certain countries could adopt policies which would prevent the Fund
from transferring cash out of such countries, and the Fund may be affected
either favorably or unfavorably by fluctuations in relative exchange rates while
the Fund holds foreign currencies.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. A repurchase agreement is
an instrument under which the Fund acquires ownership of a debt security and the
seller (usually a broker or a bank) agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the Fund's holding period. In the event of
bankruptcy or other default of a seller of a repurchase agreement, the Fund may
experience both delays in liquidating the underlying securities and
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losses, including: (a) a possible decline in the value of the underlying
security during the period in which the Fund seeks to enforce its rights
thereto; (b) a possible subnormal level of income and lack of access to income
during this period; and (c) expenses of enforcing its rights. A repurchase
agreement is collateralized by the security of the Fund and its value is marked
to market daily in order to minimize the Fund's risk. Repurchase agreements
usually are for short periods, such as one or two days, but may be entered into
for longer periods of time. Repurchase agreements are not included in the Fund's
restrictions on lending. Repurchase agreements are considered to be loans by the
Fund under the 1940 Act.
RULE 144A SECURITIES
The Fund may purchase securities which, while privately placed, are
eligible for purchase and sale pursuant to Rule 144A under the Securities Act of
1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers,
such as the Fund, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. AIM, under the supervision of
the Fund's Board of Directors, will consider whether securities purchased under
Rule 144A are illiquid and thus subject to the Fund's restriction of investing
no more than 15% of its assets in illiquid securities. Determination of whether
a Rule 144A security is liquid or not is a question of fact. In making this
determination AIM will consider the trading markets for the specific security
taking into account the unregistered nature of a Rule 144A security. In
addition, AIM could consider the (i) frequency of trades and quotes, (ii) number
of dealers and potential purchasers, (iii) dealer undertakings to make a market,
and (iv) nature of the security and of market place trades (for example, the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of transfer). The liquidity of Rule 144A securities will also be
monitored by AIM and, if as a result of changed conditions, it is determined
that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid
securities will be reviewed to determine what, if any, action is required to
assure that the Fund does not invest more than 15% of its assets in illiquid
securities. Investing in Rule 144A securities could have the effect of
increasing the amount of the Fund's investments in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.
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.
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 when, in AIM's
judgment, the income to be earned from the loans justifies the attendant risks.
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FUTURES CONTRACTS
The Fund may purchase and sell stock index futures contracts in order to
hedge the value of its portfolio against changes in market conditions. In cases
of purchases of stock index futures contracts, an amount of liquid assets, equal
to the cost of the stock index futures contracts (less any related margin
deposits), will be segregated to collateralize the position and ensure that the
use of such stock index futures contracts is unleveraged. Unlike when the Fund
purchases or sells a security, no price is paid or received by the Fund upon the
purchase or sale of a stock index futures contract. Initially, the Fund will be
required to deposit with its custodian for the account of the broker a stated
amount, as called for by the particular contract, of cash or U.S. Treasury
bills. This amount is known as "initial margin." The nature of initial margin in
futures transactions is different from that of margin in securities transactions
in that stock index futures contract margin does not involve the borrowing of
funds by the customer to finance the transactions. Rather, the initial margin is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
"variation margin," to and from the broker will be made on a daily basis as the
price of the stock index futures contract fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
"marking-to-market." For example, when the Fund has purchased a stock index
futures contract and the price of the underlying stock index has risen, that
position will have increased in value and the Fund will receive from the broker
a variation margin payment with respect to that increase in value. Conversely,
where the Fund has purchased a stock index futures contract and the price of the
underlying stock index has declined, that position would be less valuable and
the Fund would be required to make a variation margin payment to the broker. At
any time prior to expiration of the stock index futures contract, the Fund may
elect to close the position by taking an opposite position which will operate to
terminate the Fund's position in the stock index futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Fund and the Fund realizes a loss or gain.
Stock Index Futures Contracts
A stock index assigns relative values to the common stocks included in
the index and the index fluctuates with changes in the market values of the
common stocks so included. 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. Currently, stock index futures contracts can be purchased
or sold primarily with respect to broad based stock indices such as the S&P's
500 Stock Index, the NYSE Composite Index, the American Stock Exchange Major
Market Index, the NASDAQ - 100 Stock Index and the Value Line Stock Index. The
stock indices listed above consist of a spectrum of stocks not limited to any
one industry such as utility stocks. Utility stocks, at most, would be expected
to comprise a minority of the stocks comprising the portfolio of the index. The
Fund will only enter into stock index futures contracts as a hedge against
changes resulting from market conditions in the values of the securities held or
which it intends to purchase. When the Fund anticipates a significant market or
market sector advance, the purchase of a stock index futures contract affords a
hedge against not participating in such advance. Conversely, in anticipation of
or in a general market or market sector decline that adversely affects the
market values of the Fund's portfolio of securities, the Fund may sell stock
index futures contracts. 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. The Fund may purchase or sell futures contracts if, immediately
thereafter, the sum of the amount of initial margin
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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.
RISKS AS TO FUTURES CONTRACTS AND RELATED CALL OPTIONS
There are several risks in connection with the use of stock index
futures contracts and related call options as hedging devices. One risk arises
because of the imperfect correlation between movements in the price of hedging
instruments and movements in the price of the stocks, which are the subject of
the hedge. If the price of a hedging instrument moves less than the price of the
stocks, which are the subject of the hedge, the hedge will not be fully
effective. If the price of a hedging instrument moves more than the price of the
stocks, the Fund will experience either a loss or gain on the hedging instrument
which will not be completely offset by movements in the price of the stocks,
which are the subject of the hedge. The use of call options on futures contracts
involves the additional risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the call option.
Successful use of hedging instruments by the Fund is also subject to
AIM's ability to predict correctly movements in the direction of the stock
market, of interest rates or of particular stock indices. Because of possible
price distortions in the futures and options markets and because of the
imperfect correlation between movements in the prices of hedging instruments and
the investments being hedged, even a correct forecast by AIM of general market
trends may not result in a completely successful hedging transaction.
It is also possible that where the Fund has sold stock index futures
contracts to hedge its portfolio against a decline in the market, the market may
advance and the value of stocks or debt securities held in its portfolio may
decline. If this occurred, the Fund would lose money on the stock index futures
contracts and also experience a decline in the value of its portfolio
securities.
Positions in futures contracts or options may be closed out only on an
exchange on which such contracts are traded. Although the Fund intends to
purchase or sell stock index futures contracts only on exchanges or boards of
trade where there appears to be an active market, there is no assurance that a
liquid market on an exchange or a board of trade will exist for any particular
contract at any particular time. If there is not a liquid market, it may not be
possible to close a stock index futures or option position at such time. In the
event of adverse price movements under those circumstances, the Fund would
continue to be required to make daily cash payments of maintenance margin on its
futures positions. The extent to which the Fund may engage in stock index
futures contracts will be limited by Internal Revenue Code requirements for
qualification as a regulated investment company and the Fund's intent to
continue to qualify as such. The result of a hedging program cannot be foreseen
and may cause the Fund to suffer losses which it would not otherwise sustain.
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 in the Prospectus. 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. Also, to the extent
that higher portfolio turnover results in a higher rate of net realized capital
gains to a Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase.
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PORTFOLIO TRANSACTIONS AND BROKERAGE
General Brokerage Policy
AIM makes decisions to buy and sell securities for the Fund, selects
broker-dealers, effects the Fund's investment portfolio transactions, allocates
brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate. While AIM seeks reasonably competitive commission rates, the Fund may not
pay the lowest commission or spread available. See "Section 28(e) Standards"
below.
Some of the securities in which the Fund invests are traded in
over-the-counter markets. In such transactions, the Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. Although in recent years many overseas stock
markets have adopted a system of negotiated rates, a number of markets maintain
an established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Fund) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Fund and other mutual funds advised by AIM or AIM Capital
(collectively, the "AIM Funds") in particular, including sales of the Fund and
of the other AIM Funds. In connection with (3) above, the Fund's trades may be
executed directly by dealers that sell shares of the AIM Funds or by other
broker-dealers with which such dealers have clearing arrangements. AIM will not
use a specific formula in connection with any of these considerations to
determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of the
Fund any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Fund may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Fund, provided the conditions of an exemptive order received
by the Fund from the SEC are met. In addition, the Fund may purchase or sell a
security from or to another AIM Fund provided the Fund follows procedures
adopted by the Boards of Directors/Trustees of the various AIM Funds, including
the Fund. These inter-fund transactions do not generate brokerage commissions
but may result in custodial fees or taxes or other related expenses.
Allocation of Portfolio Transactions
AIM and its affiliates manage several other investment accounts. Some of
these accounts may have investment objectives similar to the Fund. Occasionally,
identical securities will be appropriate for investment by the Fund and by
another AIM Fund or one or more of these investment accounts. However, the
position of each account in the same securities and the length of time that each
account may hold its investment in the same securities may vary. The timing and
amount of purchase by each account will also be determined by its cash position.
If the purchase or sale of securities is consistent with the investment policies
of the Fund(s) and one or more of these accounts, and is considered at or about
the same time, AIM will fairly allocate transactions in such securities among
the Fund(s) and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous
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<PAGE> 60
transactions could, however, adversely affect a Fund's ability to obtain or
dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
Section 28(e) Standards
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided ... viewed in terms of
either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and appropriately assist AIM
in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, the Fund may
pay a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Fund's directors with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Fund. However, the Fund is not under any obligation to deal with
any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Fund is not reduced because AIM receives such services.
However, to the extent that AIM would have purchased research services had they
not been provided by broker-dealers, the expenses to AIM could be considered to
have been reduced accordingly.
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<PAGE> 61
Transaction With Regular Brokers
As of October 31, 1998, the Fund held an amount of common stock issued
by Merrill Lynch & Co., Inc. and PaineWebber Group having a market value of
$_____ and $_____, respectively. As of October 31, 1998, the Fund was a party to
a repurchase agreement, having a market value of $_____, with SBC Warburg Inc.,
a regular broker of the Fund, as that term is defined in Rule 10b-1 under the
1940 Act.
Brokerage Commissions Paid
For the fiscal years ended October 31, 1998, 1997 and 1996, the Fund
paid brokerage commissions of $_____, $2,573,656 and $3,138,280, respectively.
For the fiscal year ended October 31, 1998, AIM allocated certain of the Fund's
brokerage transactions to certain broker-dealers that provided AIM with certain
research, statistical and other information. Such transactions amounted to
$_____ and the related brokerage commissions were $_____.
No brokerage commissions were paid by the Fund to any broker who is an
affiliated person of the Fund, an affiliated person of such person or an
affiliated person of the Fund, the Fund's principal underwriter, or AIM.
Portfolio Turnover
The decrease in portfolio turnover rate from 1996 to 1997 resulted from
strong corporate earnings and thus a reduced need to restructure the Fund's
portfolio holdings.
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 concentrated in any specific industry or issue. 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, and except that the Fund may purchase securities of
other investment companies to the extent permitted by applicable
law or exemptive order; 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, except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or
exemptive order.
Also the Fund will not:
(4) Purchase or hold securities of any issuer if the Fund has
knowledge that the officers and directors of the Fund and its
investment advisor collectively own beneficially more than 5% of
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<PAGE> 62
the outstanding securities of such issuer. (Individual holdings
of less than 1/2 of 1% will not be counted for the purpose of
this restriction.)
(5) Borrow money or issue senior securities, except that the Fund may
borrow from banks for temporary or emergency purposes in amounts
up to 10% of the value of its total assets at the time of
borrowing. (This provision is included solely to facilitate the
orderly sale of portfolio securities to accommodate abnormally
heavy redemption requests if they should occur and is not for
leverage purposes. Any borrowings by the Fund will be repaid
prior to the purchase of additional portfolio securities.)
(6) Underwrite securities issued by any other person.
(7) Invest in real estate or purchase oil, gas or mineral interests,
except that this restriction does not apply to marketable
securities secured by real estate or interests therein or issued
by issuers which invest in real estate or interests therein, or
to securities issued by companies engaged in the exploration,
development, production, refining, transporting and marketing of
oil, gas or minerals.
(8) Buy or sell commodities or commodity futures contracts.
(9) Make loans of money or securities other than (a) through the
purchase of securities in accordance with the Fund's investment
program, and (b) by entering into repurchase agreements; provided
that the Fund may lend its portfolio securities so long as the
value of securities loaned by it does not exceed an amount equal
to 331/3% of the Fund's total assets.
(10) Purchase securities on margin, except to the extent necessary for
the clearance of its securities transactions.
(11) Make short sales of securities or maintain a short position in
securities unless at all times when a short position is open, the
Fund owns at least an equal amount of such securities or owns
securities convertible into or exchangeable for at least an equal
amount of such securities, and unless not more than 10% of the
Fund's total assets (taken at current value) is held as
collateral for such short sales at any one time.
(12) Invest in companies for the purpose of exercising control or
management except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law or
exemptive order.
(13) Purchase or sell puts or purchase calls.
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 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. In addition to the foregoing restrictions and subject to
amendment by the Board of Directors of the Fund, the Fund may not invest more
than 5% of its total assets in financial futures contracts or related call
options.
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MISCELLANEOUS INFORMATION
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to AIM Distributors by calling (800) 995-4246.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Fund.
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FINANCIAL STATEMENTS
FS
<PAGE> 65
PART C: OTHER INFORMATION
Item 23. Exhibits
(a) (1) - Articles of Incorporation, of the Registrant, as
filed with the State of Maryland on February 17,
1982, were filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1 on Form N-1 filed on
September 30, 1982, and were filed electronically
as an Exhibit with the Registrant's Post-Effective
Amendment No. 19 on February 27, 1996, and are
incorporated by reference herein.
(2) - Articles of Amendment to the Articles of
Incorporation, as filed with the State of Maryland
on September 16, 1982, were filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1 on Form
N-1 filed on September 30, 1982, and were filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996, and are incorporated by reference herein.
(3) - Articles of Amendment to the Articles of
Incorporation, as filed with the State of Maryland
on September 30, 1982, were filed electronically as
an Exhibit with the Registrant's Post-Effective
Amendment No. 19 on February 27, 1996, and are
incorporated by reference herein.
(4) - Articles of Amendment to the Articles of
Incorporation, as filed with the State of Maryland
on November 23, 1988, were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 9 on Form
N-1A filed on September 12, 1988, and were filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996, and are incorporated by reference herein.
(5) - Articles Supplementary to the Articles of
Incorporation as filed with the State of Maryland
on December 21, 1998, is filed electronically
herewith.
(6) - Articles of Amendment to the Articles of
Incorporation as filed with the State of Maryland
on December 21, 1998, is filed electronically
herewith.
(b) (1) - By-Laws of the Registrant were filed as an Exhibit
to Registrant's Pre-Effective Amendment No. 1 on
Form N-1 filed on September 30, 1982.
(2) - Amended By-Laws of the Registrant as adopted on
February 18, 1987, were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 10 on
Form N-1A filed on April 28, 1989.
(3) - Amended By-Laws of the Registrant as adopted on May
24, 1988, were filed as an Exhibit to Registrant's
Post-Effective Amendment No. 10 on Form N-1A filed
on April 28, 1989.
(4) - Amended and Restated By-Laws of the Registrant as
adopted on June 11, 1989, were filed as an Exhibit
to Registrant's Post-Effective Amendment No. 11 on
Form N-1A filed on April 30, 1990, and were filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(5) - First Amendment to the Amended and Restated By-Laws
of the Registrant as adopted on May 3, 1991, was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed on April 30,
1992, and was filed
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electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(6) - Second Amendment to the Amended and Restated
By-Laws of the Registrant as adopted on March 14,
1995, was filed electronically as an Exhibit with
the Registrant's Post-Effective Amendment No. 19 on
February 27, 1996.
(7) - Amended and Restated By-Laws of the Registrant as
adopted on December 11, 1996, were filed
electronically as an Exhibit with Registrant's
Post-Effective Amendment No. 20 on February 24,
1997, and are incorporated by reference herein.
(c) - Instruments Defining Rights of Security Holders -
None.
(d) (1) - Form of Investment Advisory Agreement, between
Registrant and A I M Advisors, Inc., was filed as
an Exhibit to Registrant's Post-Effective Amendment
No. 9 on Form N-1A filed on September 12, 1988.
(2) - Investment Advisory Agreement, dated October 5,
1988, between Registrant and A I M Advisors, Inc.,
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 13 on Form N-1A filed
on April 30, 1992.
(3) - Investment Advisory Agreement, dated October 18,
1993, between Registrant and A I M Advisors, Inc.,
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 15 on Form N-1A filed
on December 29, 1993, and was filed electronically
as an Exhibit with the Registrant's Post-Effective
Amendment No. 19 on February 27, 1996.
(4) - Master Investment Advisory Agreement, dated
February 28, 1997, between Registrant and A I M
Advisors, Inc., was filed electronically as an
Exhibit with the Registrant's Post-Effective
Amendment No. 21 on February 27, 1998, and is
incorporated by reference herein.
(5) - Form of Sub-Advisory Agreement, between A I M
Advisors, Inc. and NCNB Texas National Bank, was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed on September 12,
1988.
(6) - Sub-Advisory Agreement, dated October 5, 1988,
between A I M Advisors, Inc. and NCNB Texas
National Bank, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 13 on
Form N-1A filed on April 30, 1992.
(7) - Sub-Advisory Agreement, dated October 18, 1993,
between A I M Advisors, Inc. and NationsBank of
Texas, N.A., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 15 on
Form N-1A filed on December 29, 1993, and was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(8) - Sub-Advisory Agreement, dated October 18, 1993,
between A I M Advisors, Inc. and NationsBank of
Texas, N.A., as assumed by TradeStreet Investment
Associates, Inc., as of April 1, 1996.
(9) - Assumption Agreement, dated April 1, 1996, between
A I M Advisors, Inc. and TradeStreet Investment
Associates, Inc., was filed electronically as an
Exhibit with Registrant's Post- Effective Amendment
No. 20, on February 24, 1997.
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<PAGE> 67
(10) - Sub-Advisory Agreement, dated February 28, 1997,
between A I M Advisors, Inc. and TradeStreet
Investment Associates, Inc. was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 21 on February 27,
1998, and is incorporated by reference herein.
(11) - Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, is filed
electronically herewith.
(12) - Amendment No. 1, dated September 28, 1998 to the
Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement,
dated September 9, 1998, by and between A I M
Advisors, Inc. and the Registrant, is filed
electronically herewith.
(e) (1) - Distribution Agreement, dated August 27, 1985,
between Registrant and A I M Distributors, Inc.,
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 5 on Form N-1A filed
on April 28, 1986.
(2) - Distribution Agreement, dated October 18, 1993,
between Registrant and A I M Distributors, Inc.,
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 15 on Form N-1A filed
on December 29, 1993, and was filed electronically
as an Exhibit with the Registrant's Post-Effective
Amendment No. 19 on February 27, 1996.
(3) - Distribution Agreement, dated February 28, 1997,
between Registrant and A I M Distributors, Inc.
was filed electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 21 on
February 27, 1998, and is incorporated by reference
herein.
(4) - Form of Amendment No. 1, dated ______________, to
the Distribution Agreement, dated February 28, 1997,
between Registrant and A I M Distributors, Inc.,
is filed electronically herewith.
(f) (1) - Retirement Plan for Registrant's Non-Affiliated
Directors was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 17 on Form N-1A filed
on December 23, 1994.
(2) - Retirement Plan for Registrant's Non-Affiliated
Directors, effective as of March 8, 1994, as
restated September 18, 1995, was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996 and is incorporated by reference herein.
(3) - Form of Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors was filed as
an Exhibit to Registrant's Post-Effective Amendment
No. 17 on Form N-1A filed on December 23, 1994.
(4) - Form of Deferred Compensation Plan for Registrant's
Non-Affiliated Directors as approved on December 5,
1995, was filed electronically as an Exhibit with
the Registrant's Post-Effective Amendment No. 19 on
February 27, 1996, and is incorporated by reference
herein.
(5) - Form of Deferred Compensation Agreement for
Registrant's Non-Affiliated Directors for Non-
Interested Directors and Trustees, as approved
March 12, 1997, was filed electronically as an
Exhibit with the Registrant's Post-Effective
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Amendment No. 21 on February 27, 1998, and is
incorporated by reference herein.
(g) (1) - Custodian Contract, between Registrant and State
Street Bank and Trust Company, was filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 7 on Form N-1A filed on March 1, 1988.
(2) - Custodian Contract, dated March 7, 1988, between
Registrant and State Street Bank and Trust Company,
was filed electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 19 on
February 27, 1996, and is incorporated by reference
herein.
(3) - Amendment No. 1, dated September 19, 1995, to the
Custodian Contract dated March 7, 1988, between
Registrant and State Street Bank and Trust Company,
was filed electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 19 on
February 27, 1996, and is incorporated by reference
herein.
(4) - Amendment No. 2 dated September 28, 1996 to the
Custodian Contract dated March 7, 1988 between
Registrant and State Street Bank and Trust Company
is filed electronically herewith.
(5) - Amendment to Custodian Contract dated September 9,
1998, to the Custodian Contract dated March 7, 1988
between Registrant and State Street Bank and Trust
Company is filed electronically herewith.
(h) (1) - Transfer Agency Agreement was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1
filed on May 13, 1983.
(2) - Administrative Services Agreement, dated June 11,
1989, between Registrant and A I M Advisors, Inc.,
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on Form N- 1A filed
on April 30, 1990.
(3) - Administrative Services Agreement, dated October
18, 1993, between the Registrant and A I M
Advisors, Inc., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 15 on
Form N-1A filed on December 29, 1993, and was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(4) - Administrative Services Agreement, dated February
28, 1997, between the Registrant and A I M
Distributors, Inc., was filed electronically as an
Exhibit with the Registrant's Post-Effective
Amendment No. 21 on February 27, 1998, and is
incorporated by reference herein.
(5) - Administrative Services Agreement, dated October
18, 1993, between A I M Advisors, Inc. and A I M
Fund Services, Inc., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 15 on
Form N-1A filed on December 29, 1993, and was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(6) - Amendment No.1, dated May 11, 1994, to the
Administrative Services Agreement, dated October
18, 1993, between A I M Advisors, Inc. and A I M
Fund Services, Inc., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 17 on
Form N-1A filed on December 23, 1994, and
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<PAGE> 69
was filed electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 19 on
February 27, 1996.
(7) - Amendment No. 2, dated July 1, 1994, to the
Administrative Services Agreement, dated October
18, 1993, between A I M Advisors, Inc. and A I M
Fund Services, Inc., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 17 on
Form N-1A filed on December 23, 1994, and was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(8) - Amendment No. 3, dated September 16, 1994, to the
Administrative Services Agreement, dated October
18, 1993, between A I M Advisors, Inc. and A I M
Fund Services, Inc., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 17 on
Form N-1A filed on December 23, 1994, and was filed
electronically as an Exhibit with the Registrant's
Post-Effective Amendment No. 19 on February 27,
1996.
(9) - Amendment No. 4, dated November 1, 1994, to the
Administrative Services Agreement, dated November
1, 1994, between A I M Advisors, Inc. and A I M
Fund Services, Inc., was filed electronically as an
Exhibit with the Registrant's Post-Effective
Amendment No. 19 on February 27, 1996.
(10) - Administrative Services Agreement, dated February
28, 1997, between A I M Advisors, Inc. and A I M
Fund Services, Inc., was filed electronically as an
Exhibit with the Registrant's Post-Effective
Amendment No. 21 on February 27, 1998, and is
incorporated by reference herein herewith.
(11) - Form of Transfer Agency Agreement and Service
Agreement, between Registrant and A I M Fund
Services, Inc., is filed electronically herewith.
(i) (1) - Opinion and consent of Spengler Carlson Gubar
Brodsky & Frischling, dated March 5, 1984, was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 3 on Form N-1A filed on March 7,
1984, and was filed electronically as an Exhibit
with the Registrant's Post-Effective Amendment No.
19 on February 27, 1996, and is incorporated by
reference herein.
(2) - Opinion and Consent of Ballard Spahr Andrews &
Ingersoll, LLP is filed electronically herewith.
(j) - None.
(k) - Financial Statements - None.
(l) - Letter from A I M Distributors, Inc., dated
September 24, 1992, re: initial capital, was filed
as an Exhibit to the Registrant's Pre-Effective
Amendment No. 1 on Form N-1 filed on September 30,
1982, and was filed electronically as an Exhibit
with the Registrant's Post-Effective Amendment No.
19 on February 27, 1996, and is incorporated by
reference herein.
(m) - Form of Distribution Plan and Shareholder Service
Agreement for Registrant's Class II Shares is filed
electronically herewith.
(n) - Financial Data Schedule - None.
5
<PAGE> 70
(o) - Rule 18f-3 Plan, effective as of December 8, 1998,
is filed electronically herewith.
Item 24. Persons Controlled by or under Common Control With Registrant.
Provide a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant. For any person
controlled by another person, disclose the percentage of voting securities
owned by the immediately controlling person or other basis of that person's
control. For each company, also provide the state or other sovereign power
under the laws of which the company is organized.
All of Registrant's issued and outstanding shares of Class I
Shares of Common Stock are owned of record by State Street Bank and Trust
Company ("State Street") as custodian for Summit Investors Plans I, a unit
investment trust. State Street votes such shares in accordance with the
instructions received from beneficial owners of Registrant's shares; and, as to
shares for which no instructions are received, proportionately based upon the
votes cast by beneficial owners who furnished instructions.
Item 25. Indemnification
State the general effect of any contract, arrangements or statute
under which any director, officer, underwriter or affiliated person of the
Registrant is insured or indemnified against any liability incurred in their
official capacity, other than insurance provided by any director, officer,
affiliated person or underwriter for their own protection.
Under the terms of the Maryland General Corporation Law and the
Registrant's Articles of Incorporation and By-laws, the Registrant may
indemnify any person who was or is a director, officer or employee of the
Registrant to the maximum extent permitted by the Maryland General Corporation
Law. The specific terms of such indemnification are reflected in the
Registrant's Articles of Incorporation and By-laws, which are incorporated
herein by reference. No indemnification will be provided by the Registrant to
any director or officer of the Registrant for any liability to the Registrant
or shareholders to which such director or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy and will be governed by the final adjudication of such
issue. Insurance coverage is provided under a joint Mutual Fund and Investment
Advisory Professional Directors and Officers Liability Policy, issued by ICI
Mutual Insurance Company, with a $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of
a substantial nature that each investment advisor of the Registrant, and each
director, officer or partner of the advisor is, or has been, engaged within the
two fiscal years for his or her own account or in the capacity of director,
officer, employee, partner or trustee.
6
<PAGE> 71
A I M Advisors, Inc.
See Statement of Additional Information, Part B under headings
"General Information About the Fund - Directors and Officers" for
information concerning A I M Advisors, Inc.
TradeStreet Investment Associates, Inc.
The names and principal occupations of the chief executive officer
and each director of TradeStreet Investment Associates, Inc.
("TradeStreet") are as follows:
Holly D. Deem President and Chief Executive Officer,
TradeStreet; Senior Vice President,
NationsBank, N.A.
Martin E. Galt III Senior Executive Vice President, Asset
Management Group
All of the foregoing persons may be reached c/o TradeStreet
Investment Associates, Inc., 101 South Tryon Street, Suite 1000, Charlotte,
North Carolina 28255.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the
Registrant) for which each principal underwriter currently distributing the
Registrant's securities also acts as a principal underwriter, depositor, or
investment adviser.
A I M Distributors, Inc., the Registrant's principal
underwriter, also acts as a principal underwriter, depositor
or investment advisor to the following investment companies:
AIM Advisor Funds, Inc.
AIM Equity Funds, Inc. (Retail Classes)
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Portfolios
AIM Investment Securities Funds (Retail Class)
AIM Series Trust
AIM Special Opportunities Funds
AIM Tax-Exempt Funds, Inc.
AIM Variable Insurance Funds, Inc.
GT Global Floating Rate Fund, Inc.
Summit Investors Plans I
(b) Provide the information required by the following table for each
director, officer, or partner of each principal underwriter named in the
response to Item 20:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
------------------- ------------------------ -----------------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman & Director
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
James L. Salners Executive Vice President None
</TABLE>
7
<PAGE> 72
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
------------------- ------------------------ -------------------------
<S> <C> <C>
Robert H. Graham Senior Vice President & Director President & Director
John Caldwell Senior Vice President None
W. Gary Littlepage Senior Vice President & Director None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
B. J. Thompson First Vice President None
James R. Anderson Vice President None
Dawn M. Hawley Vice President & Treasurer None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Melville B. Cox Vice President & Chief Compliance Officer Vice President
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Ofelia M. Mayo Vice President, General Counsel & Assistant Assistant Secretary
Secretary
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President & Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Luke P. Beausoleil Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Glenda A. Dayton Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Kathryn A. Jordan Assistant Vice President None
</TABLE>
- ------------
* 11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
8
<PAGE> 73
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
------------------- ------------------------ -------------------------
<S> <C> <C>
Kim T. Auliffe Assistant Vice President None
Ivy B. McLemore Assistant Vice President None
Mary C. Mangham Assistant Vice President None
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Assistant Secretary
Secretary
Norman W. Woodson Assistant Vice President None
Samuel D. Sirko Assistant General Counsel & Assistant Assistant Secretary
Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
</TABLE>
- ----------------
* 11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
(c) Provide the information required by the following table for
all commissions and other compensation received, directly or indirectly, from
the Registrant during the last fiscal year by each principal underwriter who is
not an affiliated person of the Registrant or any affiliated person of an
affiliated person.
Not applicable.
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical
possession of each account, book, or other document required to be maintained
by section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
9
<PAGE> 74
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive
offices, except for those maintained by the Registrant's Custodian
and Transfer Agent, State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02105 and its partially
owned subsidiary, Boston Financial Data Services, Inc., P.O. Box
8300, Boston, Massachusetts 02266-8300.
Item 29. Management Services
Provide a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B, disclosing
the parties to the contract and the total amount paid and by whom for the
Registrant's last three fiscal years.
None.
Item 30. Undertakings
In initial registration statements filed under the Securities Act,
provide an undertaking to file an amendment to the registration statement with
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the Registrant intends to
raise its initial capital under section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
Not Applicable.
10
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 29th day of
December, 1998.
REGISTRANT: AIM SUMMIT FUND, INC.
By: /s/ ROBERT H. GRAHAM
---------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ CHARLES T. BAUER
------------------------------ Chairman & Director December 29, 1998
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM
------------------------------ Director & President December 29, 1998
(Robert H. Graham) (Principal Executive Officer)
/s/ BRUCE L. CROCKETT
------------------------------ Director December 29, 1998
(Bruce L. Crockett)
/s/ OWEN DALY II
------------------------------ Director December 29, 1998
(Owen Daly II)
/s/ EDWARD K. DUNN, JR.
------------------------------ Director December 29, 1998
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS
------------------------------ Director December 29, 1998
(Jack Fields)
/s/ CARL FRISCHLING
------------------------------ Director December 29, 1998
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS
------------------------------ Director December 29, 1998
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK
------------------------------ Director December 29, 1998
(Lewis F. Pennock)
/s/ IAN W. ROBINSON
------------------------------ Director December 29, 1998
(Ian W. Robinson)
/s/ LOUIS S. SKLAR
------------------------------ Director December 29, 1998
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President &
------------------------------ Treasurer (Principal Financial December 29, 1998
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 76
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
a (5) Articles Supplementary
a (6) Articles of Amendment
d (11) Foreign Country Selection and Mandatory Securities Depository Responsibilities Delegation Agreement, dated
September 9, 1998, by and between Registrant and A I M Advisors, Inc.
d (12) Amendment No. 1, dated September 28, 1998, to the Foreign Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9, 1998, by and between Registrant and A I M Advisors,
Inc.
e (4) Form of Amendment No. 1 to the Distribution Agreement, between Registrant and A I M Distributors, Inc.
g (4) Amendment No. 2 dated September 28, 1996 to the Custodian Contract
g (5) Amendment to Custodian Contract dated September 9, 1998
h (11) Form of Transfer Agency Agreement and Service Agreement, between Registrant and A I M Fund Services, Inc.
i (2) Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP
m Form of Distribution Plan and Shareholder Service Agreement, for Registrant's Class II Shares.
o Rule 18f-3 Plan
</TABLE>
<PAGE> 1
EXHIBIT a(5)
AIM SUMMIT FUND, INC.
ARTICLES SUPPLEMENTARY
AIM SUMMIT FUND, INC., a Maryland Corporation (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Immediately prior to the filing of these Articles Supplementary,
the Corporation had authority to issue One Billion (1,000,000,000) shares of
Common Stock $.01 par value per share having an aggregate par value of
$10,000,000.
SECOND: The Board of Directors of the Corporation, by resolutions duly
adopted by at least a majority of the Board of Directors at a meeting duly
called and held on December 8, 1998, reclassified unissued shares (collectively,
the "Shares") as follows: Six Hundred Million (600,000,000) shares are
classified as Class II Shares of Common Stock with the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of shares of stock as set
forth in ARTICLE SIXTH of the charter of the Corporation (the "Charter") and in
any other provisions of the charter relating to the stock of the Corporation
generally and in paragraph FOURTH hereof.
THIRD: As of the filing of these Articles Supplementary, the
Corporation shall have authority to issue One Billion (1,000,000,000) shares of
Common Stock, $.01 par value per share, having an aggregate par value of
$10,000,000, of which Four Hundred Million (400,000,000) shares remain as Common
Stock and Six Hundred Million (600,000,000) unissued shares are classified as
Class II Shares of Common Stock.
FOURTH: Class II Shares of Common Stock of the Corporation shall have
the following rights, voting powers, and restrictions:
(i) In the event of the liquidation or dissolution of the
Corporation, stockholders of each Class II Shares of Common Stock shall be
entitled to receive and shall only be entitled to receive, as a class, out of
the assets of the Corporation available for distribution to stockholders of
Common Stock, the assets allocable to Class II Shares after deduction of any
liabilities allocable to Class II Shares and the net assets so distributable to
the stockholders of Class II Shares shall be distributed among such stockholders
in proportion to the number of shares of Class II Shares held by them and
recorded on the books of the Corporation.
(ii) On each matter submitted to a vote of the stockholders,
each holder of a Class II Share of Common Stock shall be entitled to one vote
for each such share of Class II Shares of Common Stock standing in such holder's
name on the books of the Corporation, and all shares of Common Stock shall be
voted in the aggregate and not by class; provided, however, that to the extent
class voting is required by the Investment Company Act of 1940, as amended, or
the regulations adopted thereunder, or by Maryland law, or is otherwise directed
by the Board of Directors, as to any such matter, Class II Shares of Common
Stock shall be voted by individual class, or shall have no vote as the case may
be.
FIFTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940, as amended.
<PAGE> 2
SIXTH: The Shares were classified by the Board of Directors of the
Corporation under authority granted to it in ARTICLE EIGHTH, paragraph (b) of
the Charter.
SEVENTH: The undersigned President acknowledges these Articles
Supplementary to be the corporate act of the Corporation and states that to the
best of his or her knowledge, information and belief, the matters and facts set
forth in these Articles with respect to authorization and approval are true in
all material respects and that this statement is made under the penalties for
perjury.
IN WITNESS WHEREOF, AIM SUMMIT FUND, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf by its President and
witnessed by its Assistant Secretary on December 17, 1998.
Witness: AIM SUMMIT FUND, INC.
By: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
---------------------------- -------------------------
Assistant Secretary President
2
<PAGE> 1
EXHIBIT a(6)
AIM SUMMIT FUND, INC.
ARTICLES OF AMENDMENT
AIM Summit Fund, Inc., a Maryland Corporation (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Corporation hereby amends its charter as currently in effect
(the "Charter") by changing the name of the class of shares of stock of the
Corporation known as Common Stock to Class I Shares of Common Stock. Subsequent
to the foregoing amendment the names of the classes of stock of the Corporation
will be Class I Shares of Common Stock and Class II Shares of Common Stock,
respectively.
SECOND: A majority of the entire Board of Directors of the Corporation,
at a meeting duly held on December 8, 1998, duly adopted resolutions in which
was set forth, and which authorized and approved, the foregoing amendment to the
Charter.
THIRD: The amendment to the Charter set forth above is expressly
permitted by ss.2-605 of the Maryland General Corporation Law ("MGCL") to be
made without action by the stockholders of the Corporation.
FOURTH: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
FIFTH: The foregoing amendment does not increase the authorized stock
of the Corporation, and does not change the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption of any class or series of authorized stock
of the Corporation.
SIXTH: The undersigned President of the Corporation acknowledges these
Articles of Amendment to be the corporate act of the Corporation and states that
to the best of his or her knowledge, information and belief, the matters in fact
set forth in these Articles with respect to authorization and approval are true
in all material respects and that this statement is made under the penalties of
perjury.
IN WITNESS WHEREOF, AIM Summit Fund, Inc. has caused these presents to
be signed in its name and on its behalf by its President and attested by its
Assistant Secretary on December 17, 1998.
Witness: AIM SUMMIT FUND, INC.
By: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
------------------------------ ------------------------------
Name Name
Assistant Secretary President
2
<PAGE> 1
EXHIBIT (d)(11)
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This FOREIGN COUNTRY SELECTION AND MANDATORY SECURITIES DEPOSITORY
RESPONSIBILITIES DELEGATION AGREEMENT (the "Agreement") is made this 9th day of
September, 1998 by and between A I M ADVISORS, INC., a Delaware corporation
("AIM") and each registered investment company (the "Investment Companies") and
its respective portfolios (the "Funds") listed on the signature page hereof.
W I T N E S S E T H:
WHEREAS, AIM has agreed to accept responsibility for selecting and
monitoring relationships with compulsory depositories; and
WHEREAS, AIM has agreed to accept responsibility for the selection of
foreign countries in which the Funds may invest;
NOW, THEREFORE, AIM hereby agrees to exercise reasonable care, prudence and
diligence such as a person having safekeeping of fund assets would exercise in
performing the following responsibilities:
1. DEFINITIONS.
A. "FOREIGN ASSETS" means any of a Fund's investments (including foreign
currencies) for which the primary market is outside the United States,
currency contracts that are settled outside the United States, and
such cash and cash equivalents as are reasonably necessary to effect
the Fund's transactions in such investments.
B. "FOREIGN CUSTODY MANAGER" means State Street Bank and Trust Company.
C. "MANDATORY SECURITIES DEPOSITORY" means a foreign securities
depository or clearing agency that, either as a legal or practical
matter, must be used if a Fund determines to place Foreign Assets in a
country outside the United States (i) because required by law or
regulation; (ii) because securities cannot be withdrawn from such
foreign securities depository or clearing agency; or (iii) because
maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
D. "PREVAILING COUNTRY RISKS" means all factors reasonably related to the
systemic risk of holding Foreign Assets in a particular country,
including but not limited to, such country's political environment;
economic and financial infrastructure (including any Mandatory
Securities Depositories operating in the country); prevailing or
developing custody and settlement practices; laws and regulations
applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country; and factors comprising "prevailing country
risk", including the effects of foreign law on the safekeeping of Fund
assets, the likelihood of expropriation, nationalization, freezing or
confiscation of the Fund's assets and any reasonably foreseeable
difficulties in repatriating the Fund's assets.
<PAGE> 2
E. "SECURITIES DEPOSITORY" means a system for the central handling of
securities where all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of the securities. A Securities Depository includes a
Mandatory Securities Depository.
2. FOREIGN COUNTRY SELECTION. Selection of foreign countries in which a Fund
invests. AIM may determine that an issuer is located in a particular
country based on various factors, including the following: (i) the issuer
is organized under the laws of and maintains a principal office in that
country; (ii) the issuer derives 50% or more of its total revenues from
business in that country; or (iii) the primary market for the issuer's
securities is in that country. In addition, in determining whether to
maintain assets of a Fund in a foreign country, AIM shall consider
Prevailing Country Risks. AIM may rely on information provided by
computerized information services, such as Bloomberg terminals, in making
the foregoing determinations. AIM may also rely on information and
opinions provided by the Foreign Custody Manager in making such
determinations. AIM may add or delete foreign countries to or from the
list of approved foreign countries from time to time, as determined by the
AIM employees who are portfolio managers of the Funds.
3. MANDATORY SECURITIES DEPOSITORIES SELECTION. Selection of Mandatory
Securities Depositories for the placement and maintenance of Foreign
Assets. AIM shall not make any such selection unless and until it has
complied with the terms of paragraphs 4 through 6 of this Agreement.
4. DETERMINATION OF REASONABLE CARE. Determinations by AIM that the Foreign
Assets will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, if such Assets are held
with a Mandatory Securities Depository. In making such determinations, AIM
shall consider all factors relevant to the safekeeping of such Foreign
Assets, including without limitation:
A. The practices, procedures, and internal controls of the Mandatory
Securities Depository, including, but not limited to, the physical
protections available for certificated securities (if applicable), the
method of keeping custodial records, and the security and data
protection practices;
B. Whether the Mandatory Securities Depository has the requisite
financial strength to provide reasonable care for the Foreign Assets;
C. The general reputation and standing of the Mandatory Securities
Depository and its operating history and number of participants; and
D. Whether the Fund will have jurisdiction over and be able to enforce
judgments against the Mandatory Securities Depository, such as by
virtue of the existence of any offices of the Mandatory Securities
Depository in the United States or the consent by the Mandatory
Securities Depository to service of process in the United States.
5. FOREIGN CUSTODY ARRANGEMENTS. Implementation of the Funds' foreign custody
arrangements pursuant to written contracts, by the rules or established
practices or
<PAGE> 3
procedures of the Mandatory Securities Depository, or by any combination of the
foregoing that AIM determines will provide reasonable care for the Funds'
Foreign Assets based on the standards specified in paragraph A.2. above. Any
such contracts shall include provisions that provide:
A. For indemnification or insurance arrangements (or any combination of
the foregoing) such that the Funds will be adequately protected
against the risk of loss of Foreign Assets held in accordance with
such contracts;
B. That the Funds' Foreign Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
custodian or its creditors except a claim of payment for their safe
custody or administration or, in the case of cash deposits, liens or
rights in favor of creditors of the custodian arising under
bankruptcy, insolvency, or similar laws;
C. That beneficial ownership for the Funds' Foreign Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
D. That adequate records will be maintained identifying the Foreign
Assets as belonging to a Fund or as being held by a third party for
the benefit of the Fund;
E. That each Fund's independent public accountants will be given access
to those records or confirmation of the content of those records; and
F. That a Fund will receive periodic reports with respect to the
safekeeping of the Fund's Foreign Assets, including, but not limited
to, notification of any transfer to or from the Fund's accounts or a
third party account containing Foreign Assets held for the benefit of
the Fund.
In lieu of any or all of the provisions specified in a. through f.
above, such contracts may contain such other provisions that AIM
determines will provide, in their entirety, the same or a greater
level of care and protection for Fund Foreign Assets as the specified
provisions, in their entirety.
6. MONITORING MANDATORY SECURITIES DEPOSITORIES. Establishment of a system
(a) to monitor the appropriateness of maintaining the Fund's Foreign Assets
with a particular Mandatory Securities Depository under Section 4 above,
and the contracts governing the Funds' arrangements under Section 5 above;
and (b) to notify the Funds promptly if an arrangement no longer meets the
requirements of [this section B] and to withdraw promptly the Funds'
Foreign Assets from such Mandatory Securities Depository in such event.
7. REPORTS AND OTHER INFORMATION.
A. ANNUAL REPORTS AND OTHER INFORMATION. AIM shall furnish annually to
the Boards of Directors/Trustees information regarding the factors
used in its system to monitor Mandatory Securities Depositories.
B. QUARTERLY REPORTS. AIM will submit to the Boards of
Directors/Trustees a quarterly report listing all newly approved
countries and all countries in which a Fund invested
<PAGE> 4
for the first time during the preceding quarter. Such report shall
include a revised Appendix 1 to the Foreign Custody and Country
Selection Procedures, if applicable, listing the approved countries.
AIM will submit to the Boards of Directors/Trustees a quarterly report
indicating changes to Mandatory Securities Depositories to the extent
such report is not provided by the Foreign Custody Manager.
C. OTHER REPORTS. AIM will notify the Boards of Directors/Trustees in
writing of any material change in the Mandatory Securities
Depositories for a Fund that has not been reported by the Foreign
Custody Manager promptly after the occurrence of the material change.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
------------------------ -------------------------
Assistant Secretary Name:
Title:
(SEAL)
AIM ADVISOR FUNDS, INC. AIM SUMMIT FUND, INC.
AIM Advisor Flex Fund
AIM Advisor International Value Fund AIM INTERNATIONAL FUNDS, INC.
AIM Advisor Large Cap Value Fund AIM Asian Growth Fund
AIM Advisor MultiFlex Fund AIM European Development Fund
AIM Advisor Real Estate Fund AIM International Equity Fund
AIM Global Aggressive Growth Fund
AIM EQUITY FUNDS, INC. AIM Global Growth Fund
AIM Aggressive Growth Fund AIM Global Income Fund
AIM Blue Chip Fund
AIM Capital Development Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM Charter Fund AIM V.I. Aggressive Growth Fund
AIM Constellation Fund AIM V.I. Balanced Fund
AIM Weingarten Fund AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM FUNDS GROUP AIM V.I. Diversified Income Fund
AIM Balanced Fund AIM V.I. Global Utilities Fund
AIM Global Utilities Fund AIM V.I. Government Securities Fund
AIM High Yield Fund AIM V.I. Growth Fund
AIM Income Fund AIM V.I. Growth & Income Fund
AIM Money Market Fund AIM V.I. High Yield Fund
AIM Select Growth Fund AIM V.I. International Equity Fund
AIM Value Fund AIM V.I. Money Market Fund
AIM V.I. Value Fund
AIM SPECIAL OPPORTUNITIES FUNDS
AIM Small Cap Opportunities Fund
Attest: /s/ P. MICHELLE GRACE By: /s/ JOHN J. ARTHUR
------------------------ ---------------------------
Assistant Secretary Name: John J. Arthur
Title: Senior Vice President
(SEAL)
<PAGE> 1
EXHIBIT (d)(12)
AMENDMENT NO. 1
TO
FOREIGN COUNTRY SELECTION
AND MANDATORY SECURITIES DEPOSITORY RESPONSIBILITIES
DELEGATION AGREEMENT
This Amendment No. 1 dated as of September 28, 1998, amends the Foreign
Country Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement (the "Agreement"), dated September 9, 1998, between A I M
Advisors, Inc., a Delaware corporation and each registered investment company
(the "Investment Companies") and its respective portfolios (the "Funds") listed
on the signature page thereof.
W I T N E S S E T H:
WHEREAS, the parties to the Agreement desire to amend the Agreement to
add AIM Investment Securities Funds on behalf of its AIM High Yield Fund II
portfolio as a party to the agreement;
NOW, THEREFORE, the parties agree as follows;
1. The list of Investment Companies and Funds covered by the
Agreement is hereby amended to include the following:
"AIM INVESTMENT SECURITIES FUNDS
AIM High Yield Fund II"
2. In all other respects, the Agreement is hereby confirmed and
remains in full force and effect.
<PAGE> 2
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be
executed by their respective officers on the date first written above.
A I M ADVISORS, INC.
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
------------------------- ----------------------------------
Assistant Secretary President
(SEAL)
AIM ADVISOR FUNDS, INC. AIM SPECIAL OPPORTUNITIES FUNDS
AIM Advisor Flex Fund AIM Small Cap Opportunities Fund
AIM Advisor International Value Fund
AIM Advisor Large Cap Value Fund AIM SUMMIT FUND, INC.
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund AIM INTERNATIONAL FUNDS, INC.
AIM Asian Growth Fund
AIM EQUITY FUNDS, INC. AIM European Development Fund
AIM Aggressive Growth Fund AIM International Equity Fund
AIM Blue Chip Fund AIM Global Aggressive Growth Fund
AIM Capital Development Fund AIM Global Growth Fund
AIM Charter Fund AIM Global Income Fund
AIM Constellation Fund
AIM Weingarten Fund AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Aggressive Growth Fund
AIM FUNDS GROUP AIM V.I. Balanced Fund
AIM Balanced Fund AIM V.I. Capital Appreciation Fund
AIM Global Utilities Fund AIM V.I. Capital Development Fund
AIM High Yield Fund AIM V.I. Diversified Income Fund
AIM Income Fund AIM V.I. Global Utilities Fund
AIM Money Market Fund AIM V.I. Government Securities Fund
AIM Select Growth Fund AIM V.I. Growth Fund
AIM Value Fund AIM V.I. Growth & Income Fund
AIM V.I. High Yield Fund
AIM INVESTMENT SECURITIES FUNDS AIM V.I. International Equity Fund
AIM High Yield Fund II AIM V.I. Money Market Fund
AIM V.I. Value Fund
Attest: /s/ SAMUEL D. SIRKO By: /s/ ROBERT H. GRAHAM
----------------------------- ---------------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT e(4)
AMENDMENT NO. 1
DISTRIBUTION AGREEMENT
Amendment No. 1 , made this ______ day of ______ 199__ by and
between AIM SUMMIT FUND, INC., a Maryland corporation (the "Company") and A I M
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor") to that certain
agreement made as of the 28th day of February, 1997 (the "Distribution
Agreement").
WHEREAS, the Company and the Distributor have entered into the
Distribution Agreement; and
WHEREAS, the Company has divided its common stock into two
classes named Class I Shares and Class II Shares; and
WHEREAS, the parties desire to clarify that the Distributor
will act as the principal distributor of both Class I Shares and Class II Shares
of Common Stock; and
WHEREAS, the Distributor is to be compensated by the Company
for distribution efforts relating to Class II Shares.
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration by each of the parties hereto to the other party
paid and of the agreements, covenants and obligations herein contained and
intending to be legally bound, the parties hereto agree as follows:
1. Except as set forth below, the terms "Company shares," "its
shares," "Company common stock" and "its common stock" as used
in the Distribution Agreement shall mean Class I Shares and
Class II Shares of the Company.
2. Section 1(b) provides that the Distribution Agreement may be
continued by the affirmative vote of a specified percentage of
the holders of the Company's shares. Section 11 provides that
the Distribution Agreement may be terminated by the vote of a
majority of the outstanding voting securities of the Company.
In order to make it clear that the Distribution Agreement may
be continued or terminated, as the case may be, on a class
basis, all references to the Company's shares or to the
outstanding voting securities of the Company in paragraph 1(b)
and paragraph 11 of the Distribution Agreement shall mean
Class I Shares or Class II Shares of the Company, as the case
may be.
3. A new paragraph 12 shall be added which reads in its entirety
as follows:
12. Subject to the limitations, if any, of applicable law
including the applicable National Association of
Securities Dealers, Inc. ("NASD") Conduct Rules
(formerly, the NASD Rules of Fair Practice) regarding
asset-based sales charges, the Company shall pay to
the Distributor as a reimbursement for all or a
portion of such expenses, or as
<PAGE> 2
reasonable compensation for distribution of the Class
II Shares, an asset-based sales charge in an amount
equal to 0.05% per annum of the average daily net
asset value of the Class II Shares from time to time
(the "Distributor's 12b-1 Share"), such sales charge
to be payable pursuant to the distribution plan
adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 Act (the "Plan"). The
Distributor's 12b-1 Share shall accrue daily and be
paid to the Distributor as soon as practicable after
the end of each such calendar month (unless the
Distributor shall specify a later date in written
instructions to the Company). The Distributor shall
maintain adequate books and records to permit
calculations periodically (but not less than monthly)
of, and shall calculate on a monthly basis, the
Distributor's 12b-1 Share to be paid to the
Distributor. The Company shall be entitled to rely on
Distributor's books, records and calculations
relating to Distributor's 12b-1 Share.
4. Except as modified by this Amendment Agreement, the
Distribution Agreement is hereby ratified and confirmed and
remains in full force and effect.
IN WITNESS WHEREOF, this Amendment Agreement has been duly
executed by the parties hereto.
DATED: , 199 AIM SUMMIT FUND, INC.
------------------- -
ATTEST:
By:
- -------------------------- ----------------------------
Name: Name: Robert H. Graham
Title: Title: President
A I M DISTRIBUTORS, INC.
ATTEST:
By:
- -------------------------- ----------------------------
Name: Name: Michael J. Cemo
Title: Title: President
2
<PAGE> 1
EXHIBIT g(4)
AMENDMENT NO. 2 TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and AIM Summit Fund, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated March 7, 1988 (the "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed as a sealed instrument in its name and behalf by its duly authorized
representative this 28th day of September, 1996.
AIM SUMMIT FUND, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------------
Title: President
-------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ RONALD E. LOGUE
----------------------------------
Title: Executive Vice President
-------------------------------
<PAGE> 1
EXHIBIT g(5)
AMENDMENT TO CUSTODIAN CONTRACT
This Amendment to the Custodian Contract is made as of September 9, 1998 by
and between AIM Summit Fund, Inc. (the "Fund") and State Street Bank and Trust
Company (the "Custodian"). Capitalized terms used in this Amendment without
definition shall have the respective meanings ascribed to such terms in the
Custodian Contract referred to below.
WHEREAS, the Fund and the Custodian entered into a Custodian Contract dated
as of March 7, 1998 (as amended and in effect from time to time, the
"Contract"); and
WHEREAS, the Fund and the Custodian desire to amend certain provisions of
the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated under
Section 17(f) of the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund and the Custodian desire to amend and restate certain
other provisions of the Contract relating to the terms and conditions of the
custody of assets of the Fund held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereby agree to amend the
Contract; pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 17 of
the Contract are hereby amended, as of the effective date of this
Amendment, by renumbering same as Article 5 through 18, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective
date of this Amendment, as set forth below.
3. The Custodian as Foreign Custody Manager.
3.1. Definitions.
Capitalized terms in this Article 3 of the Contract shall have the following
meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastucture
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; laws and regulations
applicable to the safekeeping and recovery of Foreign Assets held in custody in
that country; and factors comprising the "prevailing country risk", including
the effects of foreign law on the safekeeping of Fund assets, the
<PAGE> 2
likelihood of expropriation, nationalization, freezing, or confiscation of the
Fund's assets and any reasonably foreseeable difficulties in repatriating the
Fund's assets.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of
Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank
(as defined in Rule 17f-5), a bank holding company meeting the requirements of
an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other
appropriate action of the SEC), or a foreign branch of a Bank (as defined in
Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under
Section 17(f) of the 1940 Act, except that the term does not include Mandatory
Securities Depositories.
"Foreign Assets" means any of the Fund's investments (including foreign
currencies) for which the primary market is outside the United States, currency
contracts that are settled outside the United States and such cash and cash
equivalents as are reasonably necessary to effect the Fund's transactions in
such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if
the Fund determines to place Foreign Assets in a country outside the United
States (i) because required by law or regulation; (ii) because securities
cannot be withdrawn from such foreign securities depository or clearing agency;
or (iii) because maintaining or effecting trades in securities outside the
foreign securities depository or clearing agency is not consistent with
prevailing or developing custodial or market practices.
3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by its Board of Directors (the "Board"), hereby
delegates to the Custodian, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Article 3 with respect to Foreign Assets
held outside the United States, and the Custodian hereby accepts such
delegation as Foreign Custody Manager of the Fund.
3.3. COUNTRIES COVERED.
The Foreign Custody Manager shall be responsible for performing the delegated
responsibilities defined below only with respect to (a) the countries listed on
Schedule A hereto as approved by the Board, which list of Board-approved
countries may be amended from time to time by the Fund with the agreement of
the Foreign Custody Manager, and (b) the custody arrangements set forth on such
Schedule A. The Foreign Custody Manager shall list on Schedule A the Eligible
Foreign Custodians selected by the Foreign Custody Manager to maintain the
Fund's assets, which list of Eligible Foreign Custodians may be amended from
time to time in the sole discretion of the Foreign Custody Manager. Mandatory
Securities Depositories are listed on Schedule B to this Contract, which
Schedule B may be amended from time to time by the Foreign Custody Manager. The
Foreign Custody Manager will provide amended versions of Schedules A and B in
accordance with Section 3.7 of this Article 3.
2
<PAGE> 3
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund of the account opening requirements
for such country (if any), the Foreign Custody Manager shall be deemed to have
been appointed by the Board as Foreign Custody Manager with respect to that
country and to have accepted the delegation. Execution of this Amendment by the
Fund shall be deemed to be a Proper Instruction to open an account, or to place
or maintain Foreign Assets, in each Board-approved country listed on Schedule A
in which the Custodian has previously placed or currently maintains Foreign
Assets pursuant to the terms of the Contract. Following the receipt of Proper
Instructions directing the Foreign Custody Manager to close the account of the
Fund with the Eligible Foreign Custodian selected by the Foreign Custody Manager
in a designated country, the delegation by the Board to the Custodian as Foreign
Custody Manager for that country shall be deemed to have been withdrawn and the
Custodian shall immediately cease to be the Foreign Custody Manager of the Fund
with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to
the Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect
to the country as to which the Custodian's acceptance of delegation is
withdrawn.
3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS.
Subject to the provisions of this Article 3, the Foreign Custody Manager of the
Fund may place and maintain the Foreign Assets in the care of the Eligible
Foreign Custodians selected by the Foreign Custody Manager in each country
listed as "approved" on Schedule A, as such Schedule is amended from time to
time.
In performing its delegated responsibilities as Foreign Custody Manager to
place or maintain the Foreign Assets with an Eligible Foreign Custodian, the
Foreign Custody Manager shall determine that the Foreign Assets will be subject
to reasonable care, based on the standards applicable to custodians in the
country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation, the factors specified in Rule
17f-5(c)(1).
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of an Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody arrangements with each Eligible Foreign Custodian selected by
the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3
<PAGE> 4
3.4.3. MONITORING.
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian, selected by the Foreign Custody Manager, the
Foreign Custody Manager shall maintain a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian, and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the
rules or established practices and procedures in the case of an Eligible
Foreign Custodian selected by the Foreign Custody Manager which is a foreign
securities depository or clearing agency that is not a Mandatory Securities
Depository). The Foreign Custody Manager shall provide the Board with
information at least annually as to the factors used in such monitoring system.
In the event the Foreign Custody Manager determines that the custody
arrangements with an Eligible Foreign Custodian that it has selected are no
longer appropriate, the Foreign Custody Manager shall promptly transfer the
Fund's Foreign Assets to another Eligible Foreign Custodian in the market and
shall notify the Board in accordance with Section 3.7 hereunder.
3.5. GUIDELINES OF THE EXERCISE OF DELEGATED AUTHORITY.
For purposes of this Article 3, the Board shall be deemed to have considered
and determined to accept such Country Risk as is incurred by placing and
maintaining the Foreign Assets in each country for which the Custodian is
serving as Foreign Custody Manager of the Fund, and the Board shall be deemed
to be monitoring on a continuing basis such Country Risk to the extent that the
Board considers necessary or appropriate.
Notwithstanding any provision of this Contract to the contrary, the Fund and the
Custodian expressly acknowledge and agree that the Foreign Custody Manager,
shall not be delegated any responsibilities under this Article 3 with respect to
Mandatory Securities Depositories, and that the determination by or on behalf of
the Board to place the Foreign Assets in a particular country shall be deemed to
include the determination to place such Foreign Assets eligible for any
Mandatory Securities Depository with such Mandatory Securities Depository,
whether the Mandatory Securities Depository exists at the time the Foreign
Assets are acquired, or after the acquisition thereof.
3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE FUND.
In performing the responsibilities delegated to it, the Foreign Custody Manager
shall exercise reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
3.7. REPORTING REQUIREMENTS.
The Foreign Custody Manager shall report at least quarterly on the Foreign
Assets held with each Eligible Foreign Custodian and, in connection therewith
if applicable, provide
4
<PAGE> 5
to the Board amended Schedules A or B at the end of the calendar quarter in
which an amendment to either Schedule has occurred. The Foreign Custody Manager
will make written reports notifying the Board of any other material change in
the foreign custody arrangements of the Fund defined in this Article 3 promptly
after the occurrence of the material change.
3.8 REPRESENTATIONS WITH RESPECT TO RULE 17f-5.
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to the Custodian that the Board has determined that it is
reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Contract to the Custodian as the
Foreign Custody Manager of the Fund.
3.9 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Board's delegation to the Custodian as Foreign Custody Manager of the Fund
shall be effective as of the date hereof and shall remain in effect until
terminated at any time, without penalty, by written notice from the terminating
party to the non-terminating party. Termination will become effective thirty
days after receipt by the non-terminating party of such notice. The provisions
of Section 3.3 hereof shall govern the delegation to and termination of the
Custodian as Foreign Custody Manager of the Fund with respect to designated
countries.
3.10 FUTURE NEGOTIATIONS.
If at any time prior to termination of this Amendment the Custodian as a matter
of standard business practice, accepts delegation as Foreign Custody Manager
for its U.S. mutual fund clients on terms materially different than set forth
in this Amendment, the Custodian hereby agrees to negotiate with the fund in
good faith with respect thereto.
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
THE UNITED STATES.
4.1 DEFINITIONS.
Terms used in this Article 4 and not defined below shall have the meanings
ascribed them in the Contract or in this Amendment:
"Foreign Securities System" means either a clearing agency or a securities
depository which is listed on Schedule A hereto or a Mandatory Securities
Depository.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Custodian.
5
<PAGE> 6
4.2 HOLDING SECURITIES.
The Custodian shall identify on its books as belonging to the Fund the foreign
securities held by each Foreign Sub-Custodian or Foreign Securities System. The
Custodian may hold foreign securities for all of its customers, including the
Fund, with and Foreign Sub-Custodian in an account that is identified as
belonging to the Custodian for the benefit of its customers, provided however,
that (i) the records of the Custodian with respect to foreign securities of the
Fund which are maintained in such account shall identify those securities as
belonging to the Fund and (ii), to the extent permitted and customary in the
market in which the account is maintained, the Custodian shall require that
securities so held by the Foreign Sub-Custodian be held separately from any
assets of such Foreign Sub-Custodian or of other customers of such Foreign
Sub-Custodian.
4.3 FOREIGN SECURITIES SYSTEMS.
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign
Sub-Custodian in such country pursuant to the terms of this Contract.
4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1 DELIVERY OF FOREIGN SECURITIES.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign
securities of the Fund held by such Foreign Sub-Custodian, or in a Foreign
Securities Systems account, only upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
(i) upon sale of such foreign securities for the Fund in accordance with
reasonable market practice in the country where such Foreign Assets
are held or traded, including, without limitation: (A) delivery
against expectation of receiving later payment; or (B), in the case
of a sale effected through a Foreign Securities System, in accordance
with the rules governing the operation of the Foreign Securities
System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Fund;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of
the Custodian (or the name of the respective Foreign Sub-Custodian
or of any nominee of the Custodian (or such Foreign Sub-Custodian))
or for
6
<PAGE> 7
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with reasonable
market practices in the country where such securities are held or
traded; provided that in any such case the Sub-Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Sub-Custodian's own
negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Fund requiring a pledge of assets by the Fund;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a copy of a resolution of the
Board or of an Executive Committee of the Board so authorized by
the Board, signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary that the resolution was duly
adopted and is in full force and effect (a "Certified
Resolution"), specifying the Foreign Assets to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such Foreign
Assets shall be made.
4.4.2. PAYMENT OF FUND MONIES.
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out, or direct the
respective Foreign Sub-Custodian or the respective Foreign Securities System to
pay out, moneys of the Fund in the following cases only:
7
<PAGE> 8
(i) upon the purchase of foreign securities for the Fund, unless
otherwise directed by Proper Instructions, in accordance with
reasonable market settlement practice in the country where such
foreign securities are held or traded, including, without
limitation: (A) delivering money to the seller thereof or to a
dealer therefor (or an agent for such seller or dealer) against
expectation of receiving later delivery of such foreign securities;
or (B) in the case of a purchase effected through a Foreign
Securities System, in accordance with the rules governing the
operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of foreign
securities of the Fund;
(iii) for the payment of any expense or liability of the Fund including
but not limited to the following payments: interest, taxes,
investment advisory fees, transfer agency fees, fees under this
Contract, legal fees, accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Fund, including transactions executed with or
through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities;
and
(viii) for any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a Certified Resolution specifying the amount
of such payment, setting forth the purpose for which such payment is
to be made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be made.
4.4.3. Market Conditions; Market Information.
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of the Fund and delivery of
Foreign Assets maintained for the account of the Fund may be effected in
accordance with the customary established securities trading or processing
practices and procedures in the country or market in which the transaction
occurs generally accepted by Institutional Clients, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Foreign Assets from such
purchaser or dealer. For purposes of this Contract, "Institutional Clients"
means U.S. registered investment companies or major U.S. based commercial banks,
insurance companies, pension funds or substantially similar institutions which,
as a part of their ordinary business operations, purchase or sell securities and
make use of global custody services.
8
<PAGE> 9
The Custodian shall provide to the Board the information with respect to
custody and settlement practices in countries in which the Custodian employs a
Foreign Sub-Custodian, including without limitation information relating to
Foreign Securities Systems, described on Schedule C hereto at the time or times
set forth on such Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board being provided
with substantively less information than had been previously provided hereunder
and, provided further, that the Custodian shall in any event provide to the
Board and to A I M Advisors, Inc. annually the following information and
opinions with respect to the Board-approved countries listed on Schedule A:
(i) legal opinions relating to whether local law restricts with respect
to U.S. registered mutual funds (a) access of a fund's independent
public accountants to books and records of a Foreign Sub-Custodian
or Foreign Securities System, (b) a fund's ability to recover in the
event of bankruptcy or insolvency of a Foreign Sub-Custodian or
Foreign Securities System, (c) a fund's ability to recover in the
event of a loss by a Foreign Sub-Custodian or Foreign Securities
System, and (d) the ability of a foreign investor to convert cash
and cash equivalents to U.S. dollars;
(ii) summary of information regarding Foreign Securities Systems; and
(iii) country profile information containing market practice for (a)
delivery versus payment, (b) settlement method, (c) currency
restrictions, (d) buy-in practices, (e) foreign ownership limits,
and (f) unique market arrangements.
4.5. REGISTRATION OF FOREIGN SECURITIES.
The foreign securities maintained in the custody of a Foreign Custodian (other
than bearer securities) shall be registered in the name of the Fund or in the
name of the Custodian or in the name of any Foreign Sub-Custodian or in the
name of any nominee of the foregoing, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such foreign
securities, except to the extent that the Fund incurs loss or damage due to
failure of such nominee to meet its standard of care as set forth in the
Contract. The Custodian or a Foreign Sub-Custodian shall not be obligated to
accept securities on behalf of the Fund under the terms of this Contract unless
the form of such securities and the manner in which they are delivered are in
accordance with reasonable market practice.
4.6. BANK ACCOUNTS.
The Custodian shall identify on its books as belonging to the Fund cash
(including cash denominated in foreign currencies) deposited with the
Custodian. Where the Custodian is unable to maintain, or market practice does
not facilitate the maintenance of, cash on the books of the Custodian, a bank
account or bank accounts opened and maintained outside
9
<PAGE> 10
the United States on behalf of the Fund in a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Contract to hold cash received by or from
or for the account of the Fund.
4.7. COLLECTION OF INCOME.
The Custodian shall use reasonable commercial efforts to collect all dividends,
income and other payments with respect to the Foreign Assets held hereunder to
which the Fund shall be entitled and shall credit such income, as collected, to
the Fund. In the event the Custodian or a Foreign Sub-Custodian must use
measures beyond those which are customary in a particular country to collect
such payments, the Fund and the Custodian shall consult as to such measures and
as to the compensation and expenses of the Custodian attendant thereto.
4.8. SHAREHOLDER RIGHTS.
With respect to the foreign securities held under this Article 4, the Custodian
will use commercially reasonable efforts to facilitate the exercise by the Fund
of voting and other shareholder rights, subject always to the laws, regulations
and practical constraints that may obtain in the country where such securities
are issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other factors may
have the effect of severely limiting the ability of the Fund to exercise
shareholder rights.
4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES.
The Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of the Fund. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund written information so
received by the Custodian from issuers of the foreign securities whose tender or
exchange is sought or from the party (or its agents) making the tender or
exchange offer. Subject to the standard of care to which the Custodian is held
under this Contract, the Custodian shall not liable for any untimely exercise of
any tender, exchange or other right or power in connection with foreign
securities or other property of the Fund at any time held by it unless (i) the
Custodian or the respective Foreign Sub-Custodian is in actual possession of
such foreign securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or power, and both
(i) and (ii) occur at least two New York business days prior to the date on
which the Custodian is to take action to exercise such right or power.
10
<PAGE> 11
4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS.
Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian
shall, to the extent possible consistent with prevailing market practice,
require the Foreign Sub-Custodian to exercise reasonable care in the performance
of its duties and to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with such Foreign Sub-Custodian's performance of such obligations. At
the election of the Fund, the Fund shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made whole
for any such loss, damage, cost, expense, liability or claim.
4.11. TAX LAW.
The Custodian shall have no responsibility or liability for any obligations now
or hereafter imposed on the Fund or the Custodian as custodian of the Fund by
the tax law of the United States or of any state or political subdivision
thereof. With respect to jurisdictions other than the United States, the sole
responsibility of the Custodian with regard to the tax law of any such
jurisdiction shall be to use reasonable efforts to (a) notify the Fund of the
obligations imposed on the Fund or the Custodian as custodian of the Fund by the
tax law of such jurisdictions, including responsibility for withholding and
other taxes, assessment or other governmental charges, certifications and
government reporting and (b) perform such ministerial steps as are required to
collect any tax refund, to ascertain the appropriate rate of tax withholding and
to provide such documents as may be required to enable each Fund to receive
appropriate tax treatment under applicable tax laws and any applicable treaty
provisions. The Custodian, in performance of its duties under this Section,
shall be entitled to treat each Fund as a Maryland corporation which is a
"registered investment company" under the laws of the United States, and it
shall be the duty of each Fund to inform the Custodian of any change in the
organization, domicile or, to the extent within the knowledge of the Fund, other
relevant facts concerning tax treatment of the Fund and further to inform the
Custodian if the Fund is or becomes the beneficiary of any special ruling or
treatment not applicable to the general nationality and category of entity of
which the Fund is a part under general laws and treaty provisions. The Custodian
shall be entitled to rely on any information supplied by the Fund. The Custodian
may engage reasonable professional advisors disclosed to the Fund by the
Custodian, which may include attorneys, accountants or financial institutions in
the regular business of investment administration and may rely upon advice
received therefrom.
4.12. LIABILITY OF CUSTODIAN.
Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence or willful misconduct of a Sub-Custodian, the Custodian shall be
without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by Country Risk (as such term is defined in Article 3
hereof), regardless of whether assets are maintained in the custody of a Foreign
Sub-Custodian or a Foreign Securities
11
<PAGE> 12
Depository, the Custodian shall be without liability for any loss, damage,
cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism, or any other
similar loss beyond the reasonable control of the Custodian or the
Sub-Custodian.
The Custodian shall be liable to the Fund on account of any actions or
omissions of any Foreign Sub-Custodian to the same extent as such Foreign
Sub-Custodian shall be liable to the Custodian.
4.13. USE OF TERM "FUND"; ASSETS AND LIABILITIES.
All references in this Article 4 or Article 3 of this Agreement to "Fund" shall
mean the Fund, or a Portfolio of the Fund, as the context requires or as
applicable.
The Custodian shall maintain separate and distinct records for each Portfolio
and the assets allocated solely with such Portfolio shall be held and accounted
for separately from the assets of the Fund associated solely with any other
Portfolio. The debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Portfolio
shall be enforceable against the assets of such Portfolio only, and not against
the assets of the Fund generally or the assets of any other Portfolio.
12
<PAGE> 13
III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and effect.
In the event of any conflict between the terms of the Contract prior to this
Amendment and this Amendment, the terms of this Amendment shall prevail. If the
Custodian is delegated the responsibilities of Foreign Custody Manager pursuant
to the terms of Article 3 hereof, in the event of any conflict between the
provisions of Articles 3 and 4 hereof, the provisions of Article 3 shall
prevail.
13
<PAGE> 14
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of the
date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST
COMPANY
/s/ MARC L. PARSONS By: /s/ RONALD E. LOGUE
- --------------------------- --------------------------
Marc L. Parsons Name: Ronald E. Logue
Associate Counsel Title: Executive Vice President
WITNESSED BY: AIM SUMMIT FUND, INC.
/s/ P. MICHELLE GRACE By: /s/ JOHN J. ARTHUR
- --------------------------- --------------------------
Name: P. Michelle Grace Name: John J. Arthur
Title: Assistant Secretary Title: Senior Vice President
<PAGE> 15
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain British Bank of the Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale de Banque --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano S.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
</TABLE>
8/13/98
<PAGE> 16
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Croatia Privredna Banka Zagreb d.d -
Cyprus Barclays Bank Plc. -
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni -
Banka, A.S.
Denmark Den Danske Bank -
Ecuador Citibank, N.A. -
Egypt National Bank of Egypt -
Estonia Hansabank -
Finland Merita Bank Limited -
France Banque Paribas -
Germany Dresdner Bank AG -
Ghana Barclays Bank of Ghana Limited -
Greece National Bank of Greece S.A. The Bank of Greece,
System for Monitoring
Transactions in Securities
in Book-Entry Form
Hong Kong Standard Chartered Bank -
Hungary Citibank Budapest Rt. -
Iceland Icebank Ltd. -
</TABLE>
8/13/98 2
<PAGE> 17
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
India Deutsche Bank AG -
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank -
Ireland Bank of Ireland -
Israel Bank Hapoalim B.M. -
Italy Banque Paribas -
Ivory Coast Societe Generale de Banques -
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and -
Merchant Bank Ltd.
Japan The Daiwa Bank, Limited Japan Securities
Depository Center
The Fuji Bank, Limited
Jordan British Bank of the Middle East -
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited
Republic of Korea The Hongkong and Shanghai -
Banking Corporation Limited
Latvia JSC Hansabank-Latvija -
Lebanon British Bank of the Middle East -
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
</TABLE>
8/13/98 3
<PAGE> 18
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Lithuania Vilniaus Bankas AB -
Malaysia Standard Chartered Bank -
Malaysia Berhad
Mauritius The Hongkong and Shanghai -
Banking Corporation Limited
Mexico Citibank Mexico, S.A. -
Morocco Banque Commerciale du Maroc -
Namibia (via) Standard Bank of South Africa -
The Netherlands MeesPierson N.V. -
New Zealand ANZ Banking Group -
(New Zealand) Limited
Norway Christiania Bank og -
Kreditkasse
Oman British Bank of the Middle East -
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG -
Peru Citibank, N.A. -
Philippines Standard Chartered Bank -
Poland Citibank (Poland) S.A. -
Bank Polska Kasa Opieki S.A.
Portugal Banco Comercial Portugues -
</TABLE>
8/13/98 4
<PAGE> 19
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Romania ING Bank N.V. -
Russia Credit Suisse First Boston AO, Moscow -
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank -
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodna -
Banka, A.S.
Slovenia Banka Creditanstalt d.d. -
South Africa Standard Bank of South Africa Limited -
Spain Banco Santander, S.A. -
Sri Lanka The Hongkong and Shanghai -
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited -
Sweden Skandinaviska Enskilda Banken -
Switzerland UBS AG -
Taiwan - R.O.C. Central Trust of China -
Thailand Standard Chartered Bank -
Trinidad & Tobago Republic Bank Limited -
Tunisia Banque Internationale Arabe de Tunisie -
</TABLE>
8/13/98 5
<PAGE> 20
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Turkey Citibank, N.A. -
Ottoman Bank
Ukraine ING Bank, Ukraine -
United Kingdom State Street Bank and Trust Company, -
London Branch
Uruguay Citibank, N.A. -
Venezuela Citibank, N.A. -
Zambia Barclays Bank of Zambia Limited -
Zimbabwe Barclays Bank of Zimbabwe Limited -
Euroclear (The Euroclear System)/State Street London Limited
Cedel, S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
</TABLE>
8/13/98 6
<PAGE> 21
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and
Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depot et
de Virement de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia (CBLC)
Bolsa de Valores de Rio de Janeiro
All SSB clients presently use CBLC
Central de Custodia e de Liquidacao
Financeira de Titulos
Banco Central do Brasil,
Sistema Especial de Liquidacao de
Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada The Canadian Depository
for Securities Limited
People's Republic Shanghai Securities Central Clearing and
of China Registration Corporation
Shenzhen Securities Central Clearing
Co., Ltd.
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter of market practice.
8/13/98 1
<PAGE> 22
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Croatia Ministry of Finance
National Bank of Croatia
Czech Republic Strodisko cennych papira
Czech National Bank
Denmark Vaerdipapicentralen (the Danish
Securities Center)
Egypt Misr Company for Clearing, Settlement,
and Central Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland The Finnish Central Securities
Depository
France Societe Interprofessionelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM)
Germany Deutsche Borse Clearing AG
Greece The Central Securities Depository
(Apothetirion Titlon A E)
Hong Kong The Central Clearing and
Settlement System
Central Money Markets Unit
Hungary The Central Depository and Clearing
House (Budapest) Ltd. (KELER)
[Mandatory for Gov't Bonds only;
SSB does not use for other securities]
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98 2
<PAGE> 23
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
India The National Securities Depository Limited
Indonesia Bank Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel The Tel Aviv Stock Exchange Clearing
House Ltd.
Bank of Israel
Italy Monte Titoli S.p.A.
Banca d'Italia
Jamaica The Jamaican Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia The Latvian Central Depository
Lebanon The Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania The Central Securities Depository of Lithuania
Malaysia The Malaysian Central Depository Sdn. Bhd.
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98 3
<PAGE> 24
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Bank of Negara Malaysia,
Scripless Securities Trading and Safekeeping
System
Mauritius The Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores)
Morocco Maroclear
(pending publication of enabling legislation
in the Moroccan government Gazette)
The Netherlands Nederlands Central Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
De Nederlandsche Bank N.V.
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentranlen (the Norwegian
Registry of Securities)
Oman Muscat Securities Market
Pakistan Central Depository Company of Pakistan Limited
Peru Caja de Valores y Liquidaciones S.A.
(CAVALI)
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a 4
matter of law or effectively mandatory as a matter of market practice.
8/13/98
<PAGE> 25
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Philippines The Philippines Central Depository, Inc.
The Registry of Scripless Securities
(ROSS) of the Bureau of the Treasury
Poland The National Depository of Securities
(Krajowy Depozyt Paplerow Wartosciowych)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios (Central)
Romania National Securities Clearing, Settlement and
Depository Co.
Bucharest Stock Exchange Registry Division
Singapore The Central Depository (Pte)
Limited
Monetary Authority of Singapore
Slovak Republic Stredisko Cennych Papierov
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a 5
matter of law or effectively mandatory as a matter of market practice.
8/13/98
<PAGE> 26
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
(Pvt) Limited
Sweden Vardepapperscentralen AB
(the Swedish Central Securities Depository)
Switzerland Schweizerische Effekten - Giro AG
INTERSETTLE
Taiwan - R.O.C. The Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle de
Compensation et de Depot de
Valeurs Mobilieres
Central Bank of Tunisia
Tunisian Treasury
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine The National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Uruguay Central Bank of Uruguay
</TABLE>
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98 6
<PAGE> 27
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Venezuela Central Bank of Venezuela
Zambia Lusaka Central Depository Limited
Bank of Zambia
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
8/13/98 7
<PAGE> 28
SCHEDULE C
MARKET INFORMATION
<TABLE>
<S> <C>
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
- ------------------------------- -----------------
(FREQUENCY)
The Guide to Custody in World Markets An overview of safekeeping and settlement practices and
- ------------------------------------- procedures in each market in which State Street Bank and
(annually) Trust Company offers custodial services.
Global Custody Network Review Information relating to the operating history and structure of
- ----------------------------- depositories and subcustodians located in the markets in
(annually) which State Street Bank and Trust Company offers custodial
services, including transnational depositories.
Global Legal Survey With respect to each market in which State Street Bank and
- ------------------- Trust Company offers custodial services, opinions relating to
(annually) whether local law restricts (1) access of a fund's independent
public accountants to books and records of a Foreign Sub-
Custodian or Foreign Securities System, (ii) the Fund's ability
to recover in the event of bankruptcy or insolvency of a
Foreign Sub-Custodian or Foreign Securities System, (iii) the
Fund's ability to recover in the event of a loss by a Foreign
Sub-Custodian or Foreign Securities System, and (iv) the
ability of a foreign investor to convert cash and cash
equivalents to U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts State Street Bank and
- ----------------------- Trust Company has entered into with each subcustodian in the
(annually) markets in which State Street Bank and Trust Company offers
subcustody services to its US mutual fund clients.
Network Bulletins (weekly) Developments of interest to investors in the markets in which
State Street Bank and Trust Company offers custodial
services.
Foreign Custody Advisories (as
necessary): With respect to markets in which State Street Bank and Trust
Company offers custodial services which exhibit special
custody risks, developments which may impact State Street's
ability to deliver expected levels of service.
</TABLE>
<PAGE> 1
EXHIBIT h(11)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM SUMMIT FUND, INC.
(CLASS II SHARES)
AND
A I M FUND SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT...............1
ARTICLE 2
FEES AND EXPENSES................................................2
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT.............3
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND.......................3
ARTICLE 5
INDEMNIFICATION..................................................4
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT.....................5
ARTICLE 7
TERMINATION OF AGREEMENT.........................................6
ARTICLE 8
ADDITIONAL FUNDS.................................................6
ARTICLE 9
ASSIGNMENT.......................................................6
ARTICLE 10
AMENDMENT........................................................7
ARTICLE 11
TEXAS LAW TO APPLY...............................................7
ARTICLE 12
MERGER OF AGREEMENT..............................................7
ARTICLE 13
COUNTERPARTS.....................................................7
</TABLE>
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of __________, 199_, by and between AIM
SUMMIT FUND, INC., a Maryland corporation, having its principal office and place
of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the "Fund"),
and A I M Fund Services, Inc., a Delaware corporation having its principal
office and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas
77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities
and Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue shares in separate classes and
each such class having different distribution arrangements; and
WHEREAS, the Fund on behalf of Class II Shares (the "Class") desires to
appoint the Transfer Agent as its transfer agent, and agent in connection with
certain other activities, with respect to the Class, and the Transfer Agent
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1
TERMS OF APPOINTMENT; DUTIES OF THE TRANSFER AGENT
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby employs and appoints the Transfer Agent to act as, and the
Transfer Agent agrees to act as, its transfer agent for the authorized and
issued Class II Shares of common stock of the Fund representing interests of the
Fund ("Shares"), dividend disbursing agent, and paying agent in connection with
any accumulation or similar plans provided to shareholders of the Class (the
"Shareholders"), including without limitation any periodic investment plan or
periodic withdrawal program, as provided in the currently effective prospectus
and statement of additional information (the "Prospectus") of the Fund on behalf
of the Class or Summit Investors Plans II, a unit investment trust.
1.02 The Transfer Agent agrees that it will perform the following
services:
(a) The Transfer Agent shall, in accordance with procedures established
from time to time by agreement between the Fund on behalf of the Class, and the
Transfer Agent:
(i) receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund
authorized pursuant to the Charter of the Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;
(iii) receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
1
<PAGE> 4
(iv) at the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by
the Fund;
(v) effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
Shares;
(vii) maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(viii) record the issuance of Shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of
the total number of Shares which are authorized,
based upon data provided to it by the Fund, and
issued and outstanding.
The Transfer Agent shall also provide the Fund on a regular basis with
the total number of Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which function shall be the sole responsibility of the
Fund.
(b) In addition to the services set forth in the above paragraph (a),
the Transfer Agent shall: (i) perform the customary services of a transfer
agent, including but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and prospectuses to current Shareholders, preparing
and mailing confirmation forms and statements of accounts to Shareholders for
all purchases and redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by agreement between the Fund on
behalf of the Class and the Transfer Agent. The Transfer Agent may at times
perform only a portion of these services and the Fund or its agent may perform
these services on the Fund's behalf.
ARTICLE 2
FEES AND EXPENSES
2.01 For performance by the Transfer Agent pursuant to this Agreement,
the Fund agrees on behalf of the Class to pay the Transfer Agent fees as set out
in the initial Schedule A attached hereto. Such fees and out-of-pocket expenses
and advances identified under Section 2.02 below may be changed from time to
time subject to mutual written agreement between the Fund and the Transfer
Agent.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Transfer Agent for out-of-pocket expenses or advances
incurred by the Transfer Agent for the items set out in Schedule A attached
hereto. In addition, any other expenses incurred by the
2
<PAGE> 5
Transfer Agent at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of the Class to pay all fees and
reimbursable expenses following the mailing of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all Shareholder accounts shall be advanced to the Transfer Agent by the Fund at
least seven (7) days prior to the mailing date of such materials.
2.04 The Transfer Agent shall pay unless and until instructed by the
Fund to the contrary, those fees and account maintenance charges of State Street
Bank and Trust Company under the Custodian Agreement for the creation of Summit
Investors Plans II dated ________ and as more specifically set forth on Schedule
B hereto which may be amended from time to time by the Fund with the approval of
its Board of Directors.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the state of Delaware.
3.02 It is duly qualified to carry on its business in Delaware and in
Texas.
3.03 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 It is registered as a Transfer Agent as required by the federal
securities laws.
3.07 This Agreement is a legal, valid and binding obligation to it.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business corporation duly organized and existing and in
good standing under the laws of Maryland.
4.02 It is empowered under applicable laws and by its Charter and
Bylaws to enter into and perform this Agreement.
3
<PAGE> 6
4.03 All corporate proceedings required by said Charter and Bylaws have
been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Classes is currently effective and will remain
effective, with respect to all Shares of the Fund being offered for sale.
ARTICLE 5
INDEMNIFICATION
5.01 The Transfer Agent shall not be responsible for, and the Fund
shall on behalf of the applicable Class, indemnify and hold the Transfer Agent
harmless from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to:
(a) all actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct;
(b) the Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of the Fund
hereunder;
(c) the reliance on or use by the Transfer Agent or its agents or
subcontractors of information, records and documents or services which (i) are
received or relied upon by the Transfer Agent or its agents or subcontractors
and/or furnished to it or performed by on behalf of the Fund, and (ii) have been
prepared, maintained and/or performed by the Fund or any other person or firm on
behalf of the Fund; provided such actions are taken in good faith and without
negligence or willful misconduct;
(d) the reliance on, or the carrying out by the Transfer Agent or its
agents or subcontractors of any instructions or requests of the Fund on behalf
of the applicable Class; provided such actions are taken in good faith and
without negligence or willful misconduct; or
(e) the offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Transfer Agent as result of the Transfer Agent's lack
of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Transfer
Agent under this Agreement, and the Transfer Agent and its agents
4
<PAGE> 7
or subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the applicable Class for any action taken or omitted by it in reliance
upon such instructions or upon the opinion of such counsel. The Transfer Agent
shall be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Fund, reasonably believed to be genuine and to
have been signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided to the Transfer Agent or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
ARTICLE 6
COVENANTS OF THE FUND AND THE TRANSFER AGENT
6.01 The Fund shall, upon request, on behalf of the Class promptly
furnish to the Transfer Agent the following:
(a) a certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Transfer Agent and the execution and
delivery of this Agreement; and
(b) a copy of the Charter and Bylaws of the Fund and all amendments
thereto.
6.02 The Transfer Agent shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Transfer Agent agrees that all such records
prepared or maintained by the Transfer Agent relating to the services to be
performed by the Transfer Agent hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
5
<PAGE> 8
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
6.04 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 7
TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty (60)
days written notice to the other.
7.02 Should the Fund exercise its right to terminate this Agreement,
all out-of-pocket expenses associated with the movement of records and material
will be borne by the Fund on behalf of the applicable Class. Additionally, the
Transfer Agent reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the average of
three (3) months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more classes of
Shares in addition to the Class with respect to which it desires to have the
Transfer Agent render services as transfer agent under the terms hereof, it
shall so notify the Transfer Agent in writing, and if the Transfer Agent agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
ARTICLE 9
ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9.03 The Transfer Agent may, without further consent on the part of the
Fund, subcontract for the performance hereof with any entity which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934 as amended ("Section 17A(c)(1)"); provided, however, that
the Transfer Agent shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
6
<PAGE> 9
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
7
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
AIM SUMMIT FUND, INC.
By:
---------------------------------
President
ATTEST:
- --------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By:
---------------------------------
President
ATTEST:
- --------------------------
Assistant Secretary
8
<PAGE> 11
SCHEDULE A
1. For performance by the Transfer Agent pursuant to this Agreement,
the Fund agrees on behalf of the Class to pay the Transfer Agent
an annualized fee for shareholder accounts that are open during
any monthly period as set forth below, and an annualized fee of
$.70 per shareholder account that is closed during any monthly
period. Both fees shall be billed by the Transfer Agent monthly in
arrears on a prorated basis of 1/12 of the annualized fee for all
such accounts.
<TABLE>
<CAPTION>
Per Account Fee
Fund Type Annualized
--------------- ---------------
<S> <C>
Class II Shares $15.15
</TABLE>
2. The Transfer Agent shall provide the various mutual funds that are
advised by A I M Advisors, Inc. or its affiliates and distributed
by A I M Distributors, Inc. (the "AIM Funds") with an annualized
credit to the monthly billings of (a) $1.50 for each open account
in excess of 100,000 open AIM Funds Accounts up to and including
125,000 open AIM Funds Accounts; (b) $1.75 for each open account
in excess of 125,000 open AIM Funds Accounts up to and including
150,000 open AIM Funds Accounts; (c) $2.00 for each open AIM Funds
Account in excess of 150,000 open AIM Funds Accounts up to and
including 200,000 open AIM Funds Accounts; (d) $2.25 for each open
AIM Funds Account in excess of 200,000 open AIM Funds Accounts up
to and including 500,000 open AIM Funds Accounts; (e) $2.50 for
each open AIM Funds Account in excess of 500,000 open AIM Funds
Accounts up to and including 1,000,000 open AIM Funds Accounts;
and (f) $3.00 for each open AIM Funds Account in excess of
1,000,000 open AIM Funds Accounts.
3. In addition, beginning on the anniversary date of the execution of
the Remote Services Agreement with The Shareholder Services Group,
Inc., and on each subsequent anniversary date, the per account
fees shall each be increased by a percentage amount equal to the
percentage increase in the then current Consumer Price Index (all
urban consumers) or its successor index, though in no event shall
such increase be greater than a 7% increase over the previous
fees.
4. Other Fees
IRA Annual Maintenance Fee $10 per IRA account per year
(paid by investor per tax I.D.
number).
Balance Credit The total fees due to the
Transfer Agent from all funds
affiliated with the Fund shall
be reduced by an amount equal to
one half of investment income
earned by the Transfer Agent on
the DDA balances of the
disbursement accounts for those
funds.
Remote Services Fee $3.60 per open
account per year, payable
monthly and $1.80 per closed
account per year, payable
monthly.
9
<PAGE> 12
5. OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the
following items:
- Microfiche/microfilm production & equipment
- Magnetic media tapes and freight
- Printing costs, including, without limitation,
certificates, envelopes, checks, stationery,
confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, bar coding, first class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all
lease, maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other
equipment and any expenses incurred in connection with
such terminals and lines
- Duplicating services
- Courier services
- Banking charges, including without limitation incoming
and outgoing wire charges @ $8.00 per wire
- Rendering fees as billed
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs,
including, but not limited to exit fees charged by third
party record keeping vendors
- Third party audit reviews
- All client specific Systems enhancements will be at the
Funds' cost.
- Certificate Insurance
- Such other miscellaneous expenses reasonably incurred by
the Transfer Agent in performing its duties and
responsibilities under this Agreement
- Check writing fee of $.75 per check redemption.
The Fund agrees that postage and mailing expenses will be paid on
the day of or prior to mailing. In addition, the Fund will
promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Fund and the
Transfer Agent mutually agree that such expenses are not otherwise
properly borne by the Transfer Agent as part of its duties and
obligations under the Agreement.
10
<PAGE> 13
SCHEDULE B
Fees payable to State Street Bank and Trust Company
(Current Custodian Fees for existing Plans are attached for your information)
To be negotiated
11
<PAGE> 14
SCHEDULE A
<TABLE>
<CAPTION>
FEE CATEGORY PER TRANSACTION COMMENTS
- ------------ --------------- --------
<S> <C> <C>
*CUSTODIAN FEES
Payments $ 1.50 Charged to planholder
account (per Prospectus)
Liquidations 2.50 All of these invoiced
Terminations 2.50 monthly to sponsor, per
Face Changes 2.50 AIM's request. Prospectus
Transfers 2.50 makes reference to these
Option Changes 2.50 fees, but sponsor
SWP's 1.00 currently pays them.
*INACTIVE/COMPLETE PLANS $ 12.00 annually Charged to planholder
account (per Prospectus)
*BOUNCED CHECKS $ 5.00 per check Invoiced monthly to
sponsor
*COMMUNICATIONS FEES
Phone Calls $ 2.50 Invoiced monthly to sponsor
Letters 2.50 Invoiced monthly to sponsor
*FIDUCIARY ACCOUNTS $ 10.00 annually Charged to planholder
account (per Prospectus)
*DELEGATED DUTY FEE Not to exceed Charged to planholder
$ 10.00 annually account and paid to sponsor
(per Prospectus)
*OUT-OF-POCKETS ---- Forms, postage, phone lines,
microfiche, etc. Invoiced
monthly to sponsor.
</TABLE>
<PAGE> 1
EXHIBIT i(2)
[BALLARD SPAHR ANDREWS & INGERSOLL, LLP LETTERHEAD]
December 29, 1998
AIM Summit Fund, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: AIM Summit Fund, Inc.
Registration Statement on Form N-1A
Ladies and Gentlemen:
We have acted as counsel to AIM Summit Fund, Inc., a
corporation organized under the laws of the State of Maryland (the "Company")
and registered under the Investment Company Act of 1940, as amended (the "1940
Act") as an open-end, series management investment company.
This opinion is given in connection with the filing by the
Company of Post-Effective Amendment No. 22 to the Registration Statement on
Form N-1A under the Securities Act of 1933, as amended, and Amendment No. 23 to
such Registration Statement under the 1940 Act (collectively, the "Registration
Statement") relating to the registration of an indefinite number of Class II
Shares of common stock, $.01 par value per share, of the Company (the "Shares").
In connection with our giving this opinion, we have examined
copies of the Company's charter (the "Charter") and resolutions of the Board of
Directors of the Company adopted December 8, 1998, and originals or copies,
certified or otherwise identified to our satisfaction, of such other documents,
corporate records and other instruments as we have deemed necessary or advisable
for purposes of this opinion. We have also examined the prospectus for the
Shares, which is included in the Registration Statement, substantially in the
form in which it is to become effective (the "Prospectus"). As to various
questions of fact material to our opinion, we have relied upon information
provided by officers of the Company.
<PAGE> 2
AIM Summit Fund, Inc.
December 29, 1998
Page 2
Based on the foregoing, we are of the opinion that the Shares
to be offered for sale pursuant to the Prospectus are, to the extent of the
number of Shares authorized to be issued by the Company in the Charter, duly
authorized and, when sold, issued and paid for as described in the Prospectus,
will be legally issued, fully paid and non-assessable.
We express no opinion concerning the laws of any jurisdiction
other than the federal law of the United States of America and the Maryland
General Corporation Law.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and to the reference to our
firm under the caption "Miscellaneous Information - Legal Matters" in the
Company's Statement of Additional Information, which is included in the
Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
<PAGE> 1
EXHIBIT m
DISTRIBUTION PLAN
OF
AIM SUMMIT FUND, INC.
(Class II Shares)
SECTION 1. AIM Summit Fund, Inc. (the "Fund") may act
as a distributor of its Class II Shares (the
"Shares"), pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"),
according to the terms of this Distribution Plan (the
"Distribution Plan").
SECTION 2. The Fund may incur pursuant to the terms of
this Distribution Plan, expenses at the rates of .30%
per annum of the average daily net assets of the Fund
attributable to the Shares, subject to any applicable
limitations imposed from time to time by applicable
rules of the National Association of Securities
Dealers, Inc.
SECTION 3. Amounts set forth in Section 2 may be used
to finance any activity which is primarily intended
to result in the sale of the Shares, including, but
not limited to, expenses of organizing and conducting
sales seminars, advertising programs, finders fees,
printing of prospectuses and statements of additional
information (and supplements thereto) and reports for
other than existing shareholders, preparation and
distribution of advertising material and sales
literature, overhead, supplemental payments to
dealers and other institutions as asset-based sales
charges. Amounts set forth in Section 2 may also be
used to finance payments of service fees under a
shareholder service arrangement to be established by
A I M Distributors, Inc. ("Distributors") as the
Fund's distributor in accordance with Section 4, and
the costs of administering the Distribution Plan. To
the extent that amounts paid hereunder are not used
specifically to reimburse Distributors for any such
expense, such amounts may be treated as compensation
for Distributors' services. All amounts expended
pursuant to the Distribution Plan shall be paid to
Distributors and are the legal obligation of the Fund
and not of Distributors. That portion of the amounts
paid under the Distribution Plan that is not paid or
advanced by Distributors to dealers or other
institutions that provide personal continuing
shareholder service as a service fee pursuant to
Section 4 shall be deemed an asset-based sales
charge. No provision of this Distribution Plan shall
be interpreted to prohibit any payments by the Fund
during periods when the Fund has suspended or
otherwise limited sales.
SECTION 4.
(a) Amounts expended by the Fund under the Distribution
Plan shall be used in part for the implementation by
Distributors of shareholder service arrangements with respect
to the Shares and Summit Investors Plans II ("Plan II"). The
maximum service fee paid to any service provider shall be
twenty-five one-hundredths of one
1
<PAGE> 2
percent (0.25%) per annum of the average daily net assets of
the Fund attributable to the Shares beneficially owned by the
customers of such service provider.
(b) Pursuant to this program, Distributors may enter into
agreements substantially in the form attached hereto as
Exhibit A ("Service Agreements") with such broker-dealers
("Dealers") as may be selected from time to time by
Distributors for the provision of personal shareholder
services in connection with the Shares or Plan II to the
Dealers' clients and customers ("Customers") to Customers who
may from time to time directly or beneficially own Shares. The
personal continuing shareholder services to be rendered by
Dealers under the Service Agreements may include, but shall
not be limited to, the following: (i) distributing sales
literature; (ii) answering routine Customer inquiries
concerning the Fund and the Shares; (iii) assisting Customers
in changing dividend options, account designations and
addresses and enrolling into any of several retirement plans
offered; (iv) assisting in the establishment and maintenance
of customer accounts and records, and in the processing of
purchase and redemption transactions; (v) investing dividends
and capital gains distributions automatically in Shares; and
(vi) providing such other information and services as the Fund
or the Customer may reasonably request.
SECTION 5. Any amendment to this Plan that requires the
approval of the shareholders of Class II pursuant to
Rule 12b-1 under the 1940 Act shall become effective
as to Class II upon the approval of such amendment by
a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of Class II, provided that
the Board of Directors of the Fund has approved such
amendment in accordance with the provisions of the
Section 6 of this Distribution Plan.
SECTION 6. This Distribution Plan, any amendment to
this Distribution Plan and any agreements related to
this Distribution Plan shall become effective
immediately upon the receipt by the Fund of both (a)
the affirmative vote of a majority of the Board of
Directors of the Fund, and (b) the affirmative vote
of a majority of those directors of the Fund who are
not "interested persons" of the Fund (as defined in
the 1940 Act) and have no direct or indirect
financial interest in the operation of this
Distribution Plan or any agreements related to it
(the "Disinterested Directors"), cast in person at a
meeting called for the purpose of voting on this
Distribution Plan or such agreements. Notwithstanding
the foregoing, no such amendment that requires the
approval of the shareholders of Class II shall become
effective as to Class II until such amendment has
been approved by the shareholders of Class II in
accordance with the provisions of Section 5 of this
Distribution Plan.
SECTION 7. Unless sooner terminated pursuant to
Section 9, this Distribution Plan shall continue in
effect until June 30, 1999 below and thereafter shall
continue in effect so long as such continuance is
specifically approved, at least annually, in the
manner provided for approval of this Distribution
Plan in Section 6.
2
<PAGE> 3
SECTION 8. Distributors shall provide to the Fund's
Board of Directors and the Board of Directors shall
review, at least quarterly, a written report of the
amounts so expended and the purposes for which such
expenditures were made.
SECTION 9. This Distribution Plan may be terminated at
any time by vote of a majority of the Disinterested
Directors, or by vote of a majority of the
outstanding voting securities of the Shares. If this
Distribution Plan is terminated, the obligation of
the Fund to make payments pursuant to this
Distribution Plan will also cease and the Fund will
not be required to make any payments beyond the
termination date even with respect to expenses
incurred prior to the termination date.
SECTION 10. Any agreement related to this Distribution
Plan shall be made in writing, and shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority of the
Disinterested Directors or by a vote of the outstanding voting
securities of the Fund attributable to the Shares, on not more
than sixty (60) days' written notice to any other party to the
agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 11. This Distribution Plan may not be amended to
increase materially the amount of distribution
expenses provided for in Section 2 hereof unless such
amendment is approved in the manner provided in
Section 5 hereof, and no material amendment to the
Distribution Plan shall be made unless approved in
the manner provided for in Section 6 hereof.
AIM SUMMIT FUND, INC.
(On behalf of its Class II Shares)
Attest: By:
-------------------------- -----------------------------
Assistant Secretary President
Effective as of , 199
------------------ --
3
<PAGE> 4
SHAREHOLDER SERVICE AGREEMENT
FOR CLASS II SHARES OF AIM SUMMIT FUND, INC. AND
AIM SUMMIT INVESTORS PLANS II
This Shareholder Service Agreement (the "Agreement") has been
adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") by AIM Summit Fund, Inc. (the "Fund"), under a Distribution Plan
(the "Plan") adopted pursuant to said Rule. This Agreement, being made between
A I M Distributors, Inc. ("Distributors"), solely as agent for the Fund, and
the undersigned authorized dealer, defines the services to be provided by the
authorized dealer for which it is to receive payments pursuant to the Plan
adopted by the Fund. The Plan and the Agreement have been approved by a majority
of the directors of the Fund, including a majority of the directors who are not
interested persons of the Fund, and who have no direct or indirect financial
interest in the operation of the Plan or related agreements (the "Disinterested
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan. Such approval included a determination that in the exercise
of their reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit such Fund and its
shareholders.
1. To the extent that you provide continuing personal shareholder services
to customers who may, from time to time, directly or beneficially
(through Summit Investors Plans II) own Class II Shares of the Fund,
including but not limited to, distributing sales literature, answering
routine customer inquiries regarding the Fund or the Plans, assisting
customers in changing dividend options, account designations and
addresses, and in enrolling into investment plans offered in connection
with the purchase of the Fund's shares, assisting in the establishment
and maintenance of customer accounts and records and in the processing
of purchase and redemption transactions, investing dividends and
capital gains distributions automatically in shares and providing such
other services as the Fund or the customer may reasonably request, we,
solely as agent for the Fund, shall pay you a fee periodically or
arrange for such fee to be paid to you.
2. The fee paid with respect to Class II Shares of the Fund will be
calculated at the end of each payment period for each business day of
the Fund during such payment period at the annual rate of .25% as
applied to the average net asset value of the Class II Shares of the
Fund purchased or acquired through exchange on or after the Plan
Calculation Date. Fees calculated in this manner shall be paid to you
only if your firm is the dealer of record at the close of business on
the last business day of the applicable payment period, for the account
in which such shares are held (the "Subject Shares").
3. The total of the fees shall be paid to you within 45 days after the
close of each payment period.
4. We reserve the right to withhold payment with respect to the Subject
Shares purchased by you and redeemed or repurchased by the Fund or by
us as Agent within seven (7) business days after the date of our
confirmation of such purchase. We reserve the right at anytime to
impose minimum fee payment requirements before any periodic payments
will be made to you hereunder.
5. This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
<PAGE> 5
6. You shall furnish us and the Fund with such information as shall
reasonably be requested either by the directors of the Fund or by us
with respect to the fees paid to you pursuant to this Agreement.
7. We shall furnish the directors of the Fund, for their review on a
quarterly basis, a written report of the amounts expended under the
Plan by us and the purposes for which such expenditures were made.
8. Neither you nor any of your employees or agents are authorized to make
any representation concerning shares of the Fund except those contained
in the then current Prospectus for the Fund, and you shall have no
authority to act as agent for the Fund or for the Distributor.
9. We may enter into other similar Shareholder Service Agreements with any
other person without your consent.
10. This Agreement may be amended at any time without your consent by
Distributors mailing a copy of an amendment to you at the address set
forth below. Such amendment shall become effective on the date
specified in such amendment unless you elect to terminate this
Agreement within thirty (30) days of your receipt of such amendment.
11. This Agreement may be terminated at any time without payment of any
penalty by the vote of a majority of the directors of the Fund who are
Disinterested Directors or by a vote of a majority of the Fund's
outstanding Class II Shares, on sixty (60) days' written notice. It
will be terminated by any act which terminates either the Selected
Dealer Agreement between your firm and us or the Fund's Distribution
Plan, and in any event, it shall terminate automatically in the event
of its assignment as that term is defined in the 1940 Act.
12. The provisions of the Distribution Agreement between the Fund and us,
insofar as they relate to the Plan, are incorporated herein by
reference. This Agreement shall become effective upon execution and
delivery hereof and shall continue in full force and effect as long as
the continuance of the Plan and this related Agreement are approved at
least annually by a vote of the directors, including a majority of the
Disinterested Directors, cast in person at a meeting called for the
purpose of voting thereon. All communications to us should be sent to
the address of Distributors as shown at the bottom of this Agreement.
Any notice to you shall be duly given if mailed or transmitted by
facsimile to you at the address specified by you below.
13. You represent that you provide to your customers who own shares of the
Fund directly or through Summit Investors Plans II personal services as
defined from time to time in applicable regulations of the National
Association of Securities Dealers, Inc., and that you will continue to
accept payments under this Agreement only so long as you provide such
services.
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<PAGE> 6
14. This Agreement shall be construed in accordance with the laws of the
State of Texas.
A I M DISTRIBUTORS, INC.
Date: By:
------------------------- ----------------------------------
The undersigned agrees to abide by the foregoing terms and conditions:
Date: By:
------------------------- ----------------------------------
Signature
-------------------------------------
Print Name Title
-------------------------------------
Dealer's Name
-------------------------------------
Address
-------------------------------------
City State Zip
-------------------------------------
Telephone
-------------------------------------
Facsimile Number
Please sign both copies and return one copy to:
A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
3
<PAGE> 1
EXHIBIT o
MULTIPLE CLASS PLAN
OF
A I M SUMMIT FUND, INC.
1. This Multiple Class Plan (the "Multiple Class Plan") adopted
in accordance with Rule 18f-3 under the Act shall govern the
terms and conditions under which the Fund may issue separate
Classes of Shares representing interests in the Fund.
2. Definitions. As used herein, the terms set forth below shall
have the meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. Class - a class of Shares of the Fund.
c. Class I Shares - shall mean those Shares designated
as Class I Shares in the Fund's organizing documents.
d. Class II Shares - shall mean those Shares designated
as Class II Shares in the Fund's organizing
documents.
e. Directors - the directors of the Fund.
f. Distribution Expenses - expenses incurred in
activities which are primarily intended to result in
the distribution and sale of Shares as defined in a
Plan of Distribution and/or agreements relating
thereto.
g. Distribution Fee - a fee paid by a fund to the
Distributor to compensate the Distributor for
Distribution Expenses.
h. Distributor - A I M Distributors, Inc.
i. Fund - AIM Summit Fund, Inc.
j. Plan I - Summit Investors Plans I, a unit investment
trust.
k. Plan II - Summit Investors Plans II, a unit
investment trust.
l. Plan I Holders - holders of beneficial interests in
Plan I.
m. Plan II Holders - holders of beneficial interests in
Plan II.
<PAGE> 2
n. Plan of Distribution - Any plan adopted under Rule
12b-1 under the Act with respect to payment of a
Distribution Fee and/or Service Fee.
o. Record Keeping Fees - fees payable to State Street
under a Custodian Agreement dated _________________
relating to Plan II.
p. Service Fee - a fee paid to financial intermediaries
for the ongoing provision of personal services to
Plan II Holders or Shareholders of Class II and/or
the maintenance of accounts for Plan II Holders or
Shareholders of Class II.
q. Shareholder - a holder of Class I or Class II Shares
of the Fund.
r. State Street - State Street Bank and Trust Company.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Class II Shares shall
bear directly any and all Distribution Fees and/or
Service Fees payable by such Class II Shares pursuant
to a Plan of Distribution adopted by the Fund with
respect to such Class II Shares.
b. Transfer Agency Fees - Class II Shares shall bear
directly the transfer agency fees and expenses
specifically attributable to Class II Shares.
c. Record Keeping Fees - Class II Shares shall bear the
Record Keeping Fees. Similar fees with respect to
Class I Shares are paid by Plan I Holders at the
account level or are borne by the Distributor.
d. Allocation of Other Expenses - Each Class shall bear
proportionately, based upon relative net assets, all
other expenses incurred by the Fund based on the
relative net assets attributable to each such Class.
e. Allocation of Income, Gains and Losses - The Fund
will allocate income and realized and unrealized
capital gains and losses to a Class based on the
relative net assets of each Class.
f. Waiver and Reimbursement of Expenses - The Fund's
adviser, underwriter or any other provider of
services to the Fund may waive or reimburse the
expenses of a particular Class or Classes to the
extent permitted by applicable law, and so long as
such waiver or reimbursement does not subject the
Fund to taxation.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below, if any, will apply
for the following Classes offered by the Fund. The provisions
of the Fund's prospectuses describing the distribution and
servicing arrangements in detail are incorporated herein by
this reference.
2
<PAGE> 3
a. Class I Shares. Class I Shares shall be offered at
net asset value and are not subject to ongoing
Distribution Fees, service fees or record keeping
fees.
b. Class II Shares. Class II Shares shall be offered at
net asset value, subject to ongoing Service Fees,
Distribution Fees, Transfer Agency Fees and
Recordkeeping Fees approved from time to time by the
Directors and set forth in the Fund's Distribution
Plan and prospectus.
5. Exchange Privileges. Exchanges of Shares shall be permitted
between Classes of Shares as follows:
a. Class I Shares may be exchanged for Class II Shares,
but Class II Shares may not be exchanged for Class I
Shares, subject to certain limitations set forth in
the Fund's prospectuses as they may be amended from
time to time, relevant portions of which are
incorporated herein by this reference.
6. Service, Record Keeping, Transfer Agent and Distribution Fees.
The Service Fee, Record Keeping Fee, Transfer Agent Fee and
Distribution Fee applicable to Class II shall be those set
forth in the Fund's prospectus, relevant portions of which are
incorporated herein by this reference. All other terms and
conditions with respect to Service Fees and Distribution Fees
shall be governed by the Plan of Distribution adopted by the
Fund with respect to such fees and Rule 12b-1 of the Act.
7. Approval Required. This Multiple Class Plan shall not take
effect until a majority of the Directors of the Fund,
including a majority of the Directors who are not interested
persons of the Fund, shall find that the Multiple Class Plan,
as proposed and including the expense allocations, is in the
best interests of each Class individually and the Fund as a
whole.
8. Amendments. This Multiple Class Plan may not be amended to
materially change the provisions of this Multiple Class Plan
unless such amendment is approved in the manner specified in
Section 7 above.
3
