<PAGE> 1
As filed with the Securities and Exchange Commission on April 27, 2000
1933 Act Registration No. 2-76909
1940 Act Registration No. 811-3443
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 25 [X]
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 26 [X]
----
</TABLE>
(Check appropriate box or boxes)
AIM SUMMIT FUND
(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:
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
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date
of this Amendment
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on June 30, 2000, pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
THE REGISTRANT IS THE SUCCESSOR ISSUER TO AIM SUMMIT FUND, INC. (THE
"PREDECESSOR FUND"). PURSUANT TO RULE 414 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, BY FILING THIS POST-EFFECTIVE AMENDMENT TO CURRENTLY EFFECTIVE
REGISTRATION STATEMENT NO. 2-76909 OF THE PREDECESSOR FUND, THE REGISTRANT
EXPRESSLY ADOPTS THE REGISTRATION STATEMENT OF THE PREDECESSOR FUND AS ITS OWN
REGISTRATION STATEMENT FOR ALL PURPOSES OF THE SECURITIES ACT AND THE SECURITIES
EXCHANGE ACT OF 1934.
<PAGE> 2
AIM SUMMIT FUND
- --------------------------------------------------------------------------------
AIM Summit Fund seeks to provide growth of capital.
PROSPECTUS AIM --Registered Trademark--
JUNE 30, 2000
Shares of the fund are offered to
and may be purchased by the general
public primarily through AIM Summit
Investors Plans I and AIM Summit
Investors Plans II (the plans), each
a unit investment trust. Details of
the plans, including the applicable
creation and sales charges and the
custodian charges, are found in each
plan's respective Prospectus. You
should read both this Prospectus and
the Prospectus of your plan 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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 3
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AIM SUMMIT FUND
---------------
TABLE OF CONTENTS
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<TABLE>
<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-2
FEE TABLE AND EXPENSE EXAMPLE A-3
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table A-3
Expense Example A-3
FUND MANAGEMENT A-4
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor A-4
Advisor Compensation A-4
Portfolio Managers A-4
OTHER INFORMATION A-4
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Dividends and Distributions A-4
FINANCIAL HIGHLIGHTS A-5
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-6
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Pricing of Shares A-6
Sales of Shares A-6
Redemption of Shares A-6
Taxes A-7
Open Account A-7
Distribution and Service (12b-1) Fees A-7
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con
Disciplina and Invest with Discipline are registered service marks and AIM Bank
Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM
Investor are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 4
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AIM SUMMIT FUND
---------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is growth of capital.
The fund seeks to meet this objective by investing primarily in common stocks
of companies that the portfolio managers believe have the potential for growth
in earnings, including small-sized growth companies, and in common stocks
believed to be undervalued relative to other available investments. The fund may
also invest up to 20% of its total assets in foreign securities, including
securities of companies located in developing countries, i.e., those that are in
the initial stages of their industrial cycles. Any percentage limitations with
respect to assets of the fund are applied at the time of purchase.
The portfolio managers purchase securities of companies that they believe have
the potential for growth. The portfolio managers consider whether to sell a
particular security when they believe the security no longer has that potential.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. This is
especially true with respect to equity securities of smaller companies, whose
prices may go up and down more than the prices of equity securities of larger,
more-established companies. Also, since equity securities of smaller companies
may not be traded as often as equity securities of larger, more-established
companies, it may be difficult or impossible for the fund to sell securities at
a desirable price.
Foreign securities 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.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
A-1
<PAGE> 5
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AIM SUMMIT FUND
---------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
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........................................ 34.45%
1999........................................ 50.76%
</TABLE>
The fund's shares' year-to-date total return as of March 31, 2000 was 9.16%.
During the periods shown in the bar chart, the highest quarterly return was
37.12% (quarter ended December 31, 1999) and the lowest quarterly return was
- -13.37% (quarter ended September 30, 1990).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares of the fund 37.95% 30.13% 19.52% 16.28% 11/01/82
S & P 500(1) 21.03% 28.54% 18.19% 18.55%(2) 10/31/82(2)
- ------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
A-2
<PAGE> 6
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AIM SUMMIT FUND
---------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- ----------------------------------------------------
(expenses that are deducted
from fund assets)
- ----------------------------------------------------
<S> <C>
Management Fees 0.63%
Distribution and/or Service (12b-1) Fees(1)
Other Expenses 0.12%
------
Total Annual Fund Operating Expenses 0.85%
- ----------------------------------------------------
</TABLE>
(1) The Distribution and/or Service Fees applicable to shares of the Fund are
0.30%, except that the Distribution and/or Service Fees applicable to shares
of the Fund invested through AIM Summit Investors Plans I are 0.10%. The
rate represents the blended rate which will increase as a percentage of
average daily net assets of the Fund as additional shares of the Fund are
acquired outside AIM Summit Investors Plans I.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived,
the expenses will be lower. Although your actual returns and costs may be higher
or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------
<S> <C> <C> <C> <C>
Shares $107 $334 $579 $1,283
- -----------------------------------------------------
</TABLE>
A-3
<PAGE> 7
---------------
AIM SUMMIT FUND
---------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor), 11 Greenway Plaza, Suite 100, Houston, TX
77046, serves as the fund's investment advisor and is responsible for its
day-to-day management. The advisor supervises all aspects of the fund's
operations and provides investment advisory services to the fund, including
obtaining and evaluating economic, statistical and financial information to
formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976,
and together with its subsidiaries, advises or manages over 120 investment
portfolios, including the fund, encompassing a broad range of investment
objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 1999, the advisor received compensation
of 0.63% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - 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.
- - Charles D. Scavone, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1996. From 1994 to 1996, he was Associate Portfolio Manager for Van
Kampen American Capital Asset Management, Inc.
- - 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.
- - Bret W. Stanley, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1998. From 1994 to 1998, he was Vice President and portfolio manager
with Van Kampen American Capital Asset Management, Inc.
- - Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for
the fund since 1999 and has been associated with the advisor and/or its
affiliates since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
A-4
<PAGE> 8
---------------
AIM SUMMIT FUND
---------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.96 $ 15.15 $ 12.99 $ 12.14 $ 9.78
Income from investment operations:
Net investment income -- 0.03 0.02 0.04 0.04
Net gains on securities (both realized and
unrealized) 6.16 1.23 3.34 1.69 2.81
Total from investment operations 6.16 1.26 3.36 1.73 2.85
Less distributions:
Dividends from net investment income (0.04) (0.02) (0.03) (0.03) (0.10)
Distributions from net realized gains (0.91) (1.43) (1.17) (0.85) (0.39)
Total distributions (0.95) (1.45) (1.20) (0.88) (0.49)
Net asset value, end of period $ 20.17 $ 14.96 $ 15.15 $ 12.99 $ 12.14
Total return(a) 42.79% 9.49% 28.53% 15.61% 31.03%
- -------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $2,623,901 $1,830,032 $1,650,234 $1,261,008 $1,050,011
Ratio of expenses to average net assets 0.67%(b) 0.67% 0.68% 0.70% 0.71%
Ratio of net investment income to average net
assets (0.01)%(b) 0.23% 0.11% 0.29% 0.33%
Portfolio turnover rate 92% 83% 88% 118% 126%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(b) Ratios are based on average net assets of $2,381,357,904.
A-5
<PAGE> 9
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AIM SUMMIT FUND
---------------
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 customary trading session 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 Trustees. 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 Trustees 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 on each day the NYSE is
open for business, as of the close of the customary trading session or any
earlier NYSE closing time that day. 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 fund will not offer its shares to the general public except through the
plans. However, the following persons may purchase shares of the fund directly
through the fund's sponsor, A I M Distributors, Inc. (the distributor) 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 A I M Management Group Inc. (AIM Management) or
its affiliates, or of any investment company managed or advised by the advisor;
or (b) any employee benefit plan established for employees of AIM Management or
its affiliates. The fund reserves the right to reject any purchase order. The
terms of offering of the plans are contained in each plan's respective
Prospectus.
REDEMPTION OF SHARES
The following discussion relates only to those investors who hold shares of the
fund directly. Planholders should consult their plan's Prospectus for the
requirements for redemption of fund shares held in a Plan.
You may redeem your shares of the fund at any time without charge, either by a
written request to A I M Fund Services, Inc. (the transfer agent), or by calling
the transfer agent at (800) 959-4246, subject to the restrictions specified
below. Upon receipt by the transfer agent 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 the transfer agent, P.O. Box 4739,
Houston, TX 77210-4739.
Written requests for redemption must include: (1) original signatures of all
registered owners; (2) your account number; (3) if the transfer agent does not
hold your shares, endorsed share certificates or share certificates accompanied
by an executed stock power; and (4) signature guarantees, if necessary (see
below). The transfer agent may require that you provide additional information,
such as corporate resolutions or powers of attorney, if applicable.
The transfer agent requires a signature guarantee when you redeem by mail and:
(1) the amount is greater than $50,000; (2) you request that payment be made to
someone other than the name registered on the account; (3) you request that
payment be sent somewhere other than the bank of record on the account; or (4)
you request that payment be sent to a new address or an address that changed in
the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
You may also request redemptions by telephone by calling the transfer agent at
(800) 959-4246. You will be allowed to redeem by telephone if (1) the proceeds
are to be mailed to the address on record with us or transferred electronically
to a pre-authorized checking account; (2) the address on record with us has not
been changed within the last 30 days; (3) you do not hold physical share
certificates; (4) you can provide proper identification information; (5) the
proceeds of the redemption do not exceed $50,000; and (6) you have not
previously declined the telephone redemption privilege. Certain accounts,
including retirement accounts and 403(b) plans, may not redeem by telephone. The
transfer agent must receive your call during the hours the NYSE is open for
business in order to effect the redemption at that day's closing price.
The transfer agent normally will send out checks within one business day, and
in any event no more than seven days, after it accepts your request to redeem.
If you redeem shares recently purchased by check, you will be required to wait
up to ten business days before we will send your redemption proceeds. This delay
is necessary to ensure that the purchase check has cleared. The fund may
postpone the right of redemption only under unusual circumstances, as allowed by
the Securities and Exchange Commission, such as when the NYSE restricts or
suspends trading.
If you mail the transfer agent a request in good order to redeem your shares,
it will mail you a check in the amount of the redemption proceeds to the address
on record. If your request is not in good order, you may have to provide the
transfer
A-6
<PAGE> 10
---------------
AIM SUMMIT FUND
---------------
agent with additional documentation in order to redeem your shares.
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. The transfer agent uses
reasonable procedures to confirm that instructions communicated by telephone are
genuine and are not liable for telephone instructions that are reasonably
believed to be genuine.
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. The transfer agent will redeem enough shares from your account
to cover the amount withdrawn. You must have an account balance of at least
$5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any
time by giving ten days prior notice to the transfer agent.
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.
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.
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 the transfer agent 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 the
transfer agent after each acquisition or redemption of fund shares, and after
each dividend or capital gains distribution.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan that allows the fund to pay distribution fees
to 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 fund pays these fees out of its assets
on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
A-7
<PAGE> 11
---------------
AIM SUMMIT FUND
---------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 995-4246
- -----------------------------------------------------
</TABLE>
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Summit Fund
SEC 1940 Act file number: 811-3443
- -----------------------------------
[AIM LOGO APPEARS HERE] SUM2-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 12
STATEMENT OF ADDITIONAL INFORMATION
AIM SUMMIT FUND
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 FUND SERVICES, INC., P.O. BOX 4739,
HOUSTON, TEXAS 77210-4739.
--------------
STATEMENT OF ADDITIONAL INFORMATION DATED JUNE 30, 2000,
RELATING TO THE PROSPECTUS DATED JUNE 30, 2000,
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTION......................................................................................................1
PERFORMANCE INFORMATION...........................................................................................1
Total Return Quotations..................................................................................3
GENERAL INFORMATION ABOUT THE FUND................................................................................4
The Fund and its Shares..................................................................................4
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................................................................5
MANAGEMENT OF THE FUND............................................................................................8
Trustees and Officers....................................................................................8
The Investment Advisor..................................................................................14
Administrator...........................................................................................15
Expenses................................................................................................15
Transfer Agent and Custodian............................................................................16
Audit Reports...........................................................................................16
INVESTMENT STRATEGIES AND RISKS..................................................................................16
Investment Program......................................................................................16
Common Stocks...........................................................................................17
Preferred Stocks........................................................................................17
Convertible Securities..................................................................................17
Corporate Debt Securities...............................................................................18
U.S. Government Securities..............................................................................18
Real Estate Investment Trusts (REITs)...................................................................18
Warrants................................................................................................19
Lending of Fund Securities..............................................................................19
Interfund Loans.........................................................................................19
Short Sales.............................................................................................19
Foreign Securities......................................................................................20
Foreign Exchange Transactions...........................................................................21
Margin Transactions.....................................................................................21
Repurchase Agreements...................................................................................21
Rule 144A Securities....................................................................................22
Illiquid Securities.....................................................................................22
Equity-Linked Derivatives...............................................................................22
Investment in Other Investment Companies................................................................22
Temporary Defensive Investments.........................................................................23
Portfolio Turnover......................................................................................23
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................23
Introduction............................................................................................23
General Risks of Options, Futures and Currency Strategies...............................................23
Cover...................................................................................................24
Writing Call Options....................................................................................24
Writing Put Options.....................................................................................25
Purchasing Put Options..................................................................................25
Purchasing Call Options.................................................................................26
Over-The-Counter Options................................................................................26
Index Options...........................................................................................27
Limitations on Options..................................................................................27
Interest Rate, Currency and Stock Index Futures Contracts...............................................27
Options on Futures Contracts............................................................................28
Forward Contracts.......................................................................................28
Limitations on Use of Futures, Options on Futures and Certain Call Options on Currencies................29
</TABLE>
i
<PAGE> 14
<TABLE>
<S> <C>
INVESTMENT RESTRICTIONS..........................................................................................29
Fundamental Restrictions................................................................................29
Non-Fundamental Restrictions............................................................................30
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................30
Reinvestment of Dividends and Distributions.............................................................30
Qualification as a Regulated Investment Company.........................................................31
Determination of Taxable Income of a Regulated Investment Company.......................................32
Excise Tax on Regulated Investment Companies............................................................33
Fund Distributions......................................................................................33
Sale or Redemption of Fund Shares.......................................................................34
Foreign Shareholders....................................................................................34
Effect of Future Legislation; Local Tax Considerations..................................................35
SHARE PURCHASES, REDEMPTIONS AND REPURCHASES.....................................................................35
Purchases and Redemptions...............................................................................35
Suspension of Right of Redemption.......................................................................35
Valuation of Shares.....................................................................................35
The Distribution Plan...................................................................................36
The Distribution Agreement..............................................................................38
MISCELLANEOUS INFORMATION........................................................................................39
Shareholder Inquiries...................................................................................39
Legal Matters...........................................................................................39
FINANCIAL STATEMENTS.............................................................................................FS
</TABLE>
ii
<PAGE> 15
INTRODUCTION
AIM Summit Fund (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. The information for the
Fund is included in a Prospectus dated June 30, 2000, which may be obtained
without charge by written request to A I M Distributors, Inc. ("AIM
Distributors"). Investors may also call A I M Fund Services, Inc. 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 prospectus and, in order to avoid
repetition, reference will be made to sections of the Prospectus. Additionally,
the Prospectus and this Statement of Additional Information omit certain
information contained in the registration statement filed with the SEC. Copies
of the registration statement, including items omitted from the Prospectus and
this Statement of Additional Information, may be obtained from the SEC by paying
the charges prescribed under its rules and regulations.
PERFORMANCE INFORMATION
All advertisements of the Fund will disclose the maximum creation and
sales charges, imposed by AIM Summit Investors Plans I ("Plans I") and AIM
Summit Investors Plans II ("Plans II") (Plans I and Plans II are collectively
referred to as "Plans"), as applicable, and other fees (collectively, the "Sales
Charges") on purchases of shares of the Fund. 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.
From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may
waive all or a portion of their fees and/or assume certain expenses of the Fund.
Voluntary fee waivers or reductions or commitments to assume expenses may be
rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions or commitments to assume expenses, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions or reimbursement of expenses set
forth in the Fee Table in the Prospectus may not be terminated or amended to the
Fund's detriment during the period stated in the agreement between AIM and the
Fund. Fee waivers or reductions or commitments to reduce expenses will have the
effect of increasing the Fund's yield and total return.
The performance of the Fund will vary from time to time and past
results are not necessarily indicative of future results. The Fund's performance
is a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in the Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in the Fund.
Total return is calculated in accordance with a standardized formula
for computation of annualized total return. Standardized total return for the
shares of the Fund 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
1
<PAGE> 16
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. 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:
<TABLE>
<S> <C> <C>
Barron's Fortune USA Today
Bloomberg Investor's Business Daily U.S. News & World Report
Business Week Money Wall Street Journal
Economist Mutual Fund Forecaster Washington Post
Financial World Mutual Fund Magazine CNN
Forbes New York Times CNBC
</TABLE>
The Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
<TABLE>
<S> <C>
Bank Rate Monitor Mutual Fund Values (Morningstar)
CDA Weisenberger Ibbotson Associates
Donoghue's Lipper Inc.
</TABLE>
The Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the following:
<TABLE>
<S> <C>
Standard & Poor's 500 Stock Index Russell 3000
Dow Jones Industrial Average NASDAQ
Consumer Price Index
</TABLE>
The Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10-year Treasury Notes
30-year Treasury Bonds
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.
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.
2
<PAGE> 17
TOTAL RETURN QUOTATIONS
The standard formula for calculating total return, as described in the
Prospectus, is as follows:
n
P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000.
T = average annual total return (assuming the
applicable maximum sales load is deducted at
the beginning of the 1, 5, or 10 year
periods).
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the 1, 5, or 10
year periods (or fractional portion of such
period).
The average annual total return for the Fund, for the one-year,
five-year and ten-year periods ended October 31, 1999, was 42.79%, 24.93% and
18.05%, respectively. These average annual total returns do include the
reinvestment of dividends and capital gains, but do not include the effect of
paying the separate Creation and Sales Charges and Custodian Fees associated
with the purchase of the Fund through the Plans. 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 the Plans. Investors
should consult the Prospectus of Plans I or Plans II, as applicable, for
complete information regarding Creation and Sales Charges and Custodian Fees.
The average annual total return for the Fund, for the one-year,
five-year and ten-year periods ended October 31, 1999, was 30.65%, 22.73% and
17.00%, respectively. These average annual total returns include the
reinvestment of dividends and capital gains, and the effects of the separate
Creation and Sales Charges and Custodian Fees assessed through 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 Plans I 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 Plans I Prospectus for more complete information on
applicable charges and fees.
Standard total return quotes may be accompanied by total return figures
calculated by alternative methods. For example, average annual total return may
be calculated without assuming payment of the full sales load according to the
following formula:
n
P(1+U) =ERV
Where P = a hypothetical initial payment of $1,000.
U = average annual total return assuming payment
of only a stated portion of, or none of, the
applicable maximum sales load at the
beginning of the stated period.
n = number of years.
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the stated
period.
Cumulative total return across a stated period may be calculated as
follows:
P(1+V)=ERV
Where P = a hypothetical initial payment of $1,000.
V = cumulative total return assuming payment of
all of, a stated portion of, or none of, the
applicable maximum sales load at the
beginning of the stated period.
ERV = ending redeemable value of a hypothetical
$1,000 payment at the end of the stated
period.
3
<PAGE> 18
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS SHARES
The Fund currently is organized as a Delaware business trust under an
Agreement and Declaration of Trust, dated December 6, 1999 (the "Trust
Agreement"). The Fund was previously organized as AIM Summit Fund, Inc. ("ASF"),
a Maryland corporation. Pursuant to an Agreement and Plan of Reorganization, ASF
was reorganized as the Fund on June 30, 2000. The Fund is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, diversified
management investment company.
The Fund offers one series of shares. Under the Trust Agreement, the
Board of Trustees is authorized to create new series of shares without the
necessity of a vote of shareholders of the Fund.
Pursuant to the June 30, 2000 Agreement and Plan of Reorganization, the
Fund succeeded to the assets and assumed the liabilities of ASF. Prior to the
reorganization, the Class II Shares of the Fund were reclassified and changed
into Class I Shares. All historical financial and other information contained in
this Statement of Additional Information for periods prior to June 30, 2000
relating to the Fund is that of ASF and the Class I Shares of ASF.
Shares of beneficial interest of the Fund are redeemable at their new
asset value at the option of the shareholder or at the option of the Fund in
certain circumstances. For information concerning the methods of redemption,
investors should consult the Prospectus under the caption "Redemption of
Shares."
Each share of the Fund represents an equal proportionate interest in
the Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are declared by the Board. Upon any liquidation of the
Fund, shareholders are entitled to share pro rata in the net assets belonging to
the Fund available for distribution after satisfaction of outstanding
liabilities of the Fund.
The Fund is not required to hold annual or regular meetings of
shareholders. Meetings of shareholders of the Fund will be held from time to
time to consider matters requiring a vote of such shareholders in accordance
with the requirements of the 1940 Act, state law or the provisions of the Trust
Agreement. It is not expected that shareholder meetings will be held annually.
Shareholders of the Fund are entitled to one vote per share (with
proportionate voting for fractional shares). When issued, shares of the fund are
fully paid and nonassessable, have no preemptive or subscription rights, and are
fully transferable. Shares do not have cumulative voting rights, which means
that in situations in which shareholders elect trustees, holders of more than
50% of the shares voting for the election of trustees can elect all of the
trustees of the Fund, and the holders of less than 50% of the shares voting for
the election of trustees will not be able to elect any trustees.
The Trust Agreement provides that the trustees of the Fund shall hold
office during the existence of the Fund, except as follows: (a) any trustee may
resign or retire; (b) any trustee may be removed by a vote of at least
two-thirds of the outstanding shares of the Fund, or at any time by written
instrument signed by at least two-thirds of the trustees and specifying when
such removal becomes effective; or (c) any trustee who has died or become
incapacitated and is unable to serve may be retired by a written instrument
signed by a majority of the trustees and specifying the date of his or her
retirement.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations or liability extended to shareholders of
private for-profit corporations, however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Fund to the extent the courts of another state which does not
recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Fund or the trustees to all parties, and each
party thereto must expressly waive all rights of action directly against
shareholders of the Fund. The Trust Agreement provides for indemnification out
of the property of the Fund for all losses and expenses of any shareholder of
the Fund held liable on account of being or having been a shareholder. Thus, the
risk of
4
<PAGE> 19
a shareholder incurring financial loss due to shareholder liability is limited
to circumstances in which the Fund would be unable to meet its obligations and
wherein the complaining party was held not to be bound by the disclaimer.
The Trust Agreement further provides that the trustees and officers
will not be liable for any act, omission or obligation of the Fund or any
trustee or officer. However, nothing in the Trust Agreement protects a trustee
or officer against any liability to the Fund or to the shareholders to which a
trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his or her office with the Fund. The Trust Agreement provides for
indemnification by the Fund of the trustees, officers, employees and agents of
the Fund, if it is determined that such person acted in good faith and
reasonably believed: (1) in the case of conduct in his or her official capacity
for the Fund, that his or her conduct was in the Fund's best interests, (2) in
all other cases, that his or her conduct was at least not opposed to the Fund's
best interests and (3) in a criminal proceeding, that he or she had no reason to
believe that his or her conduct was unlawful. The Trust Agreement also
authorizes the purchase of liability insurance on behalf of trustees and
officers.
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 A I M
Capital Management, Inc. (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.
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 an AIM 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 or account (and may invest in
affiliated money market funds) 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.
5
<PAGE> 20
Allocation of Portfolio Transactions
AIM and its affiliates manage numerous 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 transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
Allocation of IPO Securities Transactions
From time to time, certain of the AIM Funds or other accounts managed
by AIM may become interested in participating in security distributions that are
available in an IPO, and occasions may arise when purchases of such securities
by one AIM Fund or account may also be considered for purchase by one or more
other AIM Funds or accounts. In such cases, it shall be AIM's practice to
specifically combine or otherwise bunch indications of interest for IPO
securities for all AIM Funds and accounts participating in purchase transactions
for that security, and to allocate such transactions in accordance with the
following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks
to participate in a particular IPO by reviewing a number of factors, including
suitability of the investment with the AIM Fund's or account's investment
objective, policies and strategies, the liquidity of the AIM Fund or account if
such investment is purchased, and whether the portfolio manager intends to hold
the security as a long-term investment. The allocation of limited supply
securities issued in IPOs will be made to eligible AIM Funds and accounts in a
manner designed to be fair and equitable for the eligible AIM Funds and
accounts, and so that there is equal allocation of IPOs over the longer term.
Where multiple funds or accounts are eligible, rotational participation may
occur, based on the extent to which an AIM Fund or account has participated in
previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM
Fund and account with an asset level of less than $500 million, will be placed
in one of three tiers, depending upon its asset level. The AIM Funds and
accounts in the tier containing funds and accounts with the smallest asset
levels will participate first, each receiving a 40 basis point allocation
(rounded to the nearest share round lot that approximates 40 basis points) (the
"Allocation"), based on that AIM Fund's or account's net assets. This process
continues until all of the AIM Funds and accounts in the three tiers receive
their Allocations, or until the shares are all allocated. Should securities
remain after this process, eligible AIM Funds and accounts will receive their
Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts
not receiving a full Allocation, the Allocation may be made only to certain AIM
Funds or accounts so that each may receive close to or exactly 40 basis points.
When any AIM Fund and/or account with substantially identical investment
objectives and policies participate in syndicates, they will do so in amounts
that are substantially proportionate to each other. In these cases, the net
assets of the largest AIM Fund will be used to determine in which tier, as
described in the paragraph above, such group of AIM Funds or accounts will be
placed. If no AIM Fund is participating, then the net assets of the largest
account will be used to determine tier placement. The price per share of
securities purchased in such syndicate transactions will be the same for each
AIM Fund and account.
6
<PAGE> 21
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 trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally, in
written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the
broker-dealers used by AIM tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, the research provides
AIM with a diverse perspective on financial markets. Research services provided
to AIM by broker-dealers are available for the benefit of all accounts managed
or advised by AIM or by its affiliates. Some broker-dealers may indicate that
the provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the 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.
Transaction With Regular Brokers
As of October 31, 1999, the Fund held an amount of common stock issued
by Morgan Stanley Dean Witter & Co., Inc. and Lehman Brothers Holdings, Inc.
having a market value of $16,988,125 and $2,947,500, respectively. Both are
regular brokers 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, 1999, 1998 and 1997, the Fund
paid brokerage commissions of $3,472,778, $3,027,892 and $2,573,656,
respectively. For the fiscal year ended October 31, 1999, 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 $625,053,096 and the related brokerage commissions were $536,125.
7
<PAGE> 22
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.
MANAGEMENT OF THE FUND
The overall management of the business and affairs of the Fund is
vested with the Board of Trustees. The Board of Trustees 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,
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, restrictions and policies of the Fund and to the general
supervision of the Fund's Board of Trustees. Certain trustees and officers of
the Fund are affiliated with AIM and A I M Management Group Inc. ("AIM
Management") the parent company of AIM.
TRUSTEES AND OFFICERS
The trustees 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 AIM Funds. Unless
otherwise indicated, the address of each director and officer is 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173.
8
<PAGE> 23
<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 (81) Chairman and Trustee Director and Chairman, A I M 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 Executive Vice
Chairman of AMVESCAP PLC.
- ----------------------------------- ---------------------- ------------------------------------------------------------
Bruce L. Crockett, (56) Trustee Director, ACE Limited (insurance company). Formerly
906 Frome Lane Director, President and Chief Executive Officer, COMSAT
McLean, VA 22102 Corporation; and Chairman, Board of Governors of INTELSAT
(international communications company).
- ----------------------------------- ---------------------- ------------------------------------------------------------
Owen Daly II (75) Trustee Formerly, Director, Cortland Trust Inc. (investment
Six Blythewood Road company), CF & I Steel Corp., Monumental Life Insurance
Baltimore, MD 21210 Company and Monumental General Insurance Company; and
Chairman of the Board of Equitable Bancorporation
- ----------------------------------- ---------------------- ------------------------------------------------------------
Edward K. Dunn, Jr. (65) Trustee Chairman of the Board of Directors, Mercantile Mortgage
2 Hopkins Plaza, 8th Floor, Corp. Formerly, Vice Chairman of the Board of Directors,
Suite 805 President and Chief Operating Officer, Mercantile - Safe
Baltimore, MD 21201 Deposit & Trust Co.; and President, Mercantile
Bankshares.
- ----------------------------------- ---------------------- ------------------------------------------------------------
Jack Fields (48) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
Jetero Plaza, Suite E trading company) and Twenty-First Century Group, Inc.
8810 Will Clayton Parkway (governmental affairs company). Formerly, Member of the
Humble, TX 77338 U.S. House of Representatives.
- ----------------------------------- ---------------------- ------------------------------------------------------------
**Carl Frischling (63) Trustee Partner, Kramer Levin Naftalis & Frankel LLP (law firm).
919 Third Avenue
New York, NY 10022
- ----------------------------------- ---------------------- ------------------------------------------------------------
*Robert H. Graham (53) Trustee and Director, President and Chief Executive Officer, A I M
President Management Group Inc.; Director and President, A I M
Advisors, Inc.; Director and Senior Vice President, A I M
Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Director and CEO, Managed Products, AMVESCAP PLC.
- ----------------------------------- ---------------------- ------------------------------------------------------------
</TABLE>
- --------
* A trustee who is an "interested person" of the Fund and AIM as defined
in the 1940 Act.
** A trustee who is an "interested person" of the Fund as defined in the
1940 Act.
9
<PAGE> 24
<TABLE>
<CAPTION>
- ----------------------------------- ---------------------- ---------------------------------------------------------
<S> <C> <C>
Prema Mathai-Davis (49) Trustee Chief Executive Officer, YWCA of the USA.
350 Fifth Avenue, Suite 301
New York, NY 10118
- ----------------------------------- ---------------------- ---------------------------------------------------------
Lewis F. Pennock (57) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, Texas 77057
- ----------------------------------- ---------------------- ---------------------------------------------------------
Louis S. Sklar (60) Trustee Executive Vice President, Development and Operations,
The Williams Tower, Hines Interests Limited Partnership (real estate
50th Floor development).
2800 Post Oak Blvd.
Houston, Texas 77056
- ----------------------------------- ---------------------- ---------------------------------------------------------
Gary T. Crum (52) Senior Vice Director and President, A I M Capital Management, Inc.;
President Director and Executive Vice President, A I M Management
Group Inc.; Director and Senior Vice President, A I M
Advisors, Inc.; and Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- ----------------------------------- ---------------------- ---------------------------------------------------------
Carol F. Relihan (45) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Senior Vice President,
Secretary 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 (41) Vice President Vice President and Fund Controller, A I M Advisors, Inc.;
and Treasurer and Assistant Vice President and Assistant Treasurer,
Fund Management Company.
- ----------------------------------- ---------------------- ---------------------------------------------------------
Melville B. Cox (56) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and Fund
Management Company.
- ----------------------------------- ---------------------- ---------------------------------------------------------
Edgar M. Larsen (60) Vice President Vice President, A I M Capital Management, Inc.
- ----------------------------------- ---------------------- ---------------------------------------------------------
</TABLE>
The standing committees of the Board of Trustees are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for: (i) considering management's recommendations
of independent accountants for the Fund and evaluating such accountants'
performance, costs and financial stability; (ii) with AIM, reviewing and
coordinating audit plans prepared by the Fund's independent accountants and
management's internal audit staff; and (iii) reviewing financial statements
contained in periodic reports to shareholders with the Fund's independent
accountants and management.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr.
Mathai-Davis. The Investments Committee is responsible for: (i) overseeing AIM's
investment related compliance systems and procedures to ensure their continued
adequacy; and (ii) considering and acting, on an interim basis between meetings
of the full Board of Trustees,
10
<PAGE> 25
on investment related matters requiring Board of Trustees' consideration,
including dividends and distributions, brokerage policies and pricing matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for: (i) considering
and nominating individuals to stand for election as independent trustees as long
as the Fund maintains a distribution plan pursuant to Rule 12b-1 under the 1940
Act; (ii) reviewing from time to time the compensation payable to the
independent trustees; and (iii) making recommendations to the Board of Trustees
regarding matters related to compensation, including deferred compensation plans
and retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, provided (i) that such person
is a shareholder of record at the time he or she submits such names and is
entitled to vote at the meeting of shareholders at which trustees will be
elected, and (ii) that the Nominating and Compensation Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
All of the Trust's trustees also serve as directors or trustees of some
or all of the investment companies managed or advised by AIM. All of the Fund's
executive officers hold similar offices with some or all of the other investment
companies managed or advised by AIM.
Remuneration of Trustees
Each trustee is reimbursed for expenses incurred in connection with
each meeting of the Board of Trustees or any Committee attended. Each trustee of
the Fund is compensated for his or her services according to a fee schedule
which recognizes the fact that such trustee also serves as a director or trustee
of other AIM Funds. Each such trustee receives a fee, allocated among the AIM
Funds for which he or she serves as a director or trustee, which consists of an
annual retainer component and a meeting fee component.
11
<PAGE> 26
Set forth below is information regarding compensation paid or accrued
for each trustee of the Fund:
<TABLE>
<CAPTION>
=================================================================================================
RETIREMENT
BENEFITS TOTAL
ESTIMATED ACCRUED COMPENSATION
COMPENSATION FROM BY ALL AIM FROM ALL AIM
TRUSTEE FUND(1) FUNDS(2) FUNDS(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------
Bruce L. Crockett 2,045 37,485 103,500
- -------------------------------------------------------------------------------------------------
Owen Daly II 2,045 122,898 103,500
- -------------------------------------------------------------------------------------------------
Edward K. Dunn 2,045 55,565 103,500
- -------------------------------------------------------------------------------------------------
Jack Fields 2,004 15,826 101,500
- -------------------------------------------------------------------------------------------------
Carl Frischling(4) 2,035 97,791 103,500
- -------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- -------------------------------------------------------------------------------------------------
John F. Kroeger(5) 0 40,461 0
- -------------------------------------------------------------------------------------------------
Prema Mathai-Davis 2,045 11,870 101,500
- -------------------------------------------------------------------------------------------------
Lewis F. Pennock 2,035 45,755 103,500
- -------------------------------------------------------------------------------------------------
Ian Robinson(6) 858 94,442 25,000
- -------------------------------------------------------------------------------------------------
Louis S. Sklar 2,035 90,232 101,500
=================================================================================================
</TABLE>
- ----------
(1) The total amount of compensation deferred by all directors of the Fund's
predecessor during the fiscal year ended October 31, 1999, including earnings
thereon, was $13,529.
(2) During the fiscal year ended October 31, 1999, the total amount of expenses
allocated to the Fund's predecessor in respect of such retirement benefits was
$13,895. Data reflects compensation for the calendar year ended December 31,
1999.
(3) Each trustee serves as director or trustee of at least 12 registered
investment companies advised by AIM. Data reflects total compensation earned
during the calendar year ended December 31, 1999.
(4) During the fiscal year ended October 31, 1999, the Fund's predecessor paid
$8,316 in legal fees to Mr. Frischling's law firm, Kramer Levin Naftalis &
Frankel LLP, for services rendered to the independent directors of the Fund's
predecessor.
(5) Mr. Kroeger was a director of the Fund's predecessor until June 11, 1998.
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."
(6) Mr. Robinson was a director of the Fund's predecessor until March 12, 1999,
when he retired.
12
<PAGE> 27
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of
the AIM Funds, AIM Management, or any of their affiliates) may be entitled to
certain benefits upon retirement from the Board of Trustees. Pursuant to the
Plan, a trustee becomes eligible to retire and to receive full benefits under
the Plan when he or she has attained age 65 and has completed at least five
years of continuous service with one or more of the regulated investment
companies managed, administered or distributed by AIM or its affiliates (the
"Applicable AIM Funds"). Each eligible trustee is entitled to receive an annual
benefit from the Applicable AIM Funds commencing on the first day of the
calendar quarter coincident with or following his or her date of retirement
equal to a maximum of 75% of the annual retainer paid or accrued by the
Applicable AIM Funds for such trustee during the twelve-month period immediately
preceding the trustee's retirement (including amounts deferred under a separate
agreement between the Applicable AIM Funds and the trustee) and based on the
number of such trustee's years of service (not in excess of 10 years of service)
completed with respect to any of the Applicable AIM Funds. Such benefit is
payable to each eligible trustee in quarterly installments. If an eligible
trustee dies after attaining the normal retirement date but before receipt of
all benefits under the Plan, the trustee's surviving spouse (if any) shall
receive a quarterly survivor's benefit equal to 50% of the amount payable to the
deceased trustee for no more than ten years beginning the first day of the
calendar quarter following the date of the trustee's death. Payments under the
Plan are not secured or funded by any Applicable AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible trustee upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, and Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 20, 18, 11, 10
and 1 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
===============================================================
Annual Retirement
Number of Years of Compensation Paid By
Service With the All Applicable AIM
Applicable AIM Funds Funds
===============================================================
<S> <C>
10 $67,500
---------------------------------------------------------------
9 $60,750
---------------------------------------------------------------
8 $54,000
---------------------------------------------------------------
7 $47,250
---------------------------------------------------------------
6 $40,500
---------------------------------------------------------------
5 $33,750
===============================================================
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis,
(the "Deferring Trustees") have each executed a Deferred Compensation Agreement
(collectively, the "Compensation Agreements"). Pursuant to the Compensation
Agreements, the Deferring Trustees 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 Trustees may select various AIM Funds
in which all or part of his or her deferral account shall be deemed to be
invested. Distributions from the Deferring Trustees' 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 Compensation Agreement) beginning on the
date the Deferring Trustees' retirement benefits commence under the Plan. The
Fund's Board of Trustees, in its sole discretion, may accelerate or extend the
distribution
13
<PAGE> 28
of such deferral accounts after the Deferring Trustee's termination of service
as a trustee of the Fund. If a Deferring Trustee dies prior to the distribution
of amounts in his or her deferral account, the balance of the deferral account
will be distributed to his or her designated beneficiary in a single lump sum
payment as soon as practicable after such Deferring Trustee's death. The
Compensation Agreements are not funded and, with respect to the payments of
amounts held in the deferral accounts, the Deferring Trustees have the status of
unsecured creditors of the Fund and of each other AIM Fund from which they are
deferring compensation.
THE INVESTMENT ADVISOR
AIM serves as the investment advisor to the Fund pursuant to a Master
Investment Advisory Agreement dated June 30, 2000 (the "Advisory Agreement").
AIM was organized in 1976, and together with its subsidiaries, advises, manages
or administers over 120 investment portfolios encompassing a broad range of
investment objectives. AIM is a wholly owned subsidiary of AIM Management, a
holding company that has been engaged in the financial services business since
1976. The address of AIM is 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173. AIM Management is an indirect wholly owned subsidiary of AMVESCAP
PLC, 11 Devonshire Square, London EC2M 4YR, England. AMVESCAP PLC and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail 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 "Trustees 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) file reports
regarding such transactions; (c) refrain from personally engaging in (i)
short-term trading of a security, (ii) transactions involving a security within
seven days of an AIM Fund transaction involving the same security (subject to a
de minimis exception) and (iii) transactions involving securities being
considered for investment by an AIM Fund (subject to the de minimis exception);
and (d) abide by certain other provisions of the Code of Ethics. The de minimis
exception under the Code of Ethics covers situations where there is no material
conflict of interest because of the large market capitalization of a security
and the relatively small number of shares involved in a personal transaction.
The Code of Ethics also generally prohibits AIM employees who are registered
with the NASD from purchasing securities in initial public offerings. Personal
trading reports are periodically reviewed by AIM, and the Board of Trustees
reviews quarterly and annual reports (which summarize any significant violations
of the Code of Ethics). Sanctions for violating the Code of Ethics may include
censure, monetary penalties, suspension or termination of employment.
A prior investment advisory agreement with similar terms to the
Advisory Agreement was in effect prior to June 30, 2000. The Advisory Agreement
will remain in effect until June 30, 2001, and continue from year to year only
if such continuance is specifically approved at least annually by the Fund's
Board of Trustees and by the affirmative vote of a majority of the trustees who
are not parties to the Agreement or "interested persons" of any such party by
votes cast in person at a meeting called for such purpose. The Fund or AIM may
terminate the Advisory Agreement on 60 days' written notice without penalty. The
Advisory Agreement terminates automatically in the event of its "assignment," as
defined in the 1940 Act.
Pursuant to the terms of the Advisory Agreement, AIM supervises all
aspects of the Fund's operations and provides investment advisory services to
the Fund.
AIM may from time to time waive or reduce its fee. Voluntary fee
waivers or reductions, may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in the
Prospectus may not be terminated or amended to the Fund's detriment during the
period stated in the agreement between AIM and the Fund.
As compensation for its advisory services under the Advisory Agreement,
AIM receives a fee from the Fund, 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, plus 0.75% of the next $140 million of the Fund's average daily net
assets plus 0.625% of the Fund's average daily net assets in excess of $150
million. Pursuant to the investment advisory agreement in effect prior to June
30, 2000 which provided for the same level of compensation to AIM as is provided
for under the Advisory Agreement, for the fiscal years ended October 31, 1999,
1998 and 1997, the
14
<PAGE> 29
fees paid by the Fund to AIM were $15,096,393, $11,372,220 and $9,353,715,
respectively (after giving effect to fee waivers for the fiscal years ended
October 31, 1999, 1998 and 1997, respectively).
In addition, if the Fund engages in securities lending, AIM will
provide the Fund investment advisory services and related administrative
services. The Advisory Agreement describes the administrative services to be
rendered by AIM if the Fund engages in securities lending activities as well the
compensation AIM may receive for such administrative services. Services to be
provided include: (a) overseeing participation in the securities lending program
to ensure compliance with all applicable regulatory and investment guidelines;
(b) assisting the securities lending agent or principal (the agent) in
determining which specific securities are available for loan; (c) monitoring the
agent to ensure that securities loans are effected in accordance with AIM's
instructions and with procedures adopted by the Board of Trustees; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board of Trustees with respect to securities lending activities; (e) responding
to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the advisory fee schedule. As compensation for
the related administrative services AIM will provide, the Fund will pay AIM a
fee equal to 25% of the net monthly interest or fee income retained or paid to
the Fund from such activities. AIM currently intends to waive such fee, and has
agreed to seek the Board of Trustees' approval prior to its receipt of all or a
portion of such fee.
Prior to July 1, 1999, TradeStreet Investment Associates, Inc.
("TradeStreet"), 101 South Tryon Street, Suite 1000, Charlotte, North Carolina
28255, served as the Fund's sub-advisor. Trade Street is a wholly owned
subsidiary of NationsBank, N.A. and a registered investment advisor.
For the period November 1, 1998 through July 1, 1999 and the fiscal
years ended October 31, 1998 and 1997, TradeStreet received sub-advisory fees
from AIM of $2,774,130, $3,405,833 and $2,921,391, respectively.
See "Expenses."
ADMINISTRATOR
AIM also acts as the Fund's administrator pursuant to a Master
Administrative Service Agreement between AIM and the Fund (the "Administrative
Services Agreement").
Under the Administrative Services Agreement, AIM performs, or arranges
for the performance of, accounting and other administrative services for the
Fund. As full compensation for the performance of such services, AIM is
reimbursed for any personnel and other costs (including applicable office space,
facilities and equipment) of furnishing the services of a principal officer of
the Fund and of persons working under her supervision for maintaining the
financial accounts and books and records of the Fund, including calculation of
the Fund's daily net asset value, and preparing tax returns and financial
statements for the Fund. The method of calculating such reimbursements must be
annually approved, and the amounts paid will be periodically reviewed, by the
Fund's Board of Trustees.
Pursuant to the administrative services agreements in effect prior to
June 30, 2000, AIM received reimbursements for the fiscal years ended October
31, 1999, 1998 and 1997 in the amounts of $114,068, $72,766 and $67,450,
respectively, from the Fund.
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 trustees' 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.
15
<PAGE> 30
TRANSFER AGENT AND CUSTODIAN
A I M Fund Services, Inc. ("AFS"), a wholly owned subsidiary of AIM,
serves as transfer agent and dividend disbursing agent for the shares of the
Fund pursuant to a Transfer Agency and Service Agreement These services do not
include any supervisory function over management or provide any protection
against any possible depreciation of assets. The Fund pays the AFS such
compensation as may be agreed upon from time to time. The address of AFS is 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
State Street Bank and Trust Company ("State Street Bank") acts as
custodian for the Fund's portfolio securities and cash. State Street Bank
receives such compensation from the Fund for its services in such capacity as is
agreed to from time to time by the Fund. The address of State Street Bank is
P.O. Box 8300, Boston, Massachusetts 02266-8300. State Street Bank maintains the
portfolio securities owned by the Fund, administers the purchases and sales of
portfolio securities, collects interest and other distributions made on
securities held by the Fund and performs other ministerial duties.
AUDIT 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 Trustees has selected KPMG 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.
INVESTMENT STRATEGIES AND RISKS
INVESTMENT PROGRAM
The Fund's investment objective and the principal features of the
Fund's investment program and the principal risks associated with that
investment program are set forth in the Prospectus under the caption "Investment
Objective and Strategies" and "Principal Risks 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 Trustees without shareholder approval.
Set forth in this section is a description of the Fund's investment
policies, strategies and practices. The investment objective of the Fund is
fundamental and may not be changed by the Board of Trustees without shareholder
approval. The Fund's investment policies, strategies and practices are
non-fundamental. The Board of Trustees of the Fund reserves the right to change
any of these non-fundamental investment policies, strategies or practices
without shareholder approval. However, shareholders will be notified before any
material change in the investment policies becomes effective. The Fund has
adopted certain investment restrictions, some of which are fundamental and
cannot be changed without shareholder approval. See "Investment Restrictions" in
this Statement of Additional Information. Any percentage limitations with
respect to assets of the Fund will be applied at the time of purchase.
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
16
<PAGE> 31
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 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 capabilities than is the case with other types of securities
in which the Fund may invest.
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 April 4, 2000, no person owned of record or is known by the Fund
to own of record or beneficially 5% or more of the Fund's outstanding equity
securities. As of April 4, 2000, the directors and officers of the Fund as a
group owned beneficially less than 1% of the Fund's outstanding shares.
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
17
<PAGE> 32
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.
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 25% of the total assets of the Fund.
REITs are trusts which sell equity or debt securities to investors and
use the proceeds to invest in real estate or interests therein. A REIT may focus
on particular projects, such as apartment complexes, or geographic regions, such
as the Southeastern United States, or both.
To the extent that 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 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
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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 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.
LENDING OF FUND SECURITIES
Consistent with applicable regulatory requirements, the Fund may lend
its portfolio securities (principally to broker-dealers) to the extent of
one-third of its respective total assets. Such loans would be callable at any
time and will be continuously secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. The Fund would continue to receive the income on loaned securities
and would, at the same time, earn interest on the loan collateral or on the
investment of the loan collateral if it were cash. Any cash collateral pursuant
to these loans would be invested in short-term money market instruments or
affiliated money market funds. Where voting or consent rights with respect to
loaned securities pass to the borrower, the Fund will follow the policy of
calling the loan, in whole or in part as may be appropriate, to permit the
exercise of such voting or consent rights if the matters involved are expected
to have a material effect on the Fund's investment in the loaned securities.
Lending securities entails a risk of loss to the Fund if and to the extent that
the market value of the securities loaned were to increase and the lender did
not increase the collateral accordingly.
INTERFUND LOANS
The Fund may lend up to 33-1/3% of its total assets to another AIM
Fund, on such terms and conditions as the SEC may require in an exemptive order.
An application for exemptive relief has been filed with the SEC on behalf of the
Fund and others. The Fund may also borrow from another AIM Fund to satisfy
redemption requests or to cover unanticipated cash shortfalls due to a delay in
the delivery of cash to the Fund's custodian or improper delivery instructions
by a broker effectuating a transaction.
SHORT SALES
The Fund may from time to time make short sales of securities which it
owns or which it has the right to acquire through the conversion or exchange of
other securities it owns. In a short sale, the Fund does not immediately deliver
the securities sold and does not receive the proceeds from the sale. The Fund is
said to have a short position in the securities sold until it delivers the
securities sold, at which time it receives the proceeds of the sale. The Fund
will neither make short sales of securities nor maintain a short position
unless, at all times when a short position is open, the Fund owns an equal
amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short. This is a technique known
as selling short "against the box." To secure its obligation to deliver the
securities sold short, the Fund will deposit in escrow in a separate account
with its custodian, an equal amount of the securities sold short or securities
convertible into or exchangeable for such securities. In no event may more than
10% of the Fund's total assets be deposited or pledged as collateral for short
sales at any one time.
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Since the Fund ordinarily will want to continue to receive interest and
dividend payments on securities in its portfolio which are convertible into the
securities sold short, the Fund will normally close out a short position by
purchasing and delivering an equal amount of the securities sold short, rather
than by delivering securities which it already holds.
The Fund will make a short sale, as a hedge, when it believes that the
price of a security may decline, causing a decline in the value of a security
owned by the Fund or a security convertible into or exchangeable for such
security, or when the Fund does not want to sell the security it owns, because
among other reasons, it wishes to defer recognition of gain or loss for federal
income tax purposes. In such case, any future losses in the Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses are reduced will depend upon the amount of the
security sold short relative to the amount the Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the conversion premium. In determining the number of shares to be sold short
against the Fund's position in a convertible security, the anticipated
fluctuation in the conversion premium is considered. The Fund may also make
short sales to generate additional income from the investment of the cash
proceeds of short sales.
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
Depositary Receipts ("ADRs"), European Depositary 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.
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
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<PAGE> 35
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.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a
common European currency known as the "euro" and each member's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any other
European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with the euro. The anticipated replacement
of existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value of
securities held by 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.
MARGIN TRANSACTIONS
The Fund will not purchase any security on margin, except that it may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of portfolio securities. The payment by the Fund of initial
or variation margin in connection with futures or related options transactions
will not be considered the purchase of a security on margin.
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 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 acquired by 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.
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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 Trustees 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.
RULE 144A SECURITIES
The Fund may purchase privately placed securities that 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 securities that have not been registered under the 1933
Act. AIM, under the supervision of the Fund's Board of Trustees, 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, including restricted securities that are illiquid. Illiquid securities
include securities that 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.
Although securities which may be resold only to "qualified
institutional buyers" in accordance with the provisions of Rule 144A under the
Securities Act of 1933 are unregistered securities, the Fund may purchase Rule
144A securities without regard to the 15% limitation described above provided
that a determination is made that such securities have a readily available
trading market.
EQUITY-LINKED DERIVATIVES
The Fund may invest in equity-linked derivative products designed to
replicate the composition and performance of particular indices. Examples of
such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark
Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial
Average Instruments ("DIAMONDS") and Optomised Portfolios as Listed Securities
("OPALS"). Investments in equity-linked derivatives involve the same risks
associated with a direct investment in the types of securities included in the
indices such products are designed to track. There can be no assurance that the
trading price of the equity-linked derivatives will equal the underlying value
of the basket of securities purchased to replicate a particular index or that
such basket will replicate the index. Investments in equity-linked derivatives
may constitute investment in other investment companies. See "Investment in
Other Investment Companies."
INVESTMENT IN OTHER INVESTMENT COMPANIES
The Fund may invest in other investment companies to the extent
permitted by the 1940 Act, and rules and regulations thereunder, and if
applicable, exemptive orders granted by the SEC. The following restrictions
apply to investments in other investment companies other than Affiliated Money
Market Funds (defined below): (i) the Fund may not purchase more than 3% of the
total outstanding voting stock of another
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investment company; (ii) the Fund may not invest more than 5% of its total
assets in securities issued by another investment company; and (iii) the Fund
may not invest more than 10% of its total assets in securities issued by other
investment companies other than Affiliated Money Market Funds. With respect to
the Fund's purchase of shares of another investment company, including
Affiliated Money Market Funds, the Fund will indirectly bear its proportionate
share of the advisory fees and other operating expenses of such investment
company. The Fund has obtained an exemptive order from the SEC allowing it to
invest uninvested cash balances and cash collateral received in connection with
securities lending in money market funds that have AIM or an affiliate of AIM as
an investment advisor (the "Affiliated Money Market Funds"), provided that, with
respect to uninvested cash balances, investments in Affiliated Money Market
Funds do not exceed 25% of the total assets of the Fund.
TEMPORARY DEFENSIVE INVESTMENTS
In anticipation of or in response to adverse market conditions, for
cash management purposes, or for defensive purposes, the Fund may temporarily
hold all or a portion of its assets in cash, money market instruments, bonds, or
other debt securities. The Fund may also invest up to 25% of its total assets in
Affiliated Money Market Funds for these purposes.
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 the Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase.
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.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
The Fund may use forward contracts, futures contracts, options on
securities, options on indices, options on currencies, and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with the Fund's investments. These instruments
are often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities).
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Fund of options, futures contracts and forward currency
contracts involves special considerations and risks, as described below. Risks
pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability
to correctly predict the direction of changes in the value of the applicable
markets and securities, contracts and/or currencies. While AIM is experienced in
the use of these instruments, there can be no assurance that any particular
hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between the price movements of an instrument (such as a option contract) and the
price movements of the investments being hedged. For
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example, if a "protective put" is used to hedge a potential decline in a
security and the security does decline in price, the put option's increased
value may not completely offset the loss in the underlying security. Such a lack
of correlation might occur due to factors unrelated to the value of the
investments being hedged, such as changing interest rates, market liquidity, and
speculative or other pressures on the markets in which the hedging instrument is
traded.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for
any particular option, futures contract, forward contract or option thereon at
any particular time.
(5) As described below, the Fund is required to maintain assets as
"cover," and might be required to maintain segregated accounts or make margin
payments when it takes positions in instruments involving obligations to third
parties. If the Fund were unable to close out its positions in such instruments,
it might be required to continue to maintain such assets or accounts or make
such payments until the position expired or matured. The requirements might
impair the Fund's ability to sell a portfolio security or make an investment at
a time when it would otherwise be favorable to do so, or require that the Fund
sell a portfolio security at a disadvantageous time.
(6) There is no assurance that the Fund will use hedging transactions.
For example, if the Fund determines that the cost of hedging will exceed the
potential benefit to the Fund, the Fund will not enter into such transaction.
COVER
Transactions using forward contracts, futures contracts and options
(other than options purchased by the Fund) expose the Fund to an obligation to
another party. The Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options, forward contracts or futures contracts or (2) cash, liquid assets
and/or short-term debt securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. The Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities. To the extent that a
futures contract, forward contract or option is deemed to be illiquid, the
assets used to "cover" the Fund's obligation will also be treated as illiquid
for purposes of determining the Fund's maximum allowable investment in illiquid
securities.
Even though options purchased by the Fund does not expose the Fund to
an obligation to another party, but rather provide the Fund with a right to
exercise, the Fund intends to "cover" the cost of any such exercise. To the
extent that a purchased option is deemed illiquid, the Fund will treat the
market value of the option (i.e., the amount at risk to the Fund) as illiquid,
but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the
corresponding forward contract, futures contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of the Fund's
assets is used for cover or otherwise set aside, it could affect portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
WRITING CALL OPTIONS
The Fund may write (sell) covered call options on securities, futures
contracts, forward contracts, indices and currencies. As the writer of a call
option, the Fund would have the obligation to deliver the underlying security,
cash or currency (depending on the type of derivative) to the holder (buyer) at
a specified price (the exercise price) at any time until (American style) or on
(European style) a certain date (the expiration date). So long as the obligation
of the Fund continues, it may be assigned an exercise notice, requiring it to
deliver the underlying security, cash or currency against payment of the
exercise price. This obligation terminates upon the expiration of the call
option, or such earlier time at which the Fund effects a closing
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purchase transaction by purchasing an option identical to that previously sold.
When writing a call option the Fund, in return for the premium, gives
up the opportunity for profit from a price increase in the underlying security,
contract or currency above the exercise price, and retains the risk of loss
should the price of the security, contract or currency decline. Unlike one who
owns securities, contracts or currencies not subject to an option, the Fund has
no control over when it may be required to sell the underlying securities,
contracts or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that the Fund has written expires,
it will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security, contract or
currency during the option period. If the call option is exercised, the Fund
will realize a gain or loss from the sale of the underlying security, contract
or currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option.
Closing transactions may be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security, contract or currency
from being called or to permit the sale of the underlying security, contract or
currency. Furthermore, effecting a closing transaction will permit the Fund to
write another call option on the underlying security, contract or currency with
either a different exercise price or expiration date, or both.
WRITING PUT OPTIONS
The Fund may write (sell) covered put options on securities, futures
contracts, forward contracts, indices and currencies. As the writer of a put
option, the Fund would have the obligation to buy the underlying security,
contract or currency (depending on the type of derivative) at the exercise price
at any time until (American style) or on (European style) the expiration date.
This obligation terminates upon the expiration of the put option, or such
earlier time at which the Fund effects a closing purchase transaction by
purchasing an option identical to that previously sold.
The Fund would write a put option at an exercise price that, reduced by
the premium received on the option, reflects the lower price it is willing to
pay for the underlying security, contract or currency. The risk in such a
transaction would be that the market price of the underlying security, contract
or currency would decline below the exercise price less the premium received.
PURCHASING PUT OPTIONS
The Fund may purchase covered put options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a put
option, the Fund would have the right to sell the underlying security, contract
or currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise such option or permit such
option to expire.
The Fund may purchase a put option on an underlying security, contract
or currency ("protective put") owned by the Fund in order to protect against an
anticipated decline in the value of the security, contract or currency. Such
hedge protection is provided only during the life of the put option. The premium
paid for the put option and any transaction costs would reduce any profit
realized when the security, contract or currency is delivered upon exercise of
said option. Conversely, if the underlying security, contract or currency does
not decline in value, the option may expire worthless and the premium paid for
the protective put would be lost.
The Fund may also purchase put options on underlying securities,
contracts or currencies against which it has written other put options. For
example, where the Fund has written a "put option" on an underlying security,
rather than entering a closing transaction of the written option, it may
purchase a put option with a different exercise price and/or expiration date
that would eliminate some or all of the risk associated with the written put.
Used in combinations, these strategies are commonly referred to as put spreads.
Likewise, the Fund may write call options on underlying securities, contracts or
currencies against which it has purchased protective put options. This strategy
is commonly referred to as a "collar".
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PURCHASING CALL OPTIONS
The Fund may purchase covered call options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a call
option, the Fund would have the right to purchase the underlying security,
contract or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by the Fund for the purpose of acquiring
the underlying security, contract or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable the Fund to acquire the
security, contract or currency at the exercise price of the call option plus the
premium paid. So long as it holds such a call option, rather than the underlying
security or currency itself, the Fund is partially protected from any unexpected
decline in the market price of the underlying security, contract or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
The Fund may also purchase call options on underlying securities,
contracts or currencies against which it has written other call options. For
example, where the Fund has written a call option on an underlying security,
rather than entering a closing transaction of the written option, it may
purchase a call option with a different exercise price and/or expiration date
that would eliminate some or all of the risk associated with the written call.
Used in combinations, these strategies are commonly referred to as "call
spreads."
OVER-THE-COUNTER OPTIONS
Options may be either listed on an exchange or traded in
over-the-counter ("OTC") markets. Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices and
expiration dates. OTC options are two-party contracts with negotiated strike
prices and expiration dates. The Fund will not purchase an OTC option unless it
believes that daily valuations for such options are readily obtainable. OTC
options differ from exchange-traded options in that OTC options are transacted
with dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of an average
of the last bid prices obtained from dealers, unless a quotation from only one
dealer is available, in which case only that dealer's price will be used. In the
case of OTC options, there can be no assurance that a liquid secondary market
will exist for any particular option at any specific time. Although the Fund
will enter into OTC options only with dealers that are expected to be capable of
entering into closing transactions with it, there is no assurance that the Fund
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the dealer, the Fund might be
unable to close out an OTC option position at any time prior to its expiration.
The staff of the SEC considers purchased OTC options (i.e., the market
value of the option) to be illiquid securities. The Fund may sell OTC options
and, in connection therewith, segregate assets or cover its obligations with
respect to OTC options written by it. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
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INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities
or futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
movements in individual securities or futures contracts. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call or put times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will not be
perfectly correlated with the value of the index.
LIMITATIONS ON OPTIONS
The Fund will not write call options if, immediately after such sale,
the aggregate value of securities or obligations underlying the outstanding
options exceeds 20% of the Fund's total assets. The Fund will not purchase
options if, at any time of the investment, the aggregate premiums paid for the
options will exceed 5% of the Fund's total assets.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate, currency or stock index futures
contracts (collectively, "Futures" or "Futures Contracts") as a hedge against
changes in prevailing levels of interest rates, currency exchange rates or stock
price levels, respectively, in order to establish more definitely the effective
return on securities or currencies held or intended to be acquired by it. The
Fund's hedging may include sales of Futures as an offset against the effect of
expected increases in interest rates, and decreases in currency exchange rates
and stock prices, and purchases of Futures as an offset against the effect of
expected declines in interest rates, and increases in currency exchange rates or
stock prices.
A Futures Contract is a two party agreement to buy or sell a specified
amount of a specified security or currency (or delivery of a cash settlement
price, in the case of an index future) for a specified price at a designated
date, time and place. A stock index future provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading on the contract and the price agreed upon in the Futures Contract; no
physical delivery of stocks comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Future is outstanding.
The Fund will only enter into Futures Contracts that are traded (either
domestically or internationally) on futures exchanges and are standardized as to
maturity date and underlying financial instrument. Futures exchanges and trading
thereon in the United States are regulated under the Commodity Exchange Act and
by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges
and trading thereon are not regulated by the CFTC and are not subject to the
same regulatory controls. For a further discussion of the risks associated with
investments in foreign securities, see "Foreign Securities" in this Statement of
Additional Information.
Closing out an open Future is effected by entering into an offsetting
Future for the same aggregate amount of the identical financial instrument or
currency and the same delivery date. There can be no assurance, however, that
the Fund will be able to enter into an offsetting transaction with respect to a
particular Future at a particular time. If the Fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Future.
The Fund's Futures transactions will be entered into for hedging
purposes only; that is, Futures will be sold to protect against a decline in the
price of securities or currencies that the Fund owns, or Futures will
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<PAGE> 42
be purchased to protect the Fund against an increase in the price of securities
or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and maintain its open
positions in Futures. A margin deposit made when the Futures Contract is entered
("initial margin") is intended to ensure the Fund's performance under the
Futures Contract. The margin required for a particular Future is set by the
exchange on which the Future is traded and may be significantly modified from
time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures more or less valuable, a process known as
marking-to-market.
If the Fund were unable to liquidate a Future or an option on a Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account.
FORWARD CONTRACTS
A forward contract is an obligation, usually arranged with a commercial
bank or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. The Fund
either may accept or make delivery of the currency at the maturity of the
forward contract. The Fund may also, if its contra party agrees prior to
maturity, enter into a closing transaction involving the purchase or sale of an
offsetting contract. Forward contracts are traded over-the-counter, and not on
organized commodities or securities exchanges. As a result, it may be more
difficult to value such contracts, and it may be difficult to enter into closing
transactions.
The Fund may engage in forward currency transactions in anticipation
of, or to protect itself against, fluctuations in exchange rates. The Fund may
enter into forward contracts with respect to a specific purchase or sale of a
security, or with respect to its portfolio positions generally. When the Fund
purchases a security denominated in a foreign currency for settlement in the
near future, it may immediately purchase in the forward market the currency
needed to pay for and settle the purchase. By entering into a forward contract
with respect to the specific purchase or sale of a security denominated in a
foreign currency, the Fund can secure an exchange rate between the trade and
settlement dates for that purchase or sale transaction. This practice is
sometimes referred to as "transaction hedging." Position hedging is the purchase
or sale of foreign currency with respect to portfolio security positions
denominated or quoted in a foreign currency.
The cost to the Fund of engaging in forward contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of forward contracts does not eliminate fluctuations in the prices of the
underlying securities the Fund owns or intends to acquire, but it does establish
a rate of exchange in advance. In addition, while forward contract sales limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
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LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on
Futures Contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the total assets of the Fund, after taking into account unrealized
profits and unrealized losses on any contracts it has entered into. This
guideline may be modified by the Board of Trustees, without a shareholder vote.
This limitation does not limit the percentage of the Fund's assets at risk to
5%.
INVESTMENT RESTRICTIONS
The Fund is subject to the following investment restrictions, which may
be changed only by a vote of a majority of the Fund's outstanding shares.
Fundamental restrictions may be changed only by a vote of the lesser of (i) 67%
or more of the Fund's shares present at a meeting if the holders of more than
50% of the outstanding shares are present in person or represented by proxy, or
(ii) more than 50% of the Fund's outstanding shares. Any investment restriction
that involves a maximum or minimum percentage of securities or assets shall not
be considered to be violated unless an excess over or a deficiency under the
percentage occurs immediately after, and is caused by, an acquisition or
disposition of securities or utilization of assets by the Fund.
FUNDAMENTAL RESTRICTIONS
(1) The Fund is a "diversified company" as defined in the 1940
Act. The Fund will not purchase the securities of any issuer if, as a
result, the Fund would fail to be a diversified company within the
meaning of the 1940 Act, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from time
to time or are interpreted from time to time by the SEC staff
(collectively, the "1940 Act Laws and Interpretations") or except to the
extent that the Fund may be permitted to do so by exemptive order or
similar relief (collectively, with the 1940 Act Laws and
Interpretations, the "1940 Act Laws, Interpretations and Exemptions").
In complying with this restriction, however, the Fund may purchase
securities of other investment companies to the extent permitted by the
1940 Act Laws, Interpretations and Exemptions.
(2) The Fund may not borrow money or issue senior securities,
except as permitted by the 1940 Act Laws, Interpretations and
Exemptions.
(3) The Fund may not underwrite the securities of other
issuers. This restriction does not prevent the Fund from engaging in
transactions involving the acquisition, disposition or resale of its
portfolio securities, regardless of whether the Fund may be considered
to be an underwriter under the Securities Act of 1933.
(4) The Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940
Act Laws, Interpretations and Exemptions) of its investments in the
securities of issuers primarily engaged in the same industry. This
restriction does not limit the Fund's investments in (i) obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or (ii) tax-exempt obligations issued by governments
or political subdivisions of governments. In complying with this
restriction, the Fund will not consider a bank-issued guaranty or
financial guaranty insurance as a separate security.
(5) The Fund may not purchase real estate or sell real estate
unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the Fund from investing
in issuers that invest, deal, or otherwise engage in transactions in
real estate or interests therein, or investing in securities that are
secured by real estate or interests therein.
(6) The Fund may not purchase physical commodities or sell
physical commodities unless acquired as a result of ownership of
securities or other instruments. This restriction does not prevent
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<PAGE> 44
the Fund from engaging in transactions involving futures contracts and
options thereon or investing in securities that are secured by physical
commodities.
(7) The Fund may not make personal loans or loans of its
assets to persons who control or are under common control with the Fund,
except to the extent permitted by 1940 Act Laws, Interpretations and
Exemptions. This restriction does not prevent the Fund from, among other
things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and
participation interests.
The investment restrictions set forth above provide the Fund with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Fund has this flexibility, the Board of Trustees has
adopted non-fundamental restrictions for the Fund relating to certain of these
restrictions which the advisor must follow in managing the Fund. Any changes to
these non-fundamental restrictions, which are set forth below, require the
approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS
The following non-fundamental investment restrictions apply to the
Fund. They may be changed for the Fund without approval of the Fund's voting
securities.
(1) In complying with the fundamental restriction regarding
issuer diversification, the Fund will not, with respect to 75% of its
total assets, purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities), if, as a result, (i) more than 5% of the
Fund's total assets would be invested in the securities of that issuer
or (ii) the Fund would hold more than 10% of the outstanding voting
securities of that issuer. The Fund may (i) purchase securities of other
investment companies as permitted by Section 12(d)(1) of the 1940 Act
and (ii) invest its assets in securities of other money market Funds and
lend money to other investment companies or their series portfolios that
have AIM or an affiliate of AIM as an investment advisor (an "AIM
Advised Fund"), subject to the terms and conditions of any exemptive
orders issued by the SEC.
(2) In complying with the fundamental restriction regarding
borrowing money and issuing senior securities, the Fund may borrow money
in an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). The Fund may
borrow from banks, broker-dealers or an AIM Advised Fund. The Fund may
not borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The Fund may not purchase
additional securities when any borrowings from banks exceed 5% of the
Fund's total assets.
(3) In complying with the fundamental restriction regarding
industry concentration, the Fund may invest up to 25% of its total
assets in the securities of issuers whose principal business activities
are in the same industry.
(4)In complying with the fundamental restriction with regard
to making loans, the Fund may lend up to 33 1/3% of its total assets and
may lend money to another AIM Advised Fund, on such terms and conditions
as the SEC may require in an exemptive order.
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, 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
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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 BFDS,
P.O. Box 8300, Boston, Massachusetts 02266-8300, Attention: AIM Summit Fund, 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 the 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 determining the portion
of its net investment income and capital gain net income that has been
distributed. If the Fund 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 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.
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<PAGE> 46
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, the 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 the
Fund on the lapse of, or any gain or loss recognized by the 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 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 the 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, the 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.
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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), the 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.
The Fund may either retain or distribute to shareholders its net
capital gain (net long-term capital gain over net short-term loss) 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% to non-corporate shareholders), 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.
Investment income that may be received by the Fund 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 the Fund 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 the Fund's assets to be invested in various countries is not
known.
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
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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 he 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 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
34
<PAGE> 49
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 April 19, 2000. 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 shares of the Fund and the methods of
accomplishing redemption are set forth in full in the Fund's Prospectus and in
the Plans I or Plans II Prospectus.
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 once daily as of the close of the
customary trading session 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 trading
35
<PAGE> 50
on 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 the customary trading
session 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, prior to the determination of net
asset value. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued 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 Trustees 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 Trustees.
THE DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act (the "Distribution Plan"). The Distribution Plan provides that the
Fund pay 0.30% per annum of its average daily net assets as compensation to AIM
Distributors for payments made to others who provide shareholder services and
for marketing and distribution activities which are primarily intended to result
in the sale of the shares of the Fund. AIM Distributors has contractually
agreed, however, to waive a portion of the fees otherwise payable to it under
the Distribution Plan, based upon the extent to which shares of the Fund are
held by Plans I. As a result of this waiver, Distribution Plan fees will accrue
at the rate of 0.10% per annum of the average daily net assets of shares held by
Plans I, and will accrue at the rate of 0.30% per annum of the average daily net
assets of the shares of the fund held by all other shareholders. Accruing fees
at two different rates will result in a "blended" distribution fee that will be
payable from all assets of the Fund. AIM Distributors may not revoke ore revise
its contractual waiver of distribution fees without approval of shareholders of
the Fund.
The Distribution Plan is designed to implement a program which provides
for periodic payments to selected dealers who furnish continuing personal
shareholder services to their customers who purchase and own the shares of the
Fund and to compensate AIM Distributors for promotional and other sales-related
costs.
36
<PAGE> 51
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 shares of the Fund 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 Fund; 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 shares
of the Fund; 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 shares
of the Fund; and providing such other information and services as the Fund or
the customer may reasonably request.
Distribution activities appropriate for financing under the Distribution
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 Distribution Plan.
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. 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 shares of the Fund are held.
The Distribution Plan is subject to limitations imposed by NASD
Regulation, Inc. If a dealer or financial institution provides personal services
to a beneficial owner of Class I Shares, the payments the dealer or financial
institution receives for those services pursuant to the Distribution Plan are
characterized as services fees. Service fees received by a dealer or financial
institution may not exceed 0.25% per annum of the average net assets of the fund
attributable to its customers. Any fees the dealer or financial institution
receives in excess of that amount are characterized as asset-based sales
charges. AIM Distributors does not act as principal, but rather as agent for the
Fund, in making dealer incentive and shareholder servicing payments under the
Distribution Plan. These payments are an obligation of the Fund and not of AIM
Distributors.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for the Fund. Voluntary fee waivers or reductions may be rescinded
at any time without further notice to investors. During periods of voluntary fee
waivers or reductions, AIM Distributors will retain its ability to be reimbursed
for such fee prior to the end of each fiscal year. Contractual fee waivers or
reductions set forth in the Fee Table in the Prospectus may not be terminated or
amended to the Fund's detriment during the period stated in the agreement
between AIM Distributors and the Fund.
The Distribution Plan requires AIM Distributors to provide the Board of
Trustees at least quarterly with a written report of the amounts expended
pursuant to the Distribution Plan and the purposes for which such expenditures
were made. The Board of Trustees reviews these reports in connection with their
decisions with respect to the Distribution Plan.
For the period July 19, 1999 (date sales of shares of the Fund subject
to the Distribution Plan commenced) to October 31, 1999, the Fund's predecessor
paid AIM Distributors under the Distribution Plan $195, or an amount equal to
0.30%, of the shares of the Fund subject to the Distribution Plan's average
daily net assets on an annualized basis.
An estimate by category of actual fees paid by the Fund's predecessor
during the period July 19, 1999 (date sales of shares of the Fund subject to the
Distribution Plan commenced) through October 31, 1999, were allocated as
follows:
37
<PAGE> 52
<TABLE>
<S> <C>
Advertising $24
Printing and mailing prospectuses, semi-annual 2
reports and annual reports (other than to current
shareholders)
Seminars 0
Compensation to Underwriters to partially 0
offset other marketing expenses
Compensation to Dealers including 6
finder's fees
Compensation to Sales Personnel 0
Annual Report Total 32
</TABLE>
As required by Rule 12b-1, the Distribution Plan and related form of
Shareholder Service Agreement were approved by the Board of Trustees, including
a majority of the trustees who are not "interested persons" (as defined in the
1940 Act) of the Fund and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in any agreements related to the
Distribution Plan ("Non-Interested Trustees"). In approving the Distribution
Plan in accordance with the requirements of Rule 12b-1, the trustees considered
various factors and determined that there is a reasonable likelihood that the
Distribution Plan would benefit the Fund and its respective shareholders.
The Distribution Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Distribution 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 Distribution Plan is terminated earlier in accordance with
its terms, the Distribution Plan continues as long as such continuance is
specifically approved at least annually by the Board of Trustees, including a
majority of the Non-Interested Trustees.
The Distribution Plan may be terminated by the vote of a majority of the
Non-Interested Trustees, or by the majority of the outstanding voting
securities.
Any change in the Distribution Plan that would increase materially the
distribution expenses paid by the Fund's shareholders requires shareholder
approval; otherwise, it may be amended by the trustees, including a majority of
the Non-Interested Trustees, by votes cast in person at a meeting called for the
purpose of voting upon such amendment. As long as the Distribution Plan is in
effect, the selection or nomination of the Non-Interested Trustees is committed
to the discretion of the Non-Interested Trustees.
THE DISTRIBUTION AGREEMENT
The Fund has entered into a Distribution Agreement (the "Distribution
Agreement") with AIM Distributors, Inc. ("AIM Distributors"), a registered
broker-dealer and a wholly owned subsidiary of AIM, under which the Fund will
issue shares at net asset value primarily to State Street Bank, as custodian for
the Plans. The address of AIM Distributors is P.O. Box 4264, Houston, Texas
77210-4264. AIM Distributors acts as sponsor and principal underwriter of the
Plans. 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 terminate the
Distribution Agreement on 60 days' written notice without penalty. The
Distribution Agreement
38
<PAGE> 53
will terminate automatically in the event of its assignment. Certain trustees
and officers of the Fund are affiliated with AIM Distributors and AIM
Management.
MISCELLANEOUS INFORMATION
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to A I M Fund Services, Inc. by calling (800) 995-4246.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market
Street, Philadelphia, Pennsylvania 19103, serves as counsel to the Fund and
passes upon legal matters for the Fund.
39
<PAGE> 54
FINANCIAL STATEMENTS
FS
<PAGE> 55
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Summit Fund, Inc:
We have audited the accompanying statement of assets and
liabilities of the AIM Summit Fund, Inc., including the
schedule of investments, as of October 31, 1999, the
related statement of operations for the year then ended,
the statement of changes in net assets for each of the
years in the two-year period then ended, and financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Summit
Fund, Inc. as of October 31, 1999, and the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-1
<PAGE> 56
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-96.11%
AUTO PARTS & EQUIPMENT-0.13%
SPX Corp.(a) 40,000 $ 3,390,000
- ---------------------------------------------------------------
AUTOMOBILES-0.99%
Ford Motor Co. 225,000 12,346,875
- ---------------------------------------------------------------
Porsche A.G., Pfd. (Germany) 5,000 13,624,047
- ---------------------------------------------------------------
25,970,922
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.80%
Fleet Boston Corp. 400,000 17,450,000
- ---------------------------------------------------------------
Northern Trust Corp. 36,000 3,476,250
- ---------------------------------------------------------------
20,926,250
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-0.44%
Chase Manhattan Corp. (The) 133,500 11,664,562
- ---------------------------------------------------------------
BIOTECHNOLOGY-2.39%
Amgen, Inc.(a) 220,000 17,545,000
- ---------------------------------------------------------------
Biogen, Inc.(a) 350,000 25,943,750
- ---------------------------------------------------------------
Celera Genomics(a) 5,950 232,794
- ---------------------------------------------------------------
Genzyme Corp.(a) 500,000 19,125,000
- ---------------------------------------------------------------
62,846,544
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.84%
AT&T Corp.-Liberty Media
Group-Class A(a) 250,000 9,921,875
- ---------------------------------------------------------------
Comcast Corp.-Class A 200,000 8,425,000
- ---------------------------------------------------------------
USA Networks, Inc.(a) 80,500 3,627,531
- ---------------------------------------------------------------
21,974,406
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-11.99%
General Instrument Corp.(a) 250,000 13,453,125
- ---------------------------------------------------------------
JDS Uniphase Corp.(a) 660,000 110,137,500
- ---------------------------------------------------------------
Lucent Technologies Inc. 500,000 32,125,000
- ---------------------------------------------------------------
Motorola, Inc. 700,000 68,206,250
- ---------------------------------------------------------------
Nokia Oyj-ADR (Finland) 400,000 46,225,000
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Sweden) 600,000 25,650,000
- ---------------------------------------------------------------
Tellabs, Inc.(a) 300,000 18,975,000
- ---------------------------------------------------------------
314,771,875
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-2.39%
International Business Machines
Corp. 475,000 46,728,125
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 150,000 15,871,875
- ---------------------------------------------------------------
62,600,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (NETWORKING)-4.67%
Cisco Systems, Inc.(a) 1,200,000 $ 88,800,000
- ---------------------------------------------------------------
Exodus Communications, Inc.(a) 250,000 21,500,000
- ---------------------------------------------------------------
VeriSign, Inc.(a) 100,000 12,350,000
- ---------------------------------------------------------------
122,650,000
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-3.68%
Adaptec, Inc.(a) 527,000 23,715,000
- ---------------------------------------------------------------
EMC Corp.(a) 1,000,000 73,000,000
- ---------------------------------------------------------------
96,715,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-17.42%
America Online, Inc.(a) 860,000 111,531,250
- ---------------------------------------------------------------
Computer Associates
International, Inc. 540,000 30,510,000
- ---------------------------------------------------------------
eBay, Inc.(a) 250,000 33,781,250
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 300,000 12,093,750
- ---------------------------------------------------------------
Inktomi Corp.(a) 330,000 33,474,375
- ---------------------------------------------------------------
Intuit, Inc.(a) 600,000 17,475,000
- ---------------------------------------------------------------
Lycos, Inc.(a) 430,000 23,005,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 1,040,000 96,265,000
- ---------------------------------------------------------------
RealNetworks, Inc.(a) 200,000 21,937,500
- ---------------------------------------------------------------
Unisys Corp.(a) 450,000 10,912,500
- ---------------------------------------------------------------
VERITAS Software Corp.(a) 200,000 21,575,000
- ---------------------------------------------------------------
Yahoo! Inc.(a) 250,000 44,765,625
- ---------------------------------------------------------------
457,326,250
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.54%
McKesson HBOC, Inc. 710,000 14,244,375
- ---------------------------------------------------------------
ELECTRIC COMPANIES-2.05%
Illinova Corp. 415,000 13,202,187
- ---------------------------------------------------------------
Niagara Mohawk Holdings, Inc.(a) 1,185,000 18,811,875
- ---------------------------------------------------------------
Texas Utilities Co. 560,000 21,700,000
- ---------------------------------------------------------------
53,714,062
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.80%
American Power Conversion
Corp.(a) 200,000 4,487,500
- ---------------------------------------------------------------
General Electric Co. 150,000 20,334,375
- ---------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V.-ADR
(Netherlands) 178,000 18,500,875
- ---------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 57
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
Sanmina Corp.(a) 45,000 $ 4,052,812
- ---------------------------------------------------------------
47,375,562
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.70%
Alpha Industries, Inc.(a) 100,000 5,525,000
- ---------------------------------------------------------------
PE Corp-PE Biosystems Group 23,800 1,544,025
- ---------------------------------------------------------------
Waters Corp.(a) 212,000 11,262,500
- ---------------------------------------------------------------
18,331,525
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-6.36%
Analog Devices, Inc.(a) 150,000 7,968,750
- ---------------------------------------------------------------
Broadcom Corp.-Class A(a) 380,000 48,568,750
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 157,000 12,393,187
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 134,300 8,947,737
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 600,000 56,550,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 260,000 23,335,000
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 200,000 9,175,000
- ---------------------------------------------------------------
166,938,424
- ---------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.30%
McDermott International, Inc. 435,000 7,884,375
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.14%
KLA-Tencor Corp.(a) 45,000 3,563,437
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-3.54%
American Express Co. 44,000 6,776,000
- ---------------------------------------------------------------
Associates First Capital
Corp.-Class A 117,938 4,304,737
- ---------------------------------------------------------------
Citigroup, Inc. 510,000 27,603,750
- ---------------------------------------------------------------
Fannie Mae 104,600 7,400,450
- ---------------------------------------------------------------
Freddie Mac 280,000 15,137,500
- ---------------------------------------------------------------
MGIC Investment Corp. 530,000 31,667,500
- ---------------------------------------------------------------
92,889,937
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-0.20%
Abbott Laboratories 127,000 5,127,625
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.24%
Watson Pharmaceuticals, Inc.(a) 200,000 6,350,000
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-0.90%
Lilly (Eli) & Co. 76,800 5,289,600
- ---------------------------------------------------------------
Pfizer, Inc. 270,000 10,665,000
- ---------------------------------------------------------------
Schering-Plough Corp. 155,200 7,682,400
- ---------------------------------------------------------------
23,637,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (HOSPITAL
MANAGEMENT)-1.03%
Health Management Associates,
Inc.-Class A(a) 3,060,000 $ 27,157,500
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM
CARE)-0.47%
Manor Care, Inc.(a) 780,000 12,285,000
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-1.04%
United Healthcare Corp. 530,000 27,394,375
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.74%
Beckman Coulter, Inc. 330,000 15,180,000
- ---------------------------------------------------------------
Guidant Corp. 620,000 30,612,500
- ---------------------------------------------------------------
45,792,500
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.93%
AXA Financial, Inc. 508,000 16,287,750
- ---------------------------------------------------------------
UnumProvident Corp. 250,000 8,234,375
- ---------------------------------------------------------------
24,522,125
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.03%
American International Group,
Inc. 261,937 26,963,140
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.48%
XL Capital Ltd.-Class A 235,000 12,616,562
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-1.74%
Lehman Brothers Holdings, Inc. 40,000 2,947,500
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 154,000 16,988,125
- ---------------------------------------------------------------
Schwab (Charles) Corp. (The) 660,000 25,698,750
- ---------------------------------------------------------------
45,634,375
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.78%
Mattel, Inc. 1,540,000 20,597,500
- ---------------------------------------------------------------
LODGING-HOTELS-0.46%
Carnival Corp. 272,000 12,104,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.64%
Tyco International Ltd. 200,000 7,987,500
- ---------------------------------------------------------------
United Technologies Corp. 145,000 8,772,500
- ---------------------------------------------------------------
16,760,000
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.61%
Parker Hannifin Corp. 350,000 16,034,375
- ---------------------------------------------------------------
NATURAL GAS-0.47%
Coastal Corp. (The) 293,600 12,367,900
- ---------------------------------------------------------------
OIL & GAS (DRILLING &
EQUIPMENT)-2.06%
Diamond Offshore Drilling, Inc. 380,000 12,065,000
- ---------------------------------------------------------------
</TABLE>
FS-3
<PAGE> 58
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
ENSCO International, Inc. 580,000 $ 11,237,500
- ---------------------------------------------------------------
Schlumberger Ltd. 260,000 15,746,250
- ---------------------------------------------------------------
Transocean Offshore, Inc. 555,000 15,089,063
- ---------------------------------------------------------------
54,137,813
- ---------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-0.70%
Atlantic Richfield Co. 142,000 13,232,625
- ---------------------------------------------------------------
USX-Marathon Group 175,500 5,111,438
- ---------------------------------------------------------------
18,344,063
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-1.12%
Georgia Pacific Group 380,000 15,081,250
- ---------------------------------------------------------------
International Paper Co. 270,000 14,208,750
- ---------------------------------------------------------------
29,290,000
- ---------------------------------------------------------------
PUBLISHING-0.68%
Dow Jones & Co., Inc. 194,000 11,931,000
- ---------------------------------------------------------------
McGraw-Hill Cos., Inc. (The) 60,000 3,577,500
- ---------------------------------------------------------------
Reader's Digest Association,
Inc.-Class A 75,000 2,418,750
- ---------------------------------------------------------------
17,927,250
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-0.50%
Starwood Hotels & Resorts
Worldwide, Inc. 575,000 13,189,063
- ---------------------------------------------------------------
RESTAURANTS-0.10%
Tricon Global Restaurants,
Inc.(a) 65,000 2,612,188
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.58%
Home Depot, Inc. (The) 200,000 15,100,000
- ---------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-1.45%
Best Buy Co., Inc.(a) 544,800 30,270,450
- ---------------------------------------------------------------
Circuit City Stores-Circuit City
Group 180,000 7,683,750
- ---------------------------------------------------------------
37,954,200
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-1.38%
Federated Department Stores,
Inc.(a) 440,000 18,782,500
- ---------------------------------------------------------------
Kohl's Corp.(a) 100,000 7,481,250
- ---------------------------------------------------------------
Saks, Inc.(a) 575,000 9,882,813
- ---------------------------------------------------------------
36,146,563
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.18%
Family Dollar Stores, Inc. 225,000 4,640,625
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.44%
Kroger Co. (The)(a) 551,000 11,467,688
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-1.58%
Dayton Hudson Corp. 289,000 18,676,625
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE)-(CONTINUED)
Wal-Mart Stores, Inc. 400,000 $ 22,675,000
- ---------------------------------------------------------------
41,351,625
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.44%
Bed Bath & Beyond, Inc.(a) 225,000 7,495,313
- ---------------------------------------------------------------
Linens 'n Things, Inc.(a) 100,000 3,975,000
- ---------------------------------------------------------------
11,470,313
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.15%
Abercrombie & Fitch Co.-Class
A(a) 86,000 2,343,500
- ---------------------------------------------------------------
American Eagle Outfitters,
Inc.(a) 275,000 11,773,438
- ---------------------------------------------------------------
Gap, Inc. (The) 150,000 5,568,750
- ---------------------------------------------------------------
Intimate Brands, Inc. 81,270 3,332,070
- ---------------------------------------------------------------
Talbots, Inc. (The) 150,000 7,059,375
- ---------------------------------------------------------------
30,077,133
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.99%
Omnicom Group, Inc. 150,000 13,200,000
- ---------------------------------------------------------------
Outdoor Systems, Inc.(a) 300,000 12,712,500
- ---------------------------------------------------------------
25,912,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.45%
Cintas Corp. 123,700 7,452,925
- ---------------------------------------------------------------
Gartner Group, Inc.-Class B(a) 7,812 73,238
- ---------------------------------------------------------------
IMS Health, Inc. 60,000 1,740,000
- ---------------------------------------------------------------
Viad Corp. 100,000 2,456,250
- ---------------------------------------------------------------
11,722,413
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.13%
Brocade Communications Systems,
Inc.(a) 110,000 29,590,000
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.66%
Concord EFS, Inc.(a) 450,000 12,178,125
- ---------------------------------------------------------------
First Data Corp. 480,000 21,930,000
- ---------------------------------------------------------------
National Data Corp. 80,000 1,920,000
- ---------------------------------------------------------------
Paychex, Inc. 192,037 7,561,457
- ---------------------------------------------------------------
43,589,582
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.81%
Western Wireless Corp.-Class A(a) 400,000 21,150,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-2.65%
AT&T Corp. 355,000 16,596,250
- ---------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 700,000 16,756,250
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a) 422,926 36,292,337
- ---------------------------------------------------------------
69,644,837
- ---------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 59
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE-1.59%
Bell Atlantic Corp. 200,000 $ 12,987,500
- ---------------------------------------------------------------
Qwest Communications
International, Inc.(a) 800,000 28,800,000
- ---------------------------------------------------------------
41,787,500
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.54%
Waste Management, Inc. 778,000 14,295,750
- ---------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$1,615,087,599) 2,522,522,589
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE BONDS & NOTES-0.87%
COMPUTERS (PERIPHERALS)-0.36%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 $ 1,450,000 9,348,875
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-0.51%
Level 3 Communications Inc.,
Conv. Bonds, 6.00%, 09/15/09 $11,000,000 $ 13,530,000
- ---------------------------------------------------------------
Total Convertible Bonds &
Notes (Cost $12,998,720) 22,878,875
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-3.46%
STIC Liquid Assets Portfolio(b) 45,440,308 45,440,308
- ---------------------------------------------------------------
STIC Prime Portfolio(b) 45,440,308 45,440,308
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $90,880,616) 90,880,616
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.44% 2,636,282,080
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.44%) (11,667,071)
- ---------------------------------------------------------------
NET ASSETS-100.00% $2,624,615,009
===============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
Sub. - Subordinated
Notes to Schedule of Investment:
(a)
Non-income producing security.
(b)
The security shares the same
investment advisor as the Fund.
See Notes to Financial Statements.
FS-5
<PAGE> 60
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,718,966,935) $2,636,282,080
- -------------------------------------------------------------
Receivables for:
Capital stock sold 99,498
- -------------------------------------------------------------
Dividends and interest 1,053,988
- -------------------------------------------------------------
Investment for deferred compensation plan 48,076
- -------------------------------------------------------------
Other assets 12,253
- -------------------------------------------------------------
Total assets 2,637,495,895
- -------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 10,772,227
- -------------------------------------------------------------
Capital stock reacquired 469,021
- -------------------------------------------------------------
Deferred compensation 48,076
- -------------------------------------------------------------
Accrued advisory fees 1,342,674
- -------------------------------------------------------------
Accrued administrative services fees 10,000
- -------------------------------------------------------------
Accrued directors' fees 1,448
- -------------------------------------------------------------
Accrued operating expenses 237,440
- -------------------------------------------------------------
Total liabilities 12,880,886
- -------------------------------------------------------------
Net assets applicable to shares outstanding $2,624,615,009
=============================================================
NET ASSETS:
Class I $2,623,900,667
- -------------------------------------------------------------
Class II $ 714,342
- -------------------------------------------------------------
Capital stock, $0.01 par value per share:
Class I:
Authorized 1,000,000,000
- -------------------------------------------------------------
Outstanding 130,118,500
=============================================================
Class II
Authorized 1,000,000,000
- -------------------------------------------------------------
Outstanding 35,504
=============================================================
Class I
Net asset value and redemption price per
share $ 20.17
=============================================================
Class II
Net asset value and redemption price per
share $ 20.12
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $72,416 foreign withholding
tax) $ 10,836,685
- ------------------------------------------------------------
Interest 4,978,635
- ------------------------------------------------------------
Total investment income 15,815,320
- ------------------------------------------------------------
EXPENSES:
Advisory fees 15,096,393
- ------------------------------------------------------------
Administrative services fees 114,068
- ------------------------------------------------------------
Custodian fees 231,799
- ------------------------------------------------------------
Directors' fees 22,879
- ------------------------------------------------------------
Transfer agent fees 49,863
- ------------------------------------------------------------
Other 467,498
- ------------------------------------------------------------
Total expenses 15,982,500
- ------------------------------------------------------------
Less: Expenses paid indirectly (28,145)
- ------------------------------------------------------------
Net expenses 15,954,355
- ------------------------------------------------------------
Net investment income (loss) (139,035)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 418,809,758
- ------------------------------------------------------------
Foreign currencies (275,578)
- ------------------------------------------------------------
418,534,180
============================================================
CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) OF:
Investment securities 367,179,343
- ------------------------------------------------------------
Foreign currencies (3,322)
============================================================
367,176,021
============================================================
Net gain from investment securities and
foreign currencies 785,710,201
============================================================
Net increase in net assets resulting from
operations $785,571,166
============================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 61
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (139,035) $ 4,083,684
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities foreign
currencies, futures and options contracts 418,534,180 123,367,355
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 367,176,021 30,378,725
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 785,571,166 157,829,764
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment
income-Class I (4,242,441) (1,659,397)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains-Class I (112,082,098) (156,547,424)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
- ----------------------------------------------------------------------------------------------
Class I 124,655,784 180,175,249
- ----------------------------------------------------------------------------------------------
Class II 680,370 --
- ----------------------------------------------------------------------------------------------
Net increase in net assets 794,582,781 179,798,192
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,830,032,228 1,650,234,036
- ----------------------------------------------------------------------------------------------
End of period $2,624,615,009 $1,830,032,228
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,290,320,756 $1,158,384,602
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (94,294) 4,164,155
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 417,073,402 117,344,347
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 917,315,145 550,139,124
- ----------------------------------------------------------------------------------------------
$2,624,615,009 $1,830,032,228
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-7
<PAGE> 62
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Summit Fund, Inc. (the "Fund") is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified, open-end management investment company. The Fund consists of two
classes of shares: Class I shares and Class II shares. Class II shares commenced
sales on July 19, 1999. The Fund's investment objective is growth of capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair value
as determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased by
$123,027, undistributed net realized gains decreased by $6,723,027 and
paid-in capital increased by $6,600,000 as a result of differing book/tax
treatment of foreign currency transactions, equalization credits and net
operating loss reclassifications in order to comply with the requirements of
the American Institute of Certified Public Accountants of Position 93-2. Net
assets of the Fund were unaffected by the reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
D. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a
FS-8
<PAGE> 63
foreign currency in order to "lock in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value of
the foreign currency changes unfavorably.
F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
G. Expenses -- Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the first $10 million of the Fund's average daily net assets, plus 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. Prior to June 30,
1999, AIM had a sub-advisory agreement with TradeStreet Investment Associates,
("TradeStreet").
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $114,068 for such services.
The Fund has entered into a Distribution Agreement with A I M Distributors,
Inc. ("AIM Distributors") to serve as the distributor for the Fund. The Fund has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class II shares (the "Distribution Plan"). The Fund , pursuant to the
Distribution Plan, pays AIM Distributors compensation at the annual rate of
0.30% of the Fund's average daily net assets of Class II shares. Of this amount,
the Fund may pay a service fee of 0.25% of the average daily net assets of Class
II shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class II
shares of the Fund. Any amounts not paid as a service fee under the Distribution
Plan would constitute an asset-based sales charge. The Distribution Plan also
imposes a cap on the total sales charges, including asset-based sales charges
that may be paid by the Class II shares. During the period July 19, 1999 (date
sales commenced) through October 31, 1999, the Class II shares paid AIM
Distributors $195 as compensation under the Plans.
During the year ended October 31, 1999, the Fund paid legal fees of $8,316 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Company's directors. A member of that firm is a director of the Company.
Substantially all shares of the Fund are held of record by State Street Bank
and Trust Company as custodian for AIM Summit Investors Plans I and II, unit
investments trusts that are sponsored by AIM Distributors. Certain officers and
directors of the Fund are officers of AIM and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended October 31, 1999, the Fund received reductions in
custodian fees of $28,145 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$28,145 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1999 was
$2,104,224,796 and $2,129,918,843, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $973,683,957
- ---------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (65,121,247)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $908,562,710
=========================================================
</TABLE>
* Cost of investments for tax purposes is $1,727,719,370.
FS-9
<PAGE> 64
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class I 13,483,892 $ 237,827,156 13,962,660 $ 208,683,626
- -----------------------------------------------------------------------------------------------------------------------
Class II* 36,977 708,414 -- --
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class I 7,006,133 112,308,495 11,672,671 154,897,796
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class I (12,707,834) (225,479,867) (12,194,909) (183,406,173)
- -----------------------------------------------------------------------------------------------------------------------
Class II* (1,473) (28,044) -- --
- -----------------------------------------------------------------------------------------------------------------------
7,817,695 $ 125,336,154 13,440,422 $ 180,175,249
=======================================================================================================================
</TABLE>
* Class II shares commenced sales on July 19, 1999.
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the five-year period ended October 31,
1999 for Class I shares and for the period July 19, 1999 (date sales commenced)
through October 31, 1999 for Class II shares.
<TABLE>
<CAPTION>
CLASS II
JULY 19, 1999
CLASS I TO
---------------------------------------------------------------- OCTOBER 31,
1999 1998 1997 1996 1995 1999
---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.96 $ 15.15 $ 12.99 $ 12.14 $ 9.78 $20.68
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Income from investment operations:
Net investment income -- 0.03 0.02 0.04 0.04 --
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Net gains (losses) on securities (both
realized and unrealized) 6.16 1.23 3.34 1.69 2.81 (0.56)
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Total from investment operations 6.16 1.26 3.36 1.73 2.85 (0.56)
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Less distributions:
Dividends from net investment income (0.04) (0.02) (0.03) (0.03) (0.10) --
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Distributions from net realized gains (0.91) (1.43) (1.17) (0.85) (0.39) --
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Total distributions (0.95) (1.45) (1.20) (0.88) (0.49) --
- ----------------------------------------------- ---------- ---------- ---------- ---------- ---------- ------
Net asset value, end of period $ 20.17 $ 14.96 $ 15.15 $ 12.99 $ 12.14 $20.12
=============================================== ========== ========== ========== ========== ========== ======
Total return(a) 42.79% 9.49% 28.53% 15.61% 31.03% (2.71)%
=============================================== ========== ========== ========== ========== ========== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,623,901 $1,830,032 $1,650,234 $1,261,008 $1,050,011 $ 714
=============================================== ========== ========== ========== ========== ========== ======
Ratio of expenses to average net assets 0.67%(b) 0.67% 0.68% 0.70% 0.71% 1.46%(c)
=============================================== ========== ========== ========== ========== ========== ======
Ratio of net investment income (loss) to
average net assets (0.01)%(b) 0.23% 0.11% 0.29% 0.33% (0.80)%(c)
=============================================== ========== ========== ========== ========== ========== ======
Portfolio turnover rate 92% 83% 88% 118% 126% 92%
=============================================== ========== ========== ========== ========== ========== ======
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are based on average net assets of $2,381,357,904.
(c) Ratios are annualized and based on average net assets of $227,867.
FS-10
<PAGE> 65
PART C: OTHER INFORMATION
Item 23. Exhibits
a (1) - (a) 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-1A 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.
- (b) 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-1A
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.
- (c) 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.
- (d) 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.
- (e) Articles Supplementary to the Articles of
Incorporation as filed with the State of Maryland on
December 21, 1998, were filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 22 on December 29, 1998.
- (f) Articles of Amendment to the Articles of
Incorporation as filed with the State of Maryland on
December 21, 1998, were filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 22 on December 29, 1998.
- (g) Articles Supplementary to the Articles of
Incorporation as filed with the State of Maryland on
December 29, 1999.
(2) - Agreement and Declaration of Trust of Registrant
dated December 6, 1999, is filed electronically
herewith.
b (1) - (a) By-Laws of the Registrant were filed as an Exhibit
to Registrant's Pre-Effective Amendment No. 1 on Form
N-1A filed on September 30, 1982.
- (b) 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.
- (c) 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.
(2) - (a) 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.
1
<PAGE> 66
- (b) 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 electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 19 on
February 27, 1996.
- (c) 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.
(3) - (a) 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.
- (b) First Amendment dated June 9, 1999 to the Amended
and Restated By-Laws of the Registrant as adopted on
December 11, 1996.
(4) - By-Laws of the Registrant, dated December 6, 1999, are
filed electronically herewith.
c - Instruments Defining Rights of Security Holders - None.
d (1) - 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.
(2) - 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.
(3) - 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.
(4) - Form of Investment Advisory Agreement, between
Registrant and A I M Advisors, Inc., is filed
electronically herewith.
(5) - 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.
(6) - 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.
(7) - 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.
(8) - 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.
2
<PAGE> 67
(9) - 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.
(10) - (a) 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 22 on December 29, 1998 and is incorporated by
reference herein.
- (b) 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 22 on December 29, 1998 and is incorporated by
reference herein.
- (c) Amendment No. 2, dated December 14, 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 23 on February 25, 1999 and is incorporated by
reference herein.
- (d) Amendment No. 3, dated December 22, 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 23 on February 25, 1999 and is incorporated by
reference herein.
- (e) Amendment No. 4, dated January 26, 1999, 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 23 on February 25, 1999 and is incorporated by
reference herein.
- (f) Amendment No. 5, dated March 1, 1999, 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 23 on February 25, 1999 and is incorporated by
reference herein.
- (g) Amendment No. 6, dated March 18, 1999, 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 23 on February 25, 1999 and is incorporated by
reference herein.
- (h) Amendment No. 7, dated November 15, 1999, 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, was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 23 on February 25, 1999 and is incorporated by
reference herein.
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.
3
<PAGE> 68
(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) - (a) 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.
- (b) Amendment No. 1, dated March 1, 1999, to the
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. 23 on
February 25, 1999 and is incorporated by reference
herein.
(4) - Form of Distribution Agreement, 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 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) - (a) 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.
- (b) 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.
- (c) Amendment No. 2 dated September 28, 1996 to the
Custodian Contract dated March 7, 1988 between
Registrant and State Street Bank and Trust Company was
4
<PAGE> 69
filed electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 22 on
December 29, 1998 and is incorporated by reference
herein.
- (d) 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 was filed electronically as an Exhibit with the
Registrant's Post-Effective Amendment No. 22 on
December 29, 1998 and is incorporated by reference
herein.
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-1A 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 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) - (a) 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.
- (b) 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 was filed electronically as an
Exhibit with the Registrant's Post-Effective Amendment
No. 19 on February 27, 1996.
- (c) 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.
- (d) 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.
- (e) 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.
5
<PAGE> 70
(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.
(11) - Transfer Agency Agreement and Service Agreement, dated
April 29, 1999, between Registrant and A I M Fund
Services, Inc., was filed as an Exhibit with the
Registrant's Post-Effective Amendment No. 24 on
February 25, 2000, and is incorporated by reference
herein.
(12) - Amendment No. 1, dated March 13, 2000, to the Transfer
Agency Agreement and Service Agreement, dated April 29,
1999, between Registrant and A I M Fund Services, Inc.
is filed electronically herewith.
(13) - Form of Transfer Agency Agreement and Service
Agreement, between Registrant and A I M Fund Services,
Inc. is filed electronically herewith.
(14) - Memorandum of Agreement, dated March 1, 1999, between
Registrant, on behalf of Class II Shares, and A I M
Advisors, Inc., was filed as an Exhibit with the
Registrant's Post-Effective Amendment No. 24 on
February 25, 2000.
(15) - Agreement and Plan of Reorganization, dated December 7,
1999, between Registrant and AIM Summit Fund, was filed
as an Exhibit with the Registrant's Post-Effective
Amendment No. 24 on February 25, 2000, and is
incorporated by reference herein.
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 (1) - Auditors Consent of KPMG LLP, is filed electronically
herewith.
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-1A 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 (1) - Distribution Plan and Form of Shareholder Service
Agreement for Registrant's Class II Shares was filed as
an Exhibit with the Registrant's Post-Effective
Amendment No. 24 on February 25, 2000, and is
incorporated by reference herein.
(2) - Form of Distribution Plan and Form of Shareholder
Service Agreement for Registrant, is filed
electronically herewith.
n - Rule 18f-3 Plan, effective as of December 8, 1998, was
filed as an Exhibit with the Registrant's
Post-Effective Amendment No. 24 on February 25, 2000,
and is incorporated by reference herein.
o (1) - The AIM Management Group Code of Ethics, adopted May 1,
1981, as last amended August 17, 1999, relating to
A I M Management Group Inc. and A I M Advisors, Inc.,
6
<PAGE> 71
was filed as an Exhibit with the Registrant's
Post-Effective Amendment No. 24 on February 25, 2000.
(2) - The A I M Management Group Inc. Code of Ethics, adopted
May 1, 1981, as last amended February 24, 2000,
relating to A I M Management Group Inc. and A I M
Advisors, Inc., is filed herewith electronically.
(3) - Code of Ethics of Registrant, dated August 17, 1982,
was filed as an Exhibit with the Registrant's
Post-Effective Amendment No. 24 on February 25, 2000.
(4) - Code of Ethics of Registrant, dated December 8, 1999,
is filed herewith electronically.
Item 24. Persons Controlled by or under Common Control With Registrant.
Provide a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant. For any person
controlled by another person, disclose the percentage of voting securities
owned by the immediately controlling person or other basis of that person's
control. For each company, also provide the state or other sovereign power
under the laws of which the company is organized.
All of Registrant's issued and outstanding shares of Beneficial
Interest are owned of record by State Street Bank and Trust Company ("State
Street") as custodian for AIM Summit Investors Plans I and AIM Summit Investors
Plans II, which are both unit investment trusts. 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.
The Registrant's Agreement and Declaration of Trust, dated
December 6, 1999, provides, among other things (i) that trustees and officers
of the Registrant, when acting as such, shall not be personally liable for any
act, omission or obligation of the Registrant or any trustee or officer (except
for liabilities to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty); (ii)
for the indemnification by the Registrant of the trustees, officers, employees
and agents of the Registrant to the fullest extent permitted by the Delaware
Business Trust Act and Bylaws and other applicable law; (iii) that shareholders
of the Registrant shall not be personally liable for the debts, liabilities,
obligations or expenses of the Registrant or any portfolio or class; and (iv)
for the indemnification by the Registrant, out of the assets belonging to the
applicable portfolio, of shareholders and former shareholders of the Registrant
in case they are held personally liable solely by reason of being or having
been shareholders of the Registrant or any portfolio or class and not because
of their acts or omissions or for some other reason.
A I M Advisors, Inc., the Registrant and other investment
companies managed by A I M Advisors, Inc., their respective officers, trustees,
directors and employees (the "Insured Parties") are insured under a joint
Mutual Fund and Investment Advisory Professional and Directors and Officers
Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000
limit of liability.
7
<PAGE> 72
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.
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.
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 (Retail Classes)
AIM Funds Group
AIM Growth Series
AIM International Mutual Funds
AIM Investment Funds
AIM Investment Securities Funds (Retail Class)
AIM Series Trust
AIM Special Opportunities Funds
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
AIM Floating Rate Fund
AIM Summit Investors Plans I
AIM Summit Investors Plans II
8
<PAGE> 73
(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 & Director Chairman & Trustee
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
James L. Salners Executive Vice President None
Robert H. Graham Senior Vice President & Director President & Trustee
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
Glenda A. Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Ofelia M. Mayo Vice President, General Counsel & Assistant Assistant Secretary
Secretary
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President & Secretary
Kamala C. Sachidanandan Vice President None
Christopher T. Simutis Vice President None
</TABLE>
- -----------------------------
* 11 Greenway Plaza, Suite 100,
Houston, TX 77046-1173
9
<PAGE> 74
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Gary K. Wendler Vice President None
Normal W. Woodson Vice President None
Luke P. Beausoleil Assistant Vice President None
Sheila R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
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
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.
10
<PAGE> 75
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.
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.
11
<PAGE> 76
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 27th day of
April, 2000.
REGISTRANT: AIM SUMMIT FUND
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 & Trustee April 27, 2000
-------------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President
------------------------------------- (Principal Executive Officer) April 27, 2000
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee April 27, 2000
-------------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee April 27, 2000
-------------------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee April 27, 2000
-------------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee April 27, 2000
-------------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee April 27, 2000
-------------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee April 27, 2000
-------------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee April 27, 2000
-------------------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee April 27, 2000
-------------------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & April 27, 2000
------------------------------------- Treasurer (Principal Financial
(Dana R. Sutton) and Accounting Officer)
</TABLE>
<PAGE> 77
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <C>
a(2) - Agreement and Declaration of Trust of Registrant dated
December 6, 1999
b(4) - By-Laws of the Registrant, dated December 6, 1999
d(4) - Form of Investment Advisory Agreement, between Registrant
and A I M Advisors, Inc.
e(4) - Form of Distribution Agreement, between Registrant and
A I M Distributors, Inc.
h(12) - Amendment No. 1, dated March 13, 2000, to the Transfer
Agency Agreement and Service Agreement, dated April 29, 1999,
between Registrant and A I M Fund Services, Inc.
h(13) - 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
j(1) - Auditors Consent of KPMG LLP
m(2) - Form of Distribution Plan and Form of Shareholder Service
Agreement for Registrant
o(2) - The A I M Management Group Inc. Code of Ethics, adopted
May 1, 1981, as last amended February 24, 2000, relating to
A I M Management Group Inc. and A I M Advisors, Inc.
o(4) - Code of Ethics of Registrant, dated December 8, 1999
</TABLE>
<PAGE> 1
EXHIBIT a(2)
AGREEMENT AND DECLARATION OF TRUST
OF
AIM SUMMIT FUND
THIS AGREEMENT AND DECLARATION OF TRUST of AIM Summit Fund, dated
December 6, 1999, is among Charles T. Bauer and Robert H. Graham as Trustees,
and each person who becomes a Shareholder in accordance with the terms
hereinafter set forth.
NOW, THEREFORE, the Trustees do hereby declare that all money and
property contributed to the trust hereunder shall be held and managed in trust
under this Agreement for the benefit of the Shareholders as herein set forth
below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST
Section 1.1. Name. The name of the business trust established hereby is
AIM Summit Fund, and the Trustees may transact the Trust's affairs in that name.
The Trust shall constitute a Delaware business trust in accordance with the
Delaware Act.
Section 1.2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Affiliated Person," "Company," "Person," and "Principal
Underwriter" shall have the meanings given them in the 1940
Act, as modified by or interpreted by any applicable order or
orders of the Commission or any rules or regulations adopted
or interpretive releases of the Commission thereunder. The
term "Commission" shall have the meaning given it in the 1940
Act;
(b) "Agreement" means this Agreement and Declaration of Trust, as
it may be amended from time to time;
(c) "allocable" has the meaning specified in Section 2.5(d);
(d) "allocated" has the meaning specified in Section 2.5(d);
(e) "Bylaws" means the Bylaws referred to in Section 4.1(e), as
from time to time amended;
(f) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Section
2.3(b);
(g) "Class Expenses" means expenses incurred by a particular Class
in connection with a shareholder services arrangement or a
distribution plan that is specific to such Class or any other
differing share of expenses or differing fees, in each case
pursuant to or to the extent permitted by Rule 18f-3 under the
1940 Act.
<PAGE> 2
(h) "Covered Persons" means a person who is or was a Trustee,
officer, employee or agent of the Trust, or is or was serving
at the request of the Trustees as a director, trustee,
partner, officer, employee or agent of a corporation, trust,
partnership, joint venture or other enterprise.
(i) The "Delaware Act" refers to the Delaware Business Trust Act,
12 Del. C. Section 3801 et seq., as such Act may be amended
from time to time;
(j) "Governing Instrument" means collectively this Agreement, the
Bylaws, all amendments to this Agreement and the Bylaws and
every resolution of the Trustees or any committee of the
Trustees that by its terms is incorporated by reference into
this Agreement or stated to constitute part of the Trust's
Governing Instrument or that is incorporated herein by Section
2.3 of this Agreement;
(k) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" (as defined in the 1940
Act) of the Trust, Portfolio, or Class, as applicable;
(l) "Majority Trustee Vote" means the vote of a majority of the
Trustees.
(m) "New Class A Shares" has the meaning specified in Section
2.6(c);
(n) "New Class B Shares" has the meaning specified in Section
2.6(c);
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time;
(p) "Outstanding Shares" means Shares shown on the books of the
Trust or its transfer agent as then issued and outstanding,
and includes Shares of one Portfolio that the Trust has
purchased on behalf of another Portfolio, but excludes Shares
of a Portfolio that the Trust has redeemed or repurchased;
(q) "Portfolio" means a series of Shares of the Trust established
in accordance with the provisions of Section 2.3(a);
(r) "Proportionate Interest" has the meaning specified in Section
2.5(d);
(s) "Purchasing Portfolio" has the meaning specified in Section
2.10;
(t) "Schedule A" has the meaning specified in Section 2.3(a);
(u) "Selling Portfolio" has the meaning specified in Section 2.10;
(v) "Shareholder" means a record owner of Outstanding Shares of
the Trust;
2
<PAGE> 3
(w) "Shares" means, as to a Portfolio or any Class thereof, the
equal proportionate transferable units of beneficial interest
into which the beneficial interest of such Portfolio of the
Trust or such Class thereof shall be divided and may include
fractions of Shares as well as whole Shares;
(x) The "Trust" means AIM Summit Fund, the Delaware business trust
established hereby, and reference to the Trust, when
applicable to one or more Portfolios, shall refer to each such
Portfolio;
(y) The "Trustees" means the Persons who have signed this
Agreement as trustees so long as they shall continue to serve
as trustees of the Trust in accordance with the terms hereof,
and all other Persons who may from time to time be duly
appointed as Trustee in accordance with the provisions of
Section 3.4, or elected as Trustee by the Shareholders, and
reference herein to a Trustee or to the Trustees shall refer
to such Persons in their capacity as Trustees hereunder; and
(z) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the
account of the Trust or any Portfolio, or by the Trustees on
behalf of the Trust.
Section 1.3. Purpose. The purpose of the Trust is to conduct, operate
and carry on the business of an open-end management investment company
registered under the 1940 Act through one or more Portfolios investing primarily
in securities and to carry on such other business as the Trustees may from time
to time determine pursuant to their authority under this Agreement.
Section 1.4. Certificate of Trust. Immediately upon the execution of
this Agreement, the Trustees shall file a Certificate of Trust with respect to
the Trust in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. Shares of Beneficial Interest. The beneficial interest in
the Trust shall be divided into an unlimited number of Shares, with par value of
$0.01 per Share. The Trustees may, from time to time, (a) authorize the division
of the Shares into one or more series, each of which constitutes a Portfolio,
and (b) may further authorize the division of the Shares of any Portfolio into
one or more separate and distinct Classes. All Shares issued hereunder,
including without limitation, Shares issued in connection with a dividend or
other distribution in Shares or a split or reverse split of Shares, shall be
fully paid and nonassessable.
Section 2.2. Issuance of Shares. The Trustees in their discretion may,
from time to time, without vote of the Shareholders, issue Shares, in addition
to the then issued and Outstanding Shares, to such party or parties and for such
amount and type of consideration, subject to applicable law, including cash or
securities, at such time or times and on such terms as the Trustees may deem
appropriate, and may in such manner acquire other assets (including the
3
<PAGE> 4
acquisition of assets subject to, and in connection with, the assumption of
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares. The Trustees may from time to time divide
or combine the Shares into a greater or lesser number without thereby changing
the proportionate beneficial interests in the Trust. Contributions to the Trust
may be accepted for, and Shares shall be redeemed as, whole Shares and/or
1/1,000th of a Share or integral multiples thereof.
Section 2.3. Establishment of Portfolios and Classes.
(a) The Trust shall consist of one or more separate and distinct
Portfolios, each with an unlimited number of Shares unless
otherwise specified. The Trustees hereby establish and
designate the Portfolios listed on Schedule A attached hereto
and made a part hereof ("Schedule A"). Each additional
Portfolio shall be established by the adoption of a resolution
by the Trustees. Each such resolution is hereby incorporated
herein by this reference and made a part of the Trust's
Governing Instrument whether or not expressly stated in such
resolution, and shall be effective upon the occurrence of both
(i) the date stated therein (or, if no such date is stated,
upon the date of such adoption) and (ii) the execution of an
amendment either to this Agreement or to Schedule A hereto
establishing and designating such additional Portfolio or
Portfolios. The Shares of each Portfolio shall have the
relative rights and preferences provided for herein and such
rights and preferences as may be designated by the Trustees in
any amendment or modification to the Trust's Governing
Instrument. The Trust shall maintain separate and distinct
records of each Portfolio and shall hold and account for the
assets belonging thereto separately from the other Trust
Property and the assets belonging to any other Portfolio. Each
Share of a Portfolio shall represent an equal beneficial
interest in the net assets belonging to that Portfolio, except
to the extent of Class Expenses and other expenses separately
allocated to Classes thereof (if any Classes have been
established) as permitted herein.
(b) The Trustees may establish one or more Classes of Shares of
any Portfolio, each with an unlimited number of Shares unless
otherwise specified. Each Class so established and designated
shall represent a Proportionate Interest (as defined in
Section 2.5(d)) in the net assets belonging to that Portfolio
and shall have identical voting, dividend, liquidation, and
other rights and be subject to the same terms and conditions,
except that (1) Class Expenses allocated to a Class for which
such expenses were incurred shall be borne solely by that
Class, (2) other expenses, costs, charges, and reserves
allocated to a Class in accordance with Section 2.5(e) may be
borne solely by that Class, (3) dividends declared and payable
to a Class pursuant to Section 7.1 shall reflect the items
separately allocated thereto pursuant to the preceding
clauses, (4) each Class may have separate rights to convert to
another Class, exchange rights, and similar rights, each as
determined by the Trustees, and (5) subject to Section 2.6(c),
each Class may have exclusive voting rights with respect to
matters affecting only that Class. The Trustees hereby
establish for each Portfolio listed on Schedule A the Classes
listed thereon. Each additional Class for any or all
Portfolios shall be established
4
<PAGE> 5
by the adoption of a resolution by the Trustees, each of which
is hereby incorporated herein by this reference and made a
Governing Instrument whether or not expressly stated in such
resolution, and shall be effective upon the occurrence of both
(i) the date stated therein (or, if no such date is stated,
upon the date of such adoption) and (ii) the execution of an
amendment to this Agreement establishing and designating such
additional Class or Classes.
Section 2.4. Actions Affecting Portfolios and Classes. Subject to the
right of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees
shall have full power and authority, in their sole discretion without obtaining
any prior authorization or vote of the Shareholders of any Portfolio, or Class
thereof, to establish and designate and to change in any manner any Portfolio of
Shares, or any Class or Classes thereof; to fix or change such preferences,
voting powers, rights, and privileges of any Portfolio, or Classes thereof, as
the Trustees may from time to time determine, including any change that may
adversely affect a Shareholder; to divide or combine the Shares of any
Portfolio, or Classes thereof, into a greater or lesser number; to classify or
reclassify or convert any issued Shares of any Portfolio, or Classes thereof,
into one or more Portfolios or Classes of Shares of a Portfolio; and to take
such other action with respect to the Shares as the Trustees may deem desirable.
A Portfolio and any Class thereof may issue any number of Shares but need not
issue any Shares. At any time that there are no Outstanding Shares of any
particular Portfolio or Class previously established and designated, the
Trustees may abolish that Portfolio or Class and the establishment and
designation thereof.
Section 2.5. Relative Rights and Preferences. Unless the establishing
resolution or any other resolution adopted pursuant to Section 2.3 otherwise
provides, Shares of each Portfolio or Class thereof established hereunder shall
have the following relative rights and preferences:
(a) Except as set forth in paragraph (e) of this Section 2.5, each
Share of a Portfolio, regardless of Class, shall represent an
equal pro rata interest in the assets belonging to such
Portfolio and shall have identical voting, dividend,
liquidation and other rights, preferences, powers,
restrictions, limitations, qualifications and designations and
terms and conditions with each other Share of such Portfolio.
(b) Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other
Portfolio (or Class).
(c) All consideration received by the Trust for the issue or sale
of Shares of a particular Portfolio, together with all assets
in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange, or liquidation of
such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may
be, shall be held and accounted for separately from the other
assets of the Trust and of every other Portfolio and may be
referred to herein as "assets belonging to" that Portfolio.
The assets belonging to a particular Portfolio shall belong to
that Portfolio for all purposes, and to no
5
<PAGE> 6
other Portfolio, subject only to the rights of creditors of
that Portfolio. In addition, any assets, income, earnings,
profits or funds, or payments and proceeds with respect
thereto, which are not readily identifiable as belonging to
any particular Portfolio shall be allocated by the Trustees
between and among one or more of the Portfolios in such manner
as the Trustees, in their sole discretion, deem fair and
equitable. Each such allocation shall be conclusive and
binding upon the Shareholders of all Portfolios thereof for
all purposes, and such assets, income, earnings, profits, or
funds, or payments and proceeds with respect thereto shall be
assets belonging to that Portfolio.
(d) Each Class of a Portfolio shall have a proportionate undivided
interest (as determined by or at the direction of, or pursuant
to authority granted by, the Trustees, consistent with
industry practice) ("Proportionate Interest") in the net
assets belonging to that Portfolio. References herein to
assets, expenses, charges, costs, and reserves "allocable" or
"allocated" to a particular Class of a Portfolio shall mean
the aggregate amount of such item(s) of the Portfolio
multiplied by the Class's Proportionate Interest.
(e) A particular Portfolio shall be charged with the liabilities
of that Portfolio, and all expenses, costs, charges and
reserves attributable to any particular Portfolio shall be
borne by such Portfolio; provided that the Trustees may, in
their sole discretion, allocate or authorize the allocation of
particular expenses, costs, charges, and/or reserves of a
Portfolio to fewer than all the Classes thereof. Class
Expenses shall, in all cases, be allocated to the Class for
which such Class Expenses were incurred. Any general
liabilities, expenses, costs, charges or reserves of the Trust
(or any Portfolio) that are not readily identifiable as
chargeable to or bearable by any particular Portfolio (or any
particular Class) shall be allocated and charged by the
Trustees between or among any one or more of the Portfolios
(or Classes) in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall
be conclusive and binding upon the Shareholders of all
Portfolios (or Classes) for all purposes. Without limitation
of the foregoing provisions of this Section 2.5(e), (i) 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
Trust generally or assets belonging to any other Portfolio,
and (ii) none of the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with
respect to the Trust generally that have not been allocated to
a specified Portfolio, or with respect to any other Portfolio,
shall be enforceable against the assets of such specified
Portfolio. Notice of this contractual limitation on
inter-Portfolio liabilities shall be set forth in the Trust's
Certificate of Trust described to Section 1.4, and upon the
giving of such notice in the Certificate of Trust, the
statutory provisions of Section 3804 of the Delaware Act
relating to limitations on inter-Portfolio liabilities (and
the statutory effect under Section 3804 of setting forth such
notice in the Certificate of Trust) shall become applicable to
the Trust and each Portfolio.
6
<PAGE> 7
All references to Shares in this Agreement shall be deemed to
be shares of any or all Portfolios, or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Portfolio of the Trust, and each Class thereof, except as the context otherwise
requires.
Section 2.6. Additional Rights and Preferences of Class B Shares. In
addition to the relative rights and preferences set forth in Section 2.5 and all
other provisions of this Agreement relating to Shares of the Trust generally,
any Class of any Portfolio designated as Class B Shares shall have the following
rights and preferences:
(a) Subject to the provisions of paragraph (c) below, all Class B
Shares other than those purchased through the reinvestment of
dividends and distributions shall automatically convert to
Class A Shares eight (8) years after the end of the calendar
month in which a Shareholder's order to purchase such shares
was accepted.
(b) Subject to the provisions of paragraph (c) below, Class B
Shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B Shares will be
considered held in a separate sub-account, and will
automatically convert to Class A Shares in the same proportion
as any Class B Shares (other than those in the sub-account)
convert to Class A Shares. Other than this conversion feature,
the Class B Shares purchased through the reinvestment of
dividends and distributions paid in respect of Class B Shares
shall have all the rights and preferences, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of Class B Shares generally.
(c) If a Portfolio of the Trust implements any amendment to a Plan
of Distribution adopted under Rule 12b-1 promulgated under the
1940 Act (or adopts or implements a non-Rule 12b-1 shareholder
services plan that the Trustees have caused to be submitted to
the Shareholders for their approval) that the Trustees
determine would materially increase the charges that may be
borne by the Class A Shareholders under such plan, the Class B
Shares will stop converting to the Class A Shares unless the
Class B Shares, voting separately, approve the amendment or
adoption. The Trustees shall have sole discretion in
determining whether such amendment or adoption is submitted to
a vote of the Class B Shareholders. Should such amendment or
adoption not be submitted to a vote of the Class B
Shareholders or, if submitted, should the Class B Shareholders
fail to approve such amendment or adoption, the Trustees shall
take such action as is necessary to: (1) create a new class
(the "New Class A Shares") which shall be identical in all
material respects to the Class A Shares as they existed prior
to the implementation of the amendment or adoption; and (2)
ensure that the existing Class B Shares will be exchanged or
converted into New Class A Shares no later than the date such
Class B Shares were scheduled to convert to Class A Shares. If
deemed advisable by the Trustees to implement the foregoing,
and at the sole discretion of the Trustees, such action may
include the exchange of all Class B
7
<PAGE> 8
Shares for a new class (the "New Class B Shares"), identical
in all material respects to the Class B Shares except that the
New Class B Shares will automatically convert into the New
Class A Shares. Such exchanges or conversions shall be
effected in a manner that the Trustees reasonably believe will
not be subject to federal taxation.
Section 2.7. Investment in the Trust. Investments may be accepted by
the Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees from time to time may authorize. At the
Trustees' sole discretion, such investments, subject to applicable law, may be
in the form of cash or securities in which the affected Portfolio is authorized
to invest, valued as provided in applicable law. Each such investment shall be
credited to the individual Shareholder's account in the form of full and
fractional Shares of the Trust, in such Portfolio (or Class) as the Shareholder
shall select.
Section 2.8. Personal Liability of Shareholders. As provided by
applicable law, no Shareholder of the Trust shall be personally liable for the
debts, liabilities, obligations and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Portfolio (or Class)
thereof. Neither the Trust nor the Trustees, nor any officer, employee, or agent
of the Trust shall have any power to bind personally any Shareholder or, except
as provided herein or by applicable law, to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. The Shareholders shall be entitled, to the fullest
extent permitted by applicable law, to the same limitation of personal liability
as is extended under the Delaware General Corporation Law to stockholders of
private corporations for profit. Every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the Trust or to
any Portfolio shall include a recitation limiting the obligation represented
thereby to the Trust and its assets or to one or more Portfolios and the assets
belonging thereto (but the omission of such a recitation shall not operate to
bind any Shareholder or Trustee of the Trust).
Section 2.9. Assent to Agreement. Every Shareholder, by virtue of
having purchased a Share, shall be held to have expressly assented to, and
agreed to be bound by, the terms hereof. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to
rights of said decedent under this Trust.
8
<PAGE> 9
Section 2.10. Purchases of Shares Among Portfolios. The Trust may
purchase, on behalf of any Portfolio (the "Purchasing Portfolio"), Shares of
another Portfolio (the "Selling Portfolio") or any Class thereof. Shares of the
Selling Portfolio so purchased on behalf of the Purchasing Portfolio shall be
Outstanding Shares, and shall have all preferences, voting powers, rights and
privileges established for such Shares.
ARTICLE III
THE TRUSTEES
Section 3.1. Management of the Trust. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Agreement. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any and all foreign jurisdictions and to do
all such other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust although such
things are not herein specifically mentioned. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Agreement, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Agreement shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court or other authority.
Section 3.2. Trustees. The number of Trustees shall be such number as
shall be fixed from time to time by a majority of the Trustees; provided,
however, that the number of Trustees shall in no event be less than two (2) nor
more than fifteen (15). The initial Trustees are those first identified above.
Section 3.3. Terms of Office of Trustees. The Trustees shall hold
office during the lifetime of this Trust, and until its termination as herein
provided; except that (a) any Trustee may resign his trusteeship or may retire
by written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later date as is specified
therein; (b) any Trustee may be removed at any time by written instrument,
signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) any Trustee
who has died, become physically or mentally incapacitated by reason of disease
or otherwise, or is otherwise unable to serve, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) a Trustee may be removed at any meeting of the
Shareholders by a vote of the Shareholders owning at least two-thirds of the
Outstanding Shares.
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<PAGE> 10
Section 3.4. Vacancies and Appointment of Trustees. In case of the
declination to serve, death, resignation, retirement or removal of a Trustee, or
a Trustee is otherwise unable to serve, or an increase in the number of
Trustees, a vacancy shall occur. Whenever a vacancy in the Board of Trustees
shall occur, until such vacancy is filled, the other Trustees shall have all the
powers hereunder and the certification of the other Trustees of such vacancy
shall be conclusive. In the case of an existing vacancy, the remaining Trustees
may fill such vacancy by appointing such other person as they in their
discretion shall see fit, or may leave such vacancy unfilled or may reduce the
number of Trustees to not less than two (2) Trustees. Such appointment shall be
evidenced by a written instrument signed by a majority of the Trustees in office
or by resolution of the Trustees, duly adopted, which shall be recorded in the
minutes of a meeting of the Trustees, whereupon the appointment shall take
effect.
An appointment of a Trustee may be made by the Trustees then
in office in anticipation of a vacancy to occur by reason of retirement,
resignation, or removal of a Trustee, or an increase in number of Trustees
effective at a later date, provided that said appointment shall become effective
only at the time or after the expected vacancy occurs. As soon as any Trustee
appointed pursuant to this Section 3.4 or elected by the Shareholders shall have
accepted the Trust and agreed in writing to be bound by the terms of the
Agreement, the Trust estate shall vest in the new Trustee or Trustees, together
with the continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder.
Section 3.5. Temporary Absence of Trustee. Any Trustee may, by power of
attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.6. Effect of Death, Resignation, etc. of a Trustee. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Trust Agreement.
Section 3.7. Ownership of Assets of the Trust. The assets of the Trust
and of each Portfolio thereof shall be held separate and apart from any assets
now or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustees. Legal title in all of the assets of the
Trust and the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held by, or in the name of the
Trust, or in the name of any Person as nominee. No Shareholder shall be deemed
to have a severable ownership in any individual asset of the Trust, or belonging
to any Portfolio, or allocable to any Class thereof, or any right of partition
or possession thereof, but each Shareholder shall have, except as otherwise
provided for herein, a proportionate undivided beneficial interest in the Trust
or in assets belonging to the Portfolio (or allocable to the Class) in which the
Shareholder holds Shares. The Shares shall be personal property giving only the
rights specifically set forth in this Agreement or the Delaware Act.
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ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. Without
limiting the foregoing and subject to any applicable limitation in this
Agreement or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being
bound or limited by any present or future law or custom in
regard to investments by Trustees, and to sell, exchange,
lend, pledge, mortgage, hypothecate, write options on and
lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment
company, and to exercise all the powers necessary and
appropriate to the conduct of such operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security the Trust
Property; to endorse, guarantee, or undertake the performance
of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust
either through a principal underwriter in the manner hereafter
provided for or by the Trust itself, or both, or otherwise
pursuant to a plan of distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Trust Agreement
providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that they do not reserve
such right to the Shareholders; such Bylaws shall be deemed
incorporated and included in this Trust Agreement;
(f) To elect and remove such officers and appoint and terminate
such agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that
are members of a national securities exchange or such other
domestic or foreign entities as custodians of any assets of
the Trust subject to any conditions set forth in this
Agreement or in the Bylaws;
(h) To retain one or more transfer agents and shareholder
servicing agents;
(i) To set record dates in the manner provided herein or in the
Bylaws;
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(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager,
administrator, custodian, underwriter or other agent or
independent contractor;
(k) To sell or exchange any or all of the assets of the Trust,
subject to the right of Shareholders, if any, to vote on such
transaction pursuant to Section 6.1;
(l) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to
execute and deliver proxies and powers of attorney to such
person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with
relation to securities or property as the Trustee shall deem
proper;
(m) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other
negotiable form; or either in the name of the Trust or of a
Portfolio or a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Portfolios with separately
defined investment objectives and policies and distinct
investment purposes in accordance with the provisions of
Article II hereof and to establish Classes of such Portfolios
having relative rights, powers and duties as they may provide
consistent with applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a
particular Portfolio or to apportion the same between or among
two or more Portfolios, provided that any liabilities or
expenses incurred by a particular Portfolio shall be payable
solely out of the assets belonging to that Portfolio as
provided for in Article II hereof;
(q) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy
including, but not limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income
and of capital gains and capital to Shareholders in the manner
hereinafter provided;
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(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Portfolios or
Classes, and to require the redemption of the Shares of any
Shareholder whose investment is less than such minimum upon
giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees and to adopt a
committee charter providing for such responsibilities,
membership (including Trustees, officers or other agents of
the Trust therein) and any other characteristics of said
committees as the Trustees may deem proper, each of which
committees may consist of less than the whole number of
Trustees then in office, and may be empowered to act for and
bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office;
(v) To interpret the investment policies, practices or limitations
of any Portfolios;
(w) To establish a registered office and have a registered agent
in the State of Delaware; and
(x) In general, to carry on any other business in connection with
or incidental to any of the foregoing powers, to do everything
necessary, suitable or proper for the accomplishment of any
purpose or the attainment of any object or the furtherance of
any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing
incidental or appurtenant to or growing out of or connected
with the aforesaid business or purposes, objects or powers.
The foregoing clauses shall be construed both as objects and
powers, and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees. Any action
by one or more of the Trustees in their capacity as such hereunder shall be
deemed an action on behalf of the Trust or the applicable Portfolio, and not an
action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
Section 4.2. Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Articles II and VII hereof, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or any assets belonging to the particular
Portfolio or any assets allocable to the particular Class, with respect to which
such Shares are issued.
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Section 4.3. Action by the Trustees. The Board of Trustees or any
committee thereof shall act by majority vote of those present at a meeting duly
called (including a meeting by telephonic or other electronic means, unless the
1940 Act requires that a particular action be taken only at a meeting of the
Trustees in person) at which a quorum required by the Bylaws is present or by
unanimous written consent of the Trustees or committee, as the case may be,
without a meeting, provided that the writing or writings are filed with the
minutes of proceedings of the Board or committee. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Any written consent or
waiver may be provided and delivered to the Trust by any means by which notice
may be given to a Trustee. Subject to the requirements of the 1940 Act, the
Trustees by Majority Trustee Vote may delegate to any Trustee or Trustees
authority to approve particular matters or take particular actions on behalf of
the Trust.
Section 4.4. Principal Transactions. The Trustees may, on behalf of the
Trust, buy any securities from or sell any securities to, or lend any assets of
the Trust to, any Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with any investment adviser, distributor, or transfer agent for the Trust or
with any Affiliated Person of such Person; and the Trust may employ any such
Person, or firm or Company in which such Person is an Affiliated Person, as
broker, legal counsel, registrar, investment adviser, distributor,
administrator, transfer agent, dividend disbursing agent, custodian, or in any
capacity upon customary terms, subject in all cases to applicable laws, rules,
and regulations and orders of regulatory authorities.
Section 4.5. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust or any Portfolio, or partly out of the principal and partly out of income,
and to charge or allocate to, between or among such one or more of the
Portfolios (or Classes), as they deem fair, all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Trust or Portfolio
(or Class), or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser and manager,
administrator, principal underwriter, auditors, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
Section 4.6. Trustee Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust. They may fix the amount of
their compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, administrative, legal, accounting,
investment banking, underwriting, brokerage, or investment dealer or other
services and the payment for the same by the Trust.
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ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. Investment Adviser. The Trustees may in their discretion,
from time to time, enter into an investment advisory or management contract or
contracts with respect to the Trust or any Portfolio whereby the other party or
parties to such contract or contracts shall undertake to furnish the Trustees
with such management, investment advisory, statistical and research facilities
and services and such other facilities and services, if any, and all upon such
terms and conditions, as the Trustees may in their discretion determine.
The Trustees may authorize the investment adviser to employ,
from time to time, one or more sub-advisers to perform such of the acts and
services of the investment adviser, and upon such terms and conditions, as may
be agreed upon among the Trustees, the investment adviser and sub-adviser. Any
references in this Agreement to the investment adviser shall be deemed to
include such sub-advisers, unless the context otherwise requires.
Section 5.2. Other Service Contracts. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator, custodian,
and similar service providers.
Section 5.3. Parties to Contract. Any contract of the character
described in Sections 5.1 and 5.2 may be entered into with any corporation,
firm, partnership, trust or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder, or
member of such other party to the contract.
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Section 5.4. Miscellaneous. The fact that (i) any of the Shareholders,
Trustees or officers of the Trust is a shareholder, director, officer, partner,
trustee, employee, manager, adviser, principal underwriter or distributor or
agent of or for any Company or of or for any parent or affiliate of any Company,
with which an advisory or administration contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing, custodian or other
agency contract may have been or may hereafter be made, or that any such
Company, or any parent or affiliate thereof, is a Shareholder or has an interest
in the Trust, or that (ii) any Company with which an advisory or administration
contract or principal underwriter's or distributor's contract, or transfer,
shareholder servicing, custodian, or other agency contract may have been or may
hereafter be made also has an advisory or administration contract, or principal
underwriter's or distributor's contract, or transfer, shareholder servicing,
custodian or other agency contract with one or more other companies, or has
other business or interests shall not affect the validity of any such contract
or disqualify any Shareholder, Trustee or officer of the Trust from voting upon
or executing the same or create any liability or accountability to the Trust or
its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
Section 6.1. Voting Powers. The Shareholders shall have power to vote
only to: (i) elect Trustees, provided that a meeting of Shareholders has been
called for that purpose; (ii) remove Trustees, provided that a meeting of
Shareholders has been called for that purpose; (iii) approve the termination of
the Trust or any Portfolio or Class, provided that the Trustees have called a
meeting of the Shareholders for the purpose of approving any such termination,
unless, as of the date on which the Trustees have determined to so terminate the
Trust or such Portfolio or Class, there are fewer than 100 holders of record of
the Trust or of such terminating Portfolio or Class; (iv) approve the sale of
all or substantially all the assets of the Trust or any Portfolio or Class,
unless the primary purpose of such sale is to change the Trust's domicile or
form of organization or form of business trust; (v) approve the merger or
consolidation of the Trust or any Portfolio or Class with and into another
Company or with and into any Portfolio or Class of the Trust, unless (A) the
primary purpose of such merger or consolidation is to change the Trust's
domicile or form of organization or form of business trust, or (B) after giving
effect to such merger or consolidation, based on the number of Shares
outstanding as of a date selected by the Trustees, the Shareholders of the Trust
or such Portfolio or Class will have a majority of the outstanding shares of the
surviving Company or Portfolio or Class thereof, as the case may be; (vi)
approve any amendment to this Article VI, Section 6.1; and (vii) approve such
additional matters as may be required by law or as the Trustees, in their sole
discretion, shall determine.
Until Shares are issued, the Trustees may exercise all rights
of Shareholders and may take any action required or permitted by law, this Trust
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to a vote of the Shareholders, all
Shares shall be voted together, except when required by applicable law or when
the Trustees have determined that the matter affects the interests of one or
more Portfolios (or Classes), then only the Shareholders of all such affected
Portfolios (or Classes) shall be entitled to vote thereon. Each whole Share
shall
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be entitled to one vote as to any matter on which it is entitled to vote, and
each fractional Share shall be entitled to a proportionate fractional vote. The
vote necessary to approve any such matter shall be set forth in the Bylaws.
ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1. Distributions. The Trustees may from time to time declare
and pay dividends and make other distributions with respect to any Portfolio, or
Class thereof, which may be from income, capital gains or capital. The amount of
such dividends or distributions and the payment of them and whether they are in
cash or any other Trust Property shall be wholly in the discretion of the
Trustees. Dividends and other distributions may be paid pursuant to a standing
resolution adopted once or more often as the Trustees determine. All dividends
and other distributions on Shares of a particular Portfolio or Class shall be
distributed pro rata to the Shareholders of that Portfolio or Class, as the case
may be, in proportion to the number of Shares of that Portfolio or Class they
held on the record date established for such payment, provided that such
dividends and other distributions on Shares of a Class shall appropriately
reflect Class Expenses and other expenses allocated to that Class. The Trustees
may adopt and offer to Shareholders such dividend reinvestment plans, cash
distribution payment plans, or similar plans as the Trustees deem appropriate.
Section 7.2. Redemptions. Any holder of record of Shares of a
particular Portfolio, or Class thereof, shall have the right to require the
Trust to redeem his Shares, or any portion thereof, subject to such terms and
conditions as are set forth in the registration statement of the Trust in effect
from time to time. The redemption price may in any case or cases be paid wholly
or partly in kind if the Trustees determine that such payment is advisable in
the interest of the remaining Shareholders of the Portfolio or Class thereof for
which the Shares are being redeemed. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or delivered as
all or part of the redemption price may be determined by or under authority of
the Trustees. In no case shall the Trust be liable for any delay of any Person
in transferring securities selected for delivery as all or part of any payment
in kind.
Section 7.3. Redemption of Shares by Trustees. The Trustees may, at
their option, call for the redemption of the Shares of any Person or may refuse
to transfer or issue Shares to any Person to the extent that the same is
necessary to comply with applicable law or advisable to further the purposes for
which the Trust is formed. To the extent permitted by law, the Trustees may
retain the proceeds of any redemption of Shares required by them for payments of
amounts due and owing by a Shareholder to the Trust or any Portfolio.
Section 7.4. Redemption of De Minimis Accounts. If, at any time when a
request for transfer or redemption of Shares of any Portfolio is received by the
Trust or its agent, the value of the Shares of such Portfolio in a Shareholder's
account is less than Five Hundred Dollars ($500.00), or such greater amount as
the Trustees in their discretion shall have determined in accordance with
Section 4.1(t), after giving effect to such transfer or redemption and upon
giving thirty (30) days' notice to the Shareholder, the Trust may cause the
remaining Shares of such
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Portfolio in such Shareholder's account to be redeemed, subject to such terms
and conditions as are set forth in the registration statement of the Trust in
effect from time to time.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1. Limitation of Liability. A Trustee or officer, when acting
in such capacity, shall not be personally liable to any person for any act,
omission or obligation of the Trust or any Trustee or officer; provided,
however, that nothing contained herein or in the Delaware Act shall protect any
Trustee or officer against any liability to the Trust or to Shareholders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office with the Trust.
Section 8.2. Indemnification of Covered Persons. Every Covered Person
shall be indemnified by the Trust to the fullest extent permitted by the
Delaware Act, the Bylaws and other applicable law.
Section 8.3. Indemnification of Shareholders. In case any Shareholder
or former Shareholder of the Trust shall be held to be personally liable solely
by reason of his being or having been a Shareholder of the Trust or any
Portfolio or Class and not because of his acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or general successor) shall be entitled, out of
the assets belonging to the applicable Portfolio, to be held harmless from and
indemnified against all loss and expense arising from such liability in
accordance with the Bylaws and applicable law. The Trust, on behalf of the
affected Portfolio, shall upon request by the Shareholder, assume the defense of
any such claim made against the Shareholder for any act or obligation of that
Portfolio.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Trust Not a Partnership; Taxation. It is hereby expressly
declared that a trust and not a partnership is created hereby. No Trustee
hereunder shall have any power to bind personally either the Trust's officers or
any Shareholder. All persons extending credit to, contracting with or having any
claim against the Trust or the Trustees shall look only to the assets of the
appropriate Portfolio or, until the Trustees shall have established any separate
Portfolio, of the Trust for payment under such credit, contract or claim; and
neither the Shareholders, the Trustees, nor the Trust's officers nor any of the
agents of the Trustees whether past, present or future, shall be personally
liable therefor.
It is intended that the Trust, or each Portfolio if there is
more than one Portfolio, be classified for income tax purposes as an association
taxable as a corporation, and the Trustees shall do all things that they, in
their sole discretion, determine are necessary to achieve that objective,
including (if they so determine), electing such classifications on Internal
Revenue
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Form 8832. The Trustees, in their sole discretion and without the vote or
consent of the Shareholders, may amend this Agreement to ensure that this
objective is achieved.
Section 9.2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder in
good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
VIII and to Section 9.1, the Trustees shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Agreement, and subject
to the provisions of Article VIII and Section 9.1, shall be under no liability
for any act or omission in accordance with such advice or for failing to follow
such advice. The Trustees shall not be required to give any bond as such, nor
any surety if a bond is obtained.
Section 9.3. Termination of Trust or Portfolio or Class.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any
time by the Trustees by written notice to the Shareholders,
subject to the right of Shareholders, if any, to vote pursuant
to Section 6.1. Any Portfolio or Class may be terminated at
any time by the Trustees by written notice to the Shareholders
of that Portfolio or Class, subject to the right of
Shareholders, if any, to vote pursuant to Section 6.1.
(b) On termination of the Trust or any Portfolio pursuant to
paragraph (a) above,
(1) the Trust or that Portfolio thereafter shall carry on
no business except for the purpose of winding up its
affairs,
(2) the Trustees shall (i) proceed to wind up the affairs
of the Trust or that Portfolio, and all powers of the
Trustees under this Agreement with respect thereto
shall continue until such affairs have been wound up,
including the powers to fulfill or discharge the
contracts of the Trust or that Portfolio, (ii)
collect its assets or the assets belonging thereto,
(iii) sell, convey, assign, exchange, or otherwise
dispose of all or any part of those assets to one or
more persons at public or private sale for
consideration that may consist in whole or in part of
cash, securities, or other property of any kind, (iv)
discharge or pay its liabilities, and (v) do all
other acts appropriate to liquidate its business, and
(3) after paying or adequately providing for the payment
of all liabilities, and upon receipt of such
releases, indemnities, and refunding agreements as
they deem necessary for their protection, the
Trustees shall distribute the remaining assets
ratably among the Shareholders of the Trust or that
Portfolio.
(c) On termination of any Class pursuant to paragraph (a) above,
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(1) the Trust thereafter shall no longer issue Shares of
that Class,
(2) the Trustees shall do all other acts appropriate to
terminate the Class, and
(3) the Trustees shall distribute ratably among the
Shareholders of that Class, in cash or in kind, an
amount equal to the Proportionate Interest of that
Class in the net assets of the Portfolio (after
taking into account any Class Expenses or other fees,
expenses, or charges allocable thereto), and in
connection with any such distribution in cash the
Trustees are authorized to sell, convey, assign,
exchange or otherwise dispose of such assets of the
Portfolio of which that Class is a part as they deem
necessary.
(d) On completion of distribution of the remaining assets pursuant
to paragraph (b)(3) above, the Trust or the affected Portfolio
shall terminate and the Trustees and the Trust shall be
discharged from all further liabilities and duties hereunder
with respect thereto and the rights and interests of all
parties therein shall be cancelled and discharged. On
termination of the Trust, following completion of winding up
of its business, the Trustees shall cause a Certificate of
Cancellation of the Trust's Certificate of Trust to be filed
in accordance with the Delaware Act, which Certificate may be
signed by any one Trustee.
Section 9.4. Sale of Assets; Merger and Consolidation. Subject to right
of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees may cause
(i) the Trust or one or more of its Portfolios to the extent consistent with
applicable law to sell all or substantially all of its assets to, or be merged
into or consolidated with, another Portfolio, business trust (or series thereof)
or Company (or series thereof), (ii) the Shares of the Trust or any Portfolio
(or Class) to be converted into beneficial interests in another business trust
(or series thereof) created pursuant to this Section 9.4, (iii) the Shares of
any Class to be converted into another Class of the same Portfolio, or (iv) the
Shares to be exchanged under or pursuant to any state or federal statute to the
extent permitted by law. In all respects not governed by statute or applicable
law, the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation including
the power to create one or more separate business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the Trust or any
Portfolio (or Class) into beneficial interests in such separate business trust
or trusts (or series or class thereof).
Section 9.5. Filing of Copies, References, Headings. The original or a
copy of this Agreement or any amendment hereto or any supplemental agreement
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. In this Agreement or in any such amendment or supplemental
agreement, references to this Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Agreement as amended
or affected by any such supplemental agreement. All expressions like "his,"
"he," and "him," shall be deemed to include the feminine and neuter, as well as
masculine, genders. Headings are placed herein for convenience of reference only
and in case of any conflict, the text of this Agreement, rather than the
headings, shall control. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original.
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Section 9.6. Governing Law. The Trust and this Agreement, and the
rights, obligations and remedies of the Trustees and Shareholders hereunder, are
to be governed by and construed and administered according to the Delaware Act
and the other laws of the State of Delaware; provided, however, that there shall
not be applicable to the Trust, the Trustees, the Shareholders or this Trust
Agreement (a) the provisions of Section 3540 of Title 12 of the Delaware Code or
(b) any provisions of the laws (statutory or common) of the State of Delaware
(other than the Delaware Act) pertaining to trusts which relate to or regulate
(i) the filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards or responsibilities or limitations on the indemnification, acts
or powers of trustees or other Persons, which are inconsistent with the
limitations or liabilities or authorities and powers of the Trustees or officers
of the Trust set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business
trust," and without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions; provided, however, that the exercise of
any such power, privilege or action shall not otherwise violate applicable law.
Section 9.7. Amendments. Except as specifically provided in Section
6.1, the Trustees may, without any Shareholder vote, amend this Agreement by
making an amendment to this Agreement or to Schedule A, an agreement
supplemental hereto, or an amended and restated trust instrument. Any such
amendment, having been approved by a Majority Trustee Vote, shall become
effective, unless otherwise provided by such Trustees, upon being executed by a
duly authorized officer of the Trust. Any amendment submitted to Shareholders
that the Trustees determine would affect the Shareholders of fewer than all
Portfolios (or fewer than all Classes thereof) shall be authorized by a vote of
only the Shareholders of the affected Portfolio(s) (or Class(es)), and no vote
shall be required of Shareholders of any Portfolio (or Class) that is not
affected. Notwithstanding anything else herein to the contrary, any amendment to
Article VIII that would have the effect of reducing the indemnification provided
thereby to Covered Persons or to Shareholders or former Shareholders, and any
repeal or amendment of this sentence shall each require the affirmative vote of
Shareholders owning at least two-thirds of the Outstanding Shares entitled to
vote thereon. A certification signed by a duly authorized officer of the Trust
setting forth an amendment to this Agreement and reciting that it was duly
adopted by the Shareholders or by the Trustees as aforesaid, or a copy of this
Agreement, as amended, executed
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by a majority of the Trustees, or a duly authorized officer of the Trust, shall
be conclusive evidence of such amendment when lodged among the records of
the Trust.
Section 9.8. Provisions in Conflict with Law. The provisions of this
Agreement are severable, and if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with applicable law the
conflicting provision shall be deemed never to have constituted a part of this
Agreement; provided, however, that such determination shall not affect any of
the remaining provisions of this Agreement or render invalid or improper any
action taken or omitted prior to such determination. If any provision of this
Agreement shall be held invalid or enforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
Section 9.9. Shareholders' Right to Inspect Shareholder List. One or
more Persons who together and for at least six months have been Shareholders of
at least five percent (5%) of the Outstanding Shares of any Class may present to
any officer or resident agent of the Trust a written request for a list of its
Shareholders. Within twenty (20) days after such request is made, the Trust
shall prepare and have available on file at its principal office a list verified
under oath by one of its officers or its transfer agent or registrar which sets
forth the name and address of each Shareholder and the number of Shares of each
Portfolio and Class which the Shareholder holds. The rights provided for herein
shall not extend to any Person who is a beneficial owner but not also a record
owner of Shares of the Trust.
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IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this 6th day of December, 1999.
/s/ CHARLES T. BAUER
-----------------------------------
Charles T. Bauer
/s/ ROBERT H. GRAHAM
-----------------------------------
Robert H. Graham
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SCHEDULE A
AIM SUMMIT FUND
PORTFOLIOS THEREOF
PORTFOLIO
AIM Summit Fund
<PAGE> 1
EXHIBIT b(4)
BYLAWS OF AIM SUMMIT FUND,
A DELAWARE BUSINESS TRUST
Adopted effective December 6, 1999.
Capitalized terms not specifically defined herein
shall have the meanings ascribed to them in the Trust's
Agreement and Declaration of Trust (the "Agreement").
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of AIM Summit Fund
(the "Trust") shall be at the offices of The Corporation Trust Company in the
County of New Castle, State of Delaware.
Section 2. Other Offices. The Trust may also have offices at such
other places both within and without the State of Delaware as the Trustees may
from time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees of the Trust may
hold meetings, both regular and special, either within or without the State of
Delaware. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees.
Section 2. Regular Meetings. Regular meetings of the Board of Trustees
shall be held each year, at such time and place as the Board of Trustees may
determine.
Section 3. Notice of Meetings. Notice of the time, date, and place of
all meetings of the Trustees shall be given to each Trustee (i) by telephone,
telex, telegram, facsimile, electronic-mail, or other electronic mechanism sent
to his or her home or business address at least twenty-four hours in advance of
the meeting or (ii) in person at another meeting of the Trustees or (iii) by
written notice mailed or sent via overnight courier to his or her home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who signs a waiver of notice either before or after the
meeting.
Section 4. Quorum. At all meetings of the Trustees, one-third of the
Trustees then in office (but in no event less than two Trustees) shall
constitute a quorum for the transaction of business and the act of a majority
of the Trustees present at any meeting at which there is a quorum shall be the
act of the Board of Trustees, except as may be otherwise specifically
<PAGE> 2
provided by applicable law or by the Agreement or these Bylaws. If a quorum
shall not be present at any meeting of the Board of Trustees, the Trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 5. Designation, Powers, and Names of Committees.
(a) The Board of Trustees shall initially have the following
three committees: (1) an Audit Committee; (2) a Nominating and Compensation
Committee; and (3) an Investments Committee. Each such Committee shall consist
of two or more of the Trustees of the Trust and the Board may designate one or
more Trustees as alternate members of any Committee, who may replace any absent
or disqualified member at any meeting of such Committee; provided, however,
that under no circumstances shall a member of the Audit Committee or the
Nominating and Compensation Committee be an "interested person," as such term
is defined in the 1940 Act, of the Trust. The Board shall designate the powers
and duties of each such Committee and may terminate any such Committee by an
amendment to these Bylaws.
(b) The Board of Trustees may, by resolution passed by a
majority of the whole Board, designate one or more additional committees, each
committee to consist of two or more of the Trustees of the Trust. The Board may
designate one or more Trustees as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee.
Each committee, to the extent provided in the resolution, shall have and may
exercise the powers of the Board of Trustees in the management of the business
and affairs of the Trust; provided, however, that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not such members constitute a quorum, may unanimously appoint
another member of the Board of Trustees to act at the meeting in the place of
any such absent or disqualified member. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Trustees.
Section 6. Minutes of Committee. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Trustees when
required.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Trust shall be elected by the Board of Trustees as soon as practicable after
the organization of the Trust. The executive officers may include a Chairman of
the Board, and shall include a President, one or more Vice Presidents (the
number thereof to be determined by the Board of Trustees), a Secretary and a
Treasurer. The Chairman of the Board, if any, shall be selected from among the
Trustees. The Board of Trustees may also in its discretion appoint Assistant
Vice Presidents,
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Assistant Secretaries, Assistant Treasurers, and other officers, agents and
employees, who shall have such authority and perform such duties as the Board
may determine. The Board of Trustees may fill any vacancy which may occur in
any office. Any two offices, except for those of President and Vice President,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument on behalf of the Trust in more than one capacity, if such
instrument is required by law or by these Bylaws to be executed, acknowledged
or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically determined by
the Board of Trustees, the officers shall serve at the pleasure of the Board of
Trustees. If the Board of Trustees in its judgment finds that the best
interests of the Trust will be served, the Board of Trustees may remove any
officer of the Trust at any time with or without cause. The Trustees may
delegate this power to the President (without supervision by the Trustees) with
respect to any other officer. Such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer may resign from
office at any time by delivering a written resignation to the Trustees or the
President. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 3. President. The President shall be the chief executive
officer of the Trust and, subject to the Board of Trustees, shall generally
manage the business and affairs of the Trust. If there is no Chairman of the
Board, or if the Chairman of the Board has been appointed but is absent, the
President shall, if present, preside at all meetings of the Shareholders and
the Board of Trustees.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Shareholders and the Board of Trustees, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Trustees, and
shall undertake such other assignments as may be requested by the President.
Section 5. Chairman, Vice Presidents. The Chairman of the Board or one
or more Vice Presidents shall have and exercise such powers and duties of the
President in the absence or inability to act of the President, as may be
assigned to them, respectively, by the Board of Trustees or, to the extent not
so assigned, by the President. In the absence or inability to act of the
President, the powers and duties of the President not otherwise assigned by the
Board of Trustees or the President shall devolve upon the Chairman of the
Board, or in the Chairman's absence, the Vice Presidents in the order of their
election.
Section 6. Secretary. The Secretary shall (a) have custody of the seal
of the Trust; (b) attend meetings of the Shareholders, the Board of Trustees,
and any committees of Trustees and keep the minutes of such meetings of
Shareholders, the Board of Trustees and any committees thereof, and (c) issue
all notices of the Trust. The Secretary shall have charge of the Shareholder
records and such other books and papers as the Board may direct, and shall
perform such other duties as may be incidental to the office or which are
assigned by the Board of Trustees. The Secretary shall also keep or cause to be
kept a Shareholder book, which may be
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<PAGE> 4
maintained by means of computer systems, containing the names, alphabetically
arranged, of all persons who are Shareholders of the Trust, showing their
places of residence, the number and series and class of any Shares held by
them, respectively, and the dates when they became the record owners thereof.
Section 7. Treasurer. The Treasurer shall have the care and custody of
the funds and securities of the Trust and shall deposit the same in the name of
the Trust in such bank or banks or other depositories, subject to withdrawal in
such manner as these Bylaws or the Board of Trustees may determine. The
Treasurer shall, if required by the Board of Trustees, give such bond for the
faithful discharge of duties in such form as the Board of Trustees may require.
Section 8. Assistant Officers. Assistant officers, which may include
one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, shall perform such functions and have such responsibilities as the
Board of Trustees may determine.
Section 9. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "Commission") to the Trust in such sum and with such
surety or sureties as the Trustees may determine, conditioned upon the faithful
performance of his or her duties to the Trust, including responsibility for
negligence and for the accounting of any of the Trust's property, funds, or
securities that may come into his or her hands.
Section 10. Authorized Signatories. Unless a specific officer is
otherwise designated in a resolution adopted by the Board of Trustees, the
proper officers of the Trust for executing agreements, documents and
instruments other than Internal Revenue Service forms shall be the President,
any Vice President, the Secretary or any Assistant Secretary. Unless a specific
officer is otherwise designated in a resolution adopted by the Board of
Trustees, the proper officers of the Trust for executing any and all Internal
Revenue Service forms shall be the President, any Vice President, the
Secretary, any Assistant Secretary, or the Treasurer.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. Purpose. All meetings of the Shareholders for the election
of Trustees shall be held at such place as may be fixed from time to time by
the Trustees, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Trustees and stated in
the notice indicating that a meeting has been called for such purpose. Meetings
of Shareholders may be held for any purpose determined by the Trustees and may
be held at such time and place, within or without the State of Delaware as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof. At all meetings of the Shareholders, every shareholder of
record entitled to vote thereat shall be entitled to vote at such meeting
either in person or by written proxy signed by the Shareholder or by his duly
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<PAGE> 5
authorized attorney in fact. A Shareholder may duly authorize such attorney in
fact through written, electronic, telephonic, computerized, facsimile,
telecommunication, telex or oral communication or by any other form of
communication. Unless a proxy provides otherwise, such proxy is not valid more
than eleven months after its date. A proxy with respect to shares held in the
name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger.
Section 2. Nomination of Trustees. So long as the Trust has adopted
and maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a
"Rule 12b-1 Plan"), the nomination of Trustees who are not "interested
persons," as defined in the 1940 Act, of the Trust shall be made by the
Nominating and Compensation Committee. In addition, so long as the Trust
maintains a Nominating and Compensation Committee, the nomination of all other
Trustees shall also be made by the Nominating and Compensation Committee. If
the Trust no longer maintains a Rule 12b-1 Plan and no longer maintains a
Nominating and Compensation Committee, the nomination of all Trustees shall be
made by the Board of Trustees. Any Shareholder may submit names of individuals
to be considered by the Nominating and Compensation Committee or the Board of
Trustees, as applicable, provided, however, (i) that such person was a
shareholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating and Compensation Committee
or the Board of Trustees, as applicable, shall make the final determination of
persons to be nominated.
Section 3. Election of Trustees. All meetings of Shareholders for the
purpose of electing Trustees shall be held on such date and at such time as
shall be designated from time to time by the Trustees and stated in the notice
of the meeting, at which the Shareholders shall elect by a plurality vote any
number of Trustees as the notice for such meeting shall state are to be
elected, and transact such other business as may properly be brought before the
meeting in accordance with Section 1 of this Article IV.
Section 4. Notice of Meetings. Written notice of any meeting stating
the place, date, and hour of the meeting shall be given to each Shareholder
entitled to vote at such meeting not less than ten days before the date of the
meeting in accordance with Article V hereof.
Section 5. Special Meetings. Special meetings of the Shareholders, for
any purpose or purposes, unless otherwise prescribed by applicable law or by
the Agreement, may be called by any Trustee; provided, however, that the
Trustees shall promptly call a meeting of the Shareholders solely for the
purpose of removing one or more Trustees, when requested in writing to do so by
the record holders of not less than ten percent of the Outstanding Shares of
the Trust.
Section 6. Notice of Special Meeting. Written notice of a special
meeting stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is
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<PAGE> 6
called, shall be given not less than ten days before the date of the meeting,
to each Shareholder entitled to vote at such meeting.
Section 7. Conduct of Special Meeting. Business transacted at any
special meeting of Shareholders shall be limited to the purpose stated in the
notice.
Section 8. Quorum. The holders of one-third of the Outstanding Shares
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the Shareholders for the transaction of
business except as otherwise provided by applicable law or by the Agreement.
If, however, such quorum shall not be present or represented at any meeting of
the Shareholders, the vote of the holders of a majority of Shares cast shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 9. Organization of Meetings.
(a) The meetings of the Shareholders shall be presided over
by the Chairman of the Board, or if the Chairman shall not be present or if
there is no Chairman, by the President, or if the President shall not be
present, by a Vice President, or if no Vice President is present, by a chairman
appointed for such purpose by the Board of Trustees or, if not so appointed, by
a chairman appointed for such purpose by the officers and Trustees present at
the meeting. The Secretary of the Trust, if present, shall act as Secretary of
such meetings, or if the Secretary is not present, an Assistant Secretary of
the Trust shall so act, and if no Assistant Secretary is present, then a person
designated by the Secretary of the Trust shall so act, and if the Secretary has
not designated a person, then the meeting shall elect a secretary for the
meeting.
(b) The Board of Trustees of the Trust shall be entitled to make such
rules and regulations for the conduct of meetings of Shareholders as it shall
deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Trustees, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the meeting,
including, without limitation, establishing: an agenda or order of business for
the meeting; rules and procedures for maintaining order at the meeting and the
safety of those present; limitations on participation in such meeting to
shareholders of record of the Trust and their duly authorized and constituted
proxies, and such other persons as the chairman shall permit; restrictions on
entry to the meeting after the time fixed for the commencement thereof,
limitations on the time allotted to questions or comments by participants; and
regulation of the opening and closing of the polls for balloting on matters
which are to be voted on by ballot, unless and to the extent the Board of
Trustees or the chairman of the meeting determines that meetings of
Shareholders shall not be required to be held in accordance with the rules of
parliamentary procedure.
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Section 10. Voting Standard. When a quorum is present at any meeting,
the vote of the holders of a majority of the Shares cast shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of applicable law, the Agreement, these Bylaws, or applicable
contract, a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 11. Voting Procedure. Each whole Share shall be entitled to
one vote, and each fractional Share shall be entitled to a proportionate
fractional vote. On any matter submitted to a vote of the Shareholders, all
Shares shall be voted together, except when required by applicable law or when
the Trustees have determined that the matter affects the interests of one or
more Portfolios (or Classes), then only the Shareholders of such Portfolios (or
Classes) shall be entitled to vote thereon.
Section 12. Action Without Meeting. Unless otherwise provided in the
Agreement or applicable law, any action required to be taken at any meeting of
the Shareholders, or any action which may be taken at any meeting of the
Shareholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of Outstanding Shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Shares entitled to vote thereon were present and voted.
Prompt notice of the taking of any such action without a meeting by less than
unanimous written consent shall be given to those Shareholders who have not
consented in writing.
Section 13. Broker Non-Votes. At any meeting of Shareholders the Trust
will consider broker non-votes as present for purposes of determining whether a
quorum is present at the meeting. Broker non-votes will not count as votes
cast.
ARTICLE V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the provisions of
applicable law or of the Agreement or of these Bylaws, notice is required to be
given to any Trustee or Shareholder, it shall not, unless otherwise provided
herein, be construed to mean personal notice, but such notice may be given
orally in person, or by telephone (promptly confirmed in writing) or in
writing, by mail addressed to such Trustee at his or her last given address or
to such Shareholder at his address as it appears on the records of the Trust,
with postage thereon prepaid, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail. Notice to
Trustees or members of a committee may also be given by telex, telegram,
facsimile, electronic-mail or via overnight courier. If sent by telex or
facsimile, notice to a Trustee or member of a committee shall be deemed to be
given upon transmittal; if sent by telegram, notice to a Trustee or member of a
committee shall be deemed to be given when the telegram, so addressed, is
delivered to the telegraph company; if sent by electronic-mail, notice to a
Trustee or member of a committee shall be deemed to be given and
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<PAGE> 8
shall be presumed valid when the Trust's electronic-mail server reflects the
electronic-mail message as having been sent; and if sent via overnight courier,
notice to a Trustee or member of a committee shall be deemed to be given when
delivered against a receipt therefor.
Section 2. Written Waiver. Whenever any notice is required to be given
under the provisions of applicable law or of the Agreement or of these Bylaws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Issuance. The Trust may, in its sole discretion, issue a
certificate to any Shareholder, signed by, or in the name of the Trust by, the
President, certifying the number of Shares owned by him, her or it in a Class
or Portfolio of the Trust. No Shareholder shall have the right to demand or
require that a certificate be issued to him, her or it.
Section 2. Countersignature. Where a certificate is countersigned
(1) by a transfer agent other than the Trust or its employee, or (2) by a
registrar other than the Trust or its employee, the signature of the President
may be a facsimile.
Section 3. Lost Certificates. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Trust alleged to have been lost, stolen
or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Trustees may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Trust a bond in such sum as it may direct as indemnity
against any claim that may be made against the Trust with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. The Trustees shall make such rules as
they consider appropriate for the transfer of Shares and similar matters. To
the extent certificates are issued in accordance with Section 1 of this Article
VI, upon surrender to the Trust or the transfer agent of the Trust of such
certificate for Shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Trust to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 5. Fixing Record Date. In order that the Trustees may
determine the Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment
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thereof, or to express consent to action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution of allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of beneficial interests or for the purpose of any other
lawful action, the Board of Trustees may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Trustees, and which record date shall not be more than
ninety nor less than ten days before the date of such meeting, nor more than
ten days after the date upon which the resolution fixing the record date is
adopted by the Board of Trustees for action by Shareholder consent in writing
without a meeting, nor more than ninety days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of Shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Trustees may fix a new record date for the
adjourned meeting.
Section 6. Registered Shareholders. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of Shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim of interest in such Share or
Shares on the part of any other person, whether or not it shall have express or
other notice hereof.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Seal. The business seal shall have inscribed thereon the
name of the business trust, the year of its organization and the word "Business
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or otherwise reproduced. Any officer or Trustee of the
Trust shall have authority to affix the seal of the Trust to any document
requiring the same.
Section 2. Severability. The provisions of these Bylaws are severable.
If any provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
these Bylaws.
Section 3. Headings. Headings are placed in these Bylaws for
convenience of reference only and in case of any conflict, the text of these
Bylaws rather than the headings shall control.
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ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. For the purpose of this Section 1, "Trust"
includes any domestic or foreign predecessor entity of this Trust in a merger,
consolidation, or other transaction in which the predecessor's existence ceased
upon consummation of the transaction; "proceeding" means any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative; and "expenses" includes without limitation
attorney's fees and any expenses of establishing a right to indemnification
under this Section 1.
(a) The Trust shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Trust) by reason of the fact that such person
is or was a Covered Person, against expenses, judgments, fines and amounts paid
in settlements actually and reasonably incurred by such person in connection
with such proceeding, if it is determined that person acted in good faith and
reasonably believed: (a) in the case of conduct in his official capacity as a
Covered Person, that his conduct was in the Trust's best interests and (b) in
all other cases, that his conduct was at least not opposed to the Trust's best
interests and (c) in the case of a criminal proceeding, that he had no
reasonable cause to believe that his conduct was unlawful. The termination of
any proceeding by judgment, order or settlement shall not, of itself, create a
presumption that the person did not meet the requisite standard of conduct set
forth in this Section 1. The termination of any proceeding by conviction, or a
plea of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the person did not
meet the requisite standard of conduct set forth in this Section 1.
(b) The Trust shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding by or in the right
of the Trust to procure a judgment in its favor by reason of the fact that
person is or was a Covered Person, against expenses actually and reasonably
incurred by that person in connection with the defense or settlement of such
action or suit if that person acted in good faith, in a manner that person
believed to be in the best interests of the Trust and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would
use under similar circumstances.
(c) Notwithstanding any provision to the contrary contained
herein, there shall be no right to indemnification for any liability arising by
reason of willful misfeasance, bad faith, gross negligence, or the reckless
disregard of the duties involved in the conduct of the Covered Person's office
with the Trust.
Section 2. Advance Payments of Indemnifiable Expenses. To the maximum
extent permitted by law, the Trust or applicable Portfolio may advance to a
Covered Person, in connection with the preparation and presentation of a
defense to any claim, action, suit, or proceeding, expenses for which the
Covered Person would ultimately be entitled to indemnification; provided that
the Trust or applicable Portfolio has received an undertaking by
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or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or applicable Portfolio if it is ultimately determined that he is
not entitled to indemnification for such expenses, and further provided that
(i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments, or (iii) either a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust nor parties to the
matter, or independent legal counsel in a written opinion shall have
determined, based upon a review of readily available facts (as opposed to a
full trial-type inquiry) that there is reason to believe that such Covered
Person will not be disqualified from indemnification for such expenses.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These Bylaws may be altered or repealed at any
regular or special meeting of the Board of Trustees without prior notice. These
Bylaws may also be altered or repealed at any special meeting of the
Shareholders, but only if the Board of Trustees resolves to put a proposed
alteration or repealer to the vote of the Shareholders and notice of such
alteration or repealer is contained in a notice of the special meeting being
held for such purpose.
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EXHIBIT d(4)
AIM SUMMIT FUND
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 30th day of June, 2000, by and between AIM
Summit Fund, a Delaware business trust (the "Trust") and A I M Advisors, Inc., a
Delaware corporation (the "Advisor").
RECITALS
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor;
WHEREAS, as of the date of this Agreement, the shares of the Trust
represent an interest in a single portfolio of investment securities (hereafter
referred to as the "Existing Fund"); and
WHEREAS, the Board of Trustees of the Trust has the authority under its
Agreement and Declaration of Trust (the "Declaration of Trust") to classify and
reclassify its authorized and unissued shares and to set, among other things,
the preferences, conversion or other rights, voting powers, and restrictions of
the shares it has classified, thereby creating additional classes of shares
representing interests in additional portfolios of investment securities (such
portfolios, together with the Existing Fund, are hereafter collectively referred
to as the "Funds" and individually as a "Fund");
WHEREAS, the Trust and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Existing Fund and to any other
Fund shown from time to time on Schedule A hereto, as such Schedule is amended
from time to time, upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Advisory Services. The Advisor shall act as investment advisor for
the Funds and shall, in such capacity, supervise all aspects of the Funds'
operations, including the investment and reinvestment of cash, securities or
other properties comprising the Funds' assets, subject at all times to the
policies and control of the Board of Trustees. The Advisor shall give the Trust
and the Funds the benefit of its best judgment, efforts and facilities in
rendering its services as investment advisor.
2. Investment Analysis and Implementation. In carrying out its
obligations under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Funds;
1
<PAGE> 2
(b) 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 Funds, and whether concerning the individual issuers whose
securities are included in the assets of the Funds or the activities in
which such issuers engage, or with respect to securities which the
Advisor considers desirable for inclusion in the Funds' assets;
(c) determine which issuers and securities shall be
represented in the Funds' investment portfolios and regularly report
thereon to the Board of Trustees;
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly
report thereon to the Board of Trustees; and
(e) take, on behalf of the Trust and the Funds, all actions
which appear to the Trust and the Funds 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 Funds.
3. Securities Lending Duties and Fees. The Advisor agrees to provide
the following services in connection with the securities lending activities of
each Fund: (a) oversee participation in the securities lending program to ensure
compliance with all applicable regulatory and investment guidelines; (b) assist
the securities lending agent or principal (the "Agent") in determining which
specific securities are available for loan; (c) monitor the Agent to ensure that
securities loans are effected in accordance with the Advisor's instructions and
with procedures adopted by the Board of Trustees; (d) prepare appropriate
periodic reports for, and seek appropriate approvals from, the Board of Trustees
with respect to securities lending activities; (e) respond to Agent inquiries;
and (f) perform such other duties as necessary.
As compensation for such services provided by the Advisor in connection
with securities lending activities of each Fund, a lending Fund shall pay the
Advisor a fee equal to 25% of the net monthly interest or fee income retained or
paid to the Fund from such activities.
4. Delegation of Responsibilities. The Advisor is authorized to
delegate any or all of its rights, duties and obligations under this Agreement
to one or more sub-advisors, and may enter into agreements with sub-advisors,
and may replace any such sub-advisors from time to time in its discretion, in
accordance with the 1940 Act, the Advisers Act, and rules and regulations
thereunder, as such statutes, rules and regulations are amended from time to
time or are interpreted from time to time by the staff of the Securities and
Exchange Commission ("SEC"), and if applicable, exemptive orders or similar
relief granted by the SEC and upon receipt of approval of such sub-advisors by
the Board of Trustees and by shareholders (unless any such approval is not
required by such statutes, rules, regulations, interpretations, orders or
similar relief).
5. Independent Contractors. The Advisor and any sub-advisors shall for
all purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed to be an agent of the
Trust.
2
<PAGE> 3
6. Control by Board of Trustees. Any investment program undertaken by
the Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Advisor on behalf of the Funds, shall at all times be subject
to any directives of the Board of Trustees.
7. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers
Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Trust,
as the same may be amended from time to time under the Securities Act
of 1933 and the 1940 Act;
(c) the provisions of the Declaration of Trust, as the same
may be amended from time to time;
(d) the provisions of the by-laws of the Trust, as the same
may be amended from time to time; and
(e) any other applicable provisions of state, federal or
foreign law.
8. Broker-Dealer Relationships. The Advisor is responsible for
decisions to buy and sell securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates.
(a) The Advisor's primary consideration in effecting a
security transaction will be to obtain the best execution.
(b) In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and the difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Funds on a
continuing basis. Accordingly, the price to the Funds in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other
aspects of the fund execution services offered.
(c) Subject to such policies as the Board of Trustees may from
time to time determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Funds to pay a
broker or dealer that provides brokerage and research services to the
Advisor an amount of commission for effecting a fund investment
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the
Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities
with respect to a particular Fund, other Funds of the Trust, and to
other clients of the Advisor as to which the Advisor exercises
investment discretion. The Advisor is further authorized to allocate
the orders placed by it on behalf of the Funds to such brokers and
dealers who also
3
<PAGE> 4
provide research or statistical material, or other services to the
Funds, to the Advisor, or to any sub-advisor. Such allocation shall be
in such amounts and proportions as the Advisor shall determine and the
Advisor will report on said allocations regularly to the Board of
Trustees indicating the brokers to whom such allocations have been made
and the basis therefor.
(d) With respect to one or more Funds, to the extent the
Advisor does not delegate trading responsibility to one or more
sub-advisors, in making decisions regarding broker-dealer
relationships, the Advisor may take into consideration the
recommendations of any sub-advisor appointed to provide investment
research or advisory services in connection with the Funds, and may
take into consideration any research services provided to such
sub-advisor by broker-dealers.
(e) Subject to the other provisions of this Section 8, the
1940 Act, the Securities Exchange Act of 1934, and rules and
regulations thereunder, as such statutes, rules and regulations are
amended from time to time or are interpreted from time to time by the
staff of the SEC, any exemptive orders issued by the SEC, and any other
applicable provisions of law, the Advisor may select brokers or dealers
with which it or the Funds are affiliated.
9. Compensation. The compensation that each Fund shall pay the Advisor
is set forth in Appendix B attached hereto.
10. Expenses of the Funds. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Funds include but are not limited to brokerage
commissions, taxes, legal, accounting, 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
trustees and shareholder meetings, the cost of preparing and distributing
reports and notices to shareholders, the fees and other expenses incurred by the
Trust on behalf of the Funds in connection with membership in investment company
organizations and the cost of printing copies of prospectuses and statements of
additional information distributed to the Funds' shareholders.
11. Services to Other Companies or Accounts. The Trust understands that
the Advisor now acts, will continue to act and may act in the future as
investment manager or advisor to fiduciary and other managed accounts, and as
investment manager or advisor to other investment companies, including any
offshore entities, or accounts, and the Trust has no objection to the Advisor so
acting, provided that whenever the Trust and one or more other investment
companies or accounts managed or advised by the Advisor have available funds for
investment, investments suitable and appropriate for each will be allocated in
accordance with a formula believed to be equitable to each company and account.
The Trust recognizes that in some cases this procedure may adversely affect the
size of the positions obtainable and the prices realized for the Funds.
12. Non-Exclusivity. The Trust understands that the persons employed by
the Advisor to assist in the performance of the Advisor's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the right of the Advisor
or any affiliate of the Advisor to engage in and devote time and
4
<PAGE> 5
attention to other businesses or to render services of whatever kind or nature.
The Trust further understands and agrees that officers or directors of the
Advisor may serve as officers or trustees of the Trust, and that officers or
trustees of the Trust may serve as officers or directors of the Advisor to the
extent permitted by law; and that the officers and directors of the Advisor are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
13. Effective Date, Term and Approval. This Agreement shall become
effective with respect to a Fund, if approved by the shareholders of such Fund,
on the Effective Date for such Fund, as set forth in Appendix A attached hereto.
If so approved, this Agreement shall thereafter continue in force and effect
until June 30, 2001, and may be continued from year to year thereafter, provided
that the continuation of the Agreement is specifically approved at least
annually:
(a) (i) by the Board of Trustees or (ii) by the vote of "a
majority of the outstanding voting securities" of such Fund (as defined
in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the trustees who
are not parties to this Agreement or "interested persons" (as defined
in the 1940 Act) of a party to this Agreement (other than as trustees
of the Trust), by votes cast in person at a meeting specifically called
for such purpose.
14. Termination. This Agreement may be terminated as to the Trust or as
to any one or more of the Funds at any time, without the payment of any penalty,
by vote of the Board of Trustees or by vote of a majority of the outstanding
voting securities of the applicable Fund, or by the Advisor, on sixty (60) days'
written notice to the other party. The notice provided for herein may be waived
by the party entitled to receipt thereof. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
15. Amendment. No amendment of this Agreement shall be effective unless
it is in writing and signed by the party against which enforcement of the
amendment is sought.
16. Liability of Advisor and Fund. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Trust or to the
Funds or to any shareholder of the Funds for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security. Any liability of
the Advisor to one Fund shall not automatically impart liability on the part of
the Advisor to any other Fund. No Fund shall be liable for the obligations of
any other Fund.
17. Liability of Shareholders. Notice is hereby given that, as provided
by applicable law, the obligations of or arising out of this Agreement are not
binding upon any of the shareholders of the Trust individually but are binding
only upon the assets and property of the Trust and that the shareholders shall
be entitled, to the fullest extent permitted by applicable law, to the same
limitation on personal liability as shareholders of private corporations for
profit.
5
<PAGE> 6
18. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered, telecopied or mailed postage paid, to the other party
entitled to receipt thereof at such address as such party may designate for the
receipt of such notice. Until further notice to the other party, it is agreed
that the address of the Trust and that of the Advisor shall be 11 Greenway
Plaza, Suite 100, Houston, Texas 77046-1173.
19. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act or the Advisers Act shall be resolved
by reference to such term or provision of the 1940 Act or the Advisers Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the SEC issued pursuant to said Acts. In addition, where the effect of
a requirement of the 1940 Act or the Advisers Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
Subject to the foregoing, this Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Texas.
20. License Agreement. The Trust shall have the non-exclusive right to
use the name "AIM" to designate any current or future series of shares only so
long as A I M Advisors, Inc. serves as investment manager or advisor to the
Trust with respect to such series of shares.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
AIM SUMMIT FUND
(a Delaware business trust)
Attest:
By:
- ----------------------------- ----------------------------------
Assistant Secretary President
(SEAL)
Attest: A I M ADVISORS, INC.
By:
- ----------------------------- ----------------------------------
Assistant Secretary President
(SEAL)
7
<PAGE> 8
APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT
- ------------ ------------------------------------
AIM Summit Fund June 30, 2000
A-1
<PAGE> 9
APPENDIX B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered, an advisory fee for such Fund set forth
below. Such fee shall be calculated by applying the following annual rates to
the average daily net assets of such Fund for the calendar year computed in the
manner used for the determination of the net asset value of shares of such Fund.
AIM SUMMIT FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $10 million.................................................................................... 1.00%
Over $10 million up to and including $150 million.................................................... 0.75%
Over $150 million.................................................................................... 0.625%
</TABLE>
B-1
<PAGE> 1
EXHIBIT e(4)
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the ______ day of ______, 2000 by and between
AIM SUMMIT FUND, a Delaware business trust (the "Trust"), and A I M
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH
WHEREAS, the Trust is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended; and
WHEREAS, the Distributor sponsors systematic investment plans (the
"Plans") based upon shares of the beneficial interest of the Trust, and the
Distributor desires to arrange for the acquisition of Trust shares for deposit
and use under the Plans; and
WHEREAS, the Trust and the Distributor desire to enter into a new
agreement appointing the Distributor as the principal distributor of the shares
of beneficial interest of the Trust.
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:
1. The Trust appoints the Distributor as the principal distributor of
Trust shares for a term of two years commencing upon the date first above
written and continuing thereafter for consecutive periods of one year provided
the continuance of this Agreement is approved at least annually (a) by the
Trust's Board of Trustees, including a majority of the members of the Board of
Trustees who are not parties to the Agreement or interested persons of any such
party (other than as a Trust trustee), in person at a meeting called for such
purpose or (b) by the affirmative vote of the holders of either: (i) 67% or more
of the Trust shares voting (if more than 50% of the outstanding Trust shares are
voted) or (ii) more than 50% of the outstanding Trust shares. Notwithstanding
the termination of this Agreement, the Trust agrees to sell sufficient Trust
shares to the Distributor or any bank or banks acting as custodian for the Plans
to permit completion of all Plans begun prior to such termination. The
Distributor represents and agrees that it will use its best efforts to sell
Plans based upon Trust shares throughout the term of this Agreement.
2. The Trust shall use its best efforts in maintaining registration of
itself and its securities under the Investment Company Act of 1940, as amended
(the "Act"), and the Securities Act of 1933, as amended, and shall bear all
expenses in connection therewith. The Trust shall provide to the Distributor or
the bank or banks acting as custodian for the Plans sold by the Distributor a
sufficient number of copies of any and all general mailings, together with the
necessary
-1-
<PAGE> 2
envelopes, including, without limitation, proxy material, proxies, annual,
semi-annual and quarterly reports, sent from time to time to the holders of
Trust shares so as to provide a single copy, together with the necessary
envelope and postage, to each holder of a Plan. The Trust agrees to furnish all
the above-mentioned material at no cost to the Distributor. The Distributor
agrees that it will furnish the Trust for its files two copies of all material
supplied to holders of Plans by the Distributor. The Trust shall provide to the
Distributor, at printer's over-run costs, such additional copies of its
prospectus and its annual, semi-annual and other reports and communications to
shareholders as the Distributor may reasonably require for sales purposes. It is
understood that the Distributor is a wholly-owned subsidiary of A I M Advisors,
Inc., the investment adviser to the Trust ("AIM"), and that AIM is a
wholly-owned subsidiary of A I M Management Group Inc., and that the Trust's
agreement to supply information and printed material described in this Agreement
may be fulfilled by AIM.
3. The Trust shall cooperate in the qualification of Trust shares under
the laws of the various states of the United States and shall execute and
deliver such documents as may reasonably be required for such purpose, but the
Trust shall not be required to qualify as a foreign corporation in any
jurisdiction, nor effect any modification of its policies or practices without
prior approval of the Trust's officers. The officers of the Trust shall
determine whether it is desirable to qualify or continue to offer Trust shares
in any jurisdiction.
4. The Distributor agrees that all solicitations for subscriptions to
Trust shares shall be made in accordance with the Trust's Declaration of Trust
and By-laws, Registration Statement and Prospectus, and shall not at any time or
in any manner violate any provisions of the laws of the United States or of any
state or other jurisdiction in which solicitations are then being made. The
Distributor may enter into sales agreements with dealers to sell Trust shares.
5. The Distributor shall purchase from the Trust as principal, and the
Trust agrees to sell to the Distributor at the net asset value thereof, Trust
shares sufficient to meet the requirements of all such Plans as are sold,
distributed and/or issued by the Distributor. Such shares will be sold to the
Distributor at net asset value computed in the manner set forth in the Trust
prospectus in effect at the time of sale of such shares. The Distributor shall
not maintain a long or short position in Trust shares for its own account,
except as may incidentally result from cancellation or by-in of orders made by
it or its dealers for customers because of such customer's failure to pay.
6. The agreement on the part of the Trust to sell Trust shares upon
demand, at net asset value as set forth in paragraph 5 hereof, is subject to the
following limitations:
(a) that the Plans are maintained in good standing as unit
investment trusts under the Federal Securities Laws;
-2-
<PAGE> 3
(b) that the membership of the Distributor in the National
Association of Securities Dealers, Inc. and its registration
as broker-dealer under the Securities Exchange Act of 1934, as
amended, have not been cancelled, revoked or suspended; and
(c) that the Distributor is not in violation of any of the
federal or state laws and regulations relating to the
registration and sale of said Plans.
If the Distributor shall, within 30 days after a default under any of the
provisions of this paragraph, cure such default to the reasonable satisfaction
of the Trust, then the agreement of the Trust to sell at the net asset value
Trust shares in accordance with paragraph 5 hereof shall remain unimpaired,
anything in this paragraph 6 to the contrary notwithstanding.
7. The Distributor's right to purchase Trust shares at net asset value
for resale shall be exclusive, except that:
(a) the Trust may issue its shares at their net asset value to
any shareholder of the Trust purchasing such shares with
dividends or other distributions received from the Trust
pursuant to an offer made to all shareholders;
(b) the Trust may issue its shares at their net asset value in
connection with certain classes of transactions or to certain
classes of persons as set forth in the then current prospectus
of the Trust;
(c) the Distributor may, and when requested by the Trust
shall, suspend its efforts to effectuate sales of Trust shares
at any time when in the opinion of the Distributor or of the
Trust no sales should be made because of market or other
economic considerations or abnormal circumstances of any kind;
and
(d) the Trust may withdraw the offering of its shares of
beneficial interest (i) at any time with the consent of the
Distributor, or (ii) without such consent when so required by
the provisions of any statute or of any order, rule or
regulation of any governmental body having jurisdiction.
It is mutually understood and agreed that the
Distributor does not undertake to sell all or any specific
portion of the shares of beneficial interest of the Trust.
-3-
<PAGE> 4
8. The Distributor may from time to time, whenever it is in the best
interest of holders of Plans, substitute a new investment medium for the Trust
shares theretofore employed (such substitution to be made as to the Trust shares
already purchased and to be purchased, or only as to Trust shares to be
purchased), provided that no substitution shall result in a direct or indirect
payment, commission or other compensation to the Distributor or any subsidiary
or affiliate of the Distributor, and provided, further, that such substituted
shares are generally comparable in character and quality to the Trust shares
theretofore purchased under the Plans and meet with the approval of the
custodian of the Plans and are shares registered with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, so long as
that statute remains in force; and further provided, that before any
substitution may be made, the Distributor shall:
(a) Give notice of the proposed substitution to the Trust and
the custodian of the Plans and first satisfy the custodian
that arrangements have been entered into by the Distributor
which reasonably assure that the new shares will be available
for purchase by the custodian and subject to redemption on
terms generally as favorable as those applicable to the Trust
shares currently employed as the investment medium;
(b) Give written notice to each holder of a Plan of the
proposed substitution giving a reasonable description of the
new shares and notifying each holder of a Plan that unless he
surrenders his Plan to the custodian for termination within 30
days of the date of such notice, he will be conclusively
deemed to have authorized the substitution, and to have agreed
to bear his pro rata share of the actual expenses including
tax liability incurred by the custodian and the Distributor in
connection therewith;
(c) In the case of substitution of new shares for Trust shares
already purchased, arrange that the custodian will be
furnished, without payment of sales commission or fees, with
new shares having an aggregate value on the basis of their net
asset value at least equal to the aggregate value of the old
Trust shares similarly computed, or computed on the basis of
the best available bid price the custodian is able to obtain
for such old Trust shares in the event the issuer thereof does
not quote the net asset value at the time in question;
-4-
<PAGE> 5
(d) Furnish the custodian with a certificate signed by the
President or Secretary of the Distributor, showing that the
Distributor has given notice to each holder of a Plan as above
provided; and
(e) File an application with the Securities and Exchange
Commission.
9. The Trust agrees to indemnify and hold the Distributor and each
person (if any) who controls the Distributor within the meaning of Section 15 of
the Securities Act of 1933 harmless from and against any and all losses, claims,
damages and liabilities caused by or alleged to exist by reason of any untrue
statement or alleged untrue statement of a material fact contained in the
Trust's Registration Statement or Prospectus (as amended or supplemented if the
Trust shall have made any amendments or supplements thereto) or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such statement or
omission or alleged untrue statement or omission shall have been furnished by
the Trust for use in the Registration Statement or Prospectus.
The Distributor agrees that, promptly upon its receipt of notice of the
commencement of any action against the Distributor or against any person so
controlling the Distributor, in respect of which indemnity or reimbursement may
be sought from the Trust on account of its agreement in the preceding paragraph,
notice in writing will be given to the Trust of the commencement thereof.
Thereupon, the Trust shall be entitled to participate, to the extent that it
shall wish (including the selection of counsel), in the defense thereof. The
Distributor or any such controlling person shall have the right, at its or his
own expense, to employ separate counsel in any such case.
In the event that any such claim for indemnification is made by any
officer, director or person in control of the Distributor within the meaning of
Section 15 of the Securities Act of 1933 who is also an officer or director of
the Trust, the Trust will submit to a court of appropriate jurisdiction the
question of whether or not indemnification by it is against public policy as
expressed in the Securities Act of 1933, the Securities Exchange Act of 1934,
and the Act, and will be governed by the final adjudication of such question.
Notwithstanding anything to the contrary contained herein, the
foregoing indemnity does not protect or purport to protect or indemnity the
Distributor for any liability to the Trust or to holders of Trust shares to
which it would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
-5-
<PAGE> 6
10. The Distributor agrees to indemnify and hold harmless the Trust,
its officers, directors or agents to the same extent as in the foregoing
indemnity from the Trust to the Distributor, arising by reason of the
sponsorship or distribution by the Distributor of Plans based upon Trust shares,
but only with respect to any untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to the Trust
by the Distributor or by any person on behalf of or at the request of the
Distributor, excluding the Trust, expressly for use in the Registration
Statement or Prospectus. The Distributor also agrees to indemnify and hold
harmless the Trust, its officers, agents and directors from and against any and
all losses, claims damages and liabilities caused by or alleged to exist by
reason of sales activities by it or its authorized agents, in violation of the
laws of the United States or of any state or other jurisdiction in which
solicitations are made or any rule or regulation promulgated by any lawfully
constituted authority.
In case any action shall be brought against the Company, its officers,
directors or agents, in respect of which it may seek indemnity or reimbursement
from the Distributor on account of the agreement of the Distributor contained in
the preceding paragraph, the Distributor shall have the rights and duties given
to the Trust, and the Trust, its directors, officers or agents shall have the
rights and duties given to the Distributor, in the second, third and fourth
paragraphs of paragraph 9.
11. This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust, or by the
Distributor, on sixty (60) days' written notice to the other party. This
Agreement shall automatically terminate in the event of its assignment, as
defined in the Act, by the Distributor.
12. The Trust has adopted a distribution plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Plan") which authorizes the Trust
to pay to the Distributor an asset-based sales charge in an amount equal to
0.30% per annum of the average daily net assets attributable to the Shares of
the Trust. The Distributor hereby contractually agrees to waive a portion of the
amount payable under the Plan attributable to Shares held in AIM Summit
Investors Plans I so that, 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 Trust shall pay to the Distributor as a
reimbursement for all or a portion of the expenses it incurs in providing
shareholder services, or as reasonable compensation for distribution of the
Shares, an asset-based sales charge in an amount equal to 0.10% per annum of the
average daily net asset value of the Shares held through AIM Summit Investors
Plans I and 0.30% per annum of the average daily net asset value of all other
Shares (collectively, the "Distributor's 12b-1 Share"), such sales charge to be
payable pursuant to
-6-
<PAGE> 7
the Plan. The Distributor further agrees that its waiver of payments under the
Plan in respect of Shares held in AIM Summit Investors Plans I shall not be
changed or revoked without prior approval of shareholders of the Trust.
Amounts received by the Distributor may be used in part for the
implementation of shareholder service arrangements with respect to Trust Shares,
AIM Summit Investors Plans I and AIM Summit Investors Plans II. The maximum
service fee paid to any service shall be twenty-five one-hundredths of
one-percent (0.25%) per annum of the daily net assets, attributable to the Trust
Shares beneficially owned by the customers of such service providers. To the
extent that amounts paid to the Distributor pursuant to this paragraph 12 are
not used specifically to reimburse the Distributor for any such expenses, such
amounts may be treated as compensation for the Distributor's services and shall
be deemed an asset-based sales charge. 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 Trust). 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
Shares to be paid to the Distributor. The Trust shall be entitled to rely on
Distributor's books, records and calculation relating to Distributor's 12b-1
Share.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto the day and year first above written.
AIM SUMMIT FUND
ATTEST:
By:
-----------------------------------
Name: Robert H. Graham
Title: President
- -------------------------------
Name:
Title:
A I M DISTRIBUTORS, INC.
ATTEST:
By:
-----------------------------------
Name: Michael J. Cemo
Title: President
- -------------------------------
Name:
Title:
-7-
<PAGE> 1
EXHIBIT h(12)
AMENDMENT NUMBER 1 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of March 13, 2000, is made to the Transfer Agency and
Service Agreement dated April 29, 1999 (the "Agreement"), between AIM Summit
Fund, Inc. (the "Fund") and A I M Fund Services, Inc. (the "Transfer Agent")
pursuant to Article 10 of the Agreement.
WHEREAS, the Fund on behalf of Class I Shares 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.
Sections 1.01 and 2.04 of the Agreement are hereby deleted in their entirety and
replaced with the following:
"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 I and 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, AIM Summit Investors Plans I or AIM Summit
Investors Plans II, both unit investment trusts."
"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 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."
The term "Class" used in the Agreement shall mean each of the Class I and Class
II shares of the Fund.
Item 1 of Schedule A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"1. For performance by the Transfer Agent pursuant to this
Agreement, the Fund agrees on behalf of 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
<PAGE> 2
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 I Shares $15.15
Class II Shares $15.15"
</TABLE>
All other terms and provisions of the Agreement not amended herein shall remain
in full force and effect.
AIM SUMMIT FUND, INC.
By: /s/ ROBERT H. GRAHAM
----------------------------
President
ATTEST:
/s/ STEPHEN I. WINER
- --------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
----------------------------
President
ATTEST:
/s/ STEPHEN I. WINER
- --------------------------
Assistant Secretary
2
<PAGE> 1
EXHIBIT h(13)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM SUMMIT FUND
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......................................................4
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......................................................................................7
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 ________, 2000, by and
between AIM SUMMIT FUND, a Delaware business trust, having its principal office
and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the
"Fund"), and A I M Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046 (the "Transfer Agent").
WHEREAS, the Transfer Agent is registered as such with the Securities
and Exchange Commission (the "SEC"); and
WHEREAS, the Fund is authorized to issue separate series and classes,
with each such series representing interests in a separate portfolio of
securities and other assets and each such class having different distribution
arrangements; and
WHEREAS, the Fund on behalf of all its authorized and issued shares of
beneficial interest representing interests of the Fund ("Shares") desires to
appoint the Transfer Agent as its transfer agent, and agent in connection with
certain other activities, with respect to the Shares, 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 Shares, dividend
disbursing agent, and paying agent in connection with any accumulation or
similar plans provided to shareholders of the Shares (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 Shares,
AIM Summit Investors Plans I or AIM Summit Investors Plans II, each 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 Shares, and the
Transfer Agent:
(i) receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation thereof to the Custodian of the
Fund authorized pursuant to the Agreement and Declaration of Trust 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 Shares 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 Shares 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
2
<PAGE> 5
incurred by the Transfer Agent at the request or with the consent of the Fund,
will be reimbursed by the Fund on behalf of the applicable Shares.
2.03 The Fund agrees on behalf of the Shares 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 dated June 1, 1983 and the
Custodian Agreement dated May 1, 1996 for the creation of AIM Summit Investors
Plans I 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
Trustees.
2.05 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 AIM
Summit Investors Plans II dated April 29, 1999 and as more specifically set
forth on Schedule C hereto which may be amended from time to time by the Fund
with the approval of its Board of Trustees.
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 Certificate of
Incorporation 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.
3
<PAGE> 6
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of the state of Delaware.
4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust and Bylaws to enter into and perform this Agreement.
4.03 All proceedings required by said Agreement and Declaration of
Trust 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 the Shares 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 Shares, 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 Shares; provided such actions are taken in good faith and without
negligence or willful misconduct; or
4
<PAGE> 7
(e) the offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state.
5.02 The Transfer Agent shall indemnify and hold the Fund harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Transfer Agent as result of the Transfer Agent's lack
of good faith, negligence or willful misconduct.
5.03 At any time the Transfer Agent may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Transfer
Agent under this Agreement, and the Transfer Agent and its agents or
subcontractors shall not be liable to and shall be indemnified by the Fund on
behalf of the Shares 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 Shares promptly
furnish to the Transfer Agent the following:
5
<PAGE> 8
(a) a certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Transfer Agent and the execution and
delivery of this Agreement; and
(b) a copy of the Agreement and Declaration of Trust and Bylaws of the
Fund and all amendments thereto.
6.02 The Transfer Agent shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Transfer Agent agrees that all such records
prepared or maintained by the Transfer Agent relating to the services to be
performed by the Transfer Agent hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.03 The Transfer Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the 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 Shares. Additionally, the Transfer
Agent reserves the right to charge for any other reasonable expenses associated
with such termination and/or a charge equivalent to the average of three (3)
months' fees.
ARTICLE 8
ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of
shares in addition to the Shares 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.
6
<PAGE> 9
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.
ARTICLE 10
AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
ARTICLE 11
TEXAS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Texas.
ARTICLE 12
MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
ARTICLE 13
COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
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
By:
--------------------------------------
Senior Vice President
ATTEST:
- ----------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By:
--------------------------------------
President
ATTEST:
- ----------------------------------
Assistant Secretary
<PAGE> 11
SCHEDULE A
1. For performance by the Transfer Agent pursuant to this Agreement, the Fund
agrees on behalf of the Shares 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>
AIM Summit Fund $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 PFPC 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.
<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.
<PAGE> 13
SCHEDULE B
Fees payable to State Street Bank and Trust Company
The following fees and charges will be deducted from the Fund, AIM
Summit Investors Plans I ("Plans I") or from Planholder accounts and paid to
State Street Bank and Trust Company ("State Street") in accordance with the
terms of the applicable Prospectus.
General
Account Service fees are based on an annual per shareholder
account charge for account maintenance plus transaction and out-of-pocket
expenses. There is a minimum charge of $1,500 per month. Fees are billable on a
monthly basis at the rate of 1/12 of the annual fee. A charge is made for an
account in the month that an account opens or closes.
<TABLE>
<S> <C>
Annual Account Service Fees
Open Account - active $16.00/year(1)
Activity Based Fees
Telephone Calls $ 2.50/each(1)
Correspondence $ 3.00/each(1)
New Account and Setup Kits $ 2.50/each(1)
Planholder Fees
IRA Annual Maintenance $10.00/year
Bounced Checks $ 5.00/each
Transcripts $ 5.00/each year researched
Terminations $ 2.50/each
Inactive Accounts(2) $12.00/year
Out-of-Pocket Expenses(1)
</TABLE>
Out-of-Pocket expenses include but are not limited to:
Confirmation statements, checks, postage, forms, telephone, microfilm,
microfiche, year-end forms and expenses incurred at the specific direction of
A I M Distributors, Inc. ("AIM Distributors")
- ------------------------------
(1) These are fees that the Fund has voluntarily elected to pay to State
Street on behalf of Plans I.
(2) A Plan that is not current and to which no investments have been made
for a 12-month period but does not include completed plans. This fee
will be paid annually to AIM Distributors or its designee.
<PAGE> 14
SCHEDULE C
Fees payable to State Street Bank and Trust Company
The following fees and charges will be deducted from the Fund, AIM
Summit Investors Plans II ("Plans II") or from Planholder accounts and paid to
State Street Bank and Trust Company ("State Street") in accordance with the
terms of the applicable Prospectus.
General
Account Service fees are based on an annual per shareholder
account charge for account maintenance plus transaction and out-of-pocket
expenses. There is a minimum charge of $1,500 per month. Fees are billable on a
monthly basis at the rate of 1/12 of the annual fee. A charge is made for an
account in the month that an account opens or closes.
<TABLE>
<S> <C>
Annual Account Service Fees
Open Account - active $19.00/year(1)
Activity Based Fees
Telephone Calls $ 2.50/each(1)
Correspondence $ 3.00/each(1)
New Account and Setup Kits $ 2.50/each(1)
Planholder Fees
IRA Annual Maintenance(3) $10.00/year
Bounced Checks $ 5.00/each
Transcripts $ 5.00/each year researched
Terminations $ 2.50/each
Inactive Accounts(2) $12.00/year
Out-of-Pocket Expenses(1)
</TABLE>
Out-of-Pocket expenses include but are not limited to:
Confirmation statements, checks, postage, forms, telephone, microfilm,
microfiche, year-end forms and expenses incurred at the specific direction of
A I M Distributors, Inc. ("AIM Distributors")
- ------------------------------
(1) These are fees that the Fund has voluntarily elected to pay to State
Street on behalf of Plans II.
(2) A Plan that is not current and to which no investments have been made
for a 12-month period but does not include completed plans. This fee
will be paid annually to AIM Distributors or its designee.
(3) State Street will receive $6.00 and AIM Distributors will receive
$4.00.
<PAGE> 1
EXHIBIT i(2)
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
April 26, 2000
AIM Summit Fund
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: AIM Summit Fund
Registration Statement on Form N-1A
Gentlemen:
We have acted as counsel to AIM Summit Fund, a business trust
organized under the laws of the State of Delaware (the "Trust") and registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, series management investment company.
The Board of Trustees of the Trust has deemed it advisable for
the Trust to acquire all of the assets and assume all of the liabilities of AIM
Summit Fund, Inc., a Maryland corporation (the "Company"), pursuant to an
Agreement and Plan of Reorganization (the "Reorganization").
Upon consummation of the Reorganization, the Trust will be the
successor issuer to the Company. Pursuant to Rule 414 under the Securities Act
of 1933, as amended (the "1933 Act"), the Trust is adopting the Registration
Statement of the Company as its own for all purposes of the 1933 Act and the
Securities Exchange Act of 1934, as amended, and is filing Post-Effective
Amendment No. 25 under the 1933 Act and Amendment No. 26 under the 1940 Act to
the Company's currently effective Registration Statement on Form N-1A
(collectively, the "Registration Statement"). The Registration Statement
registers an indefinite number of shares of beneficial interest, par value $0.01
per share (the "Shares"), representing interests in the Trust.
In connection with our giving this opinion, we have examined
copies of the Trust's Certificate of Trust, Agreement and Declaration of Trust
(the "Trust Agreement") and resolutions of the Board of Trustees adopted
December 8, 1999, and originals or copies, certified or otherwise identified to
our satisfaction, of such other documents, records and other instruments as we
have deemed necessary or advisable for purposes of this opinion. We have also
examined the prospectus for the Trust, 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 Trust.
Based on the foregoing and provided that the shareholders of
the Company approve the Reorganization and that the Registration Statement
becomes effective, we are of the opinion that the Shares to be issued to
shareholders of the Company in the Reorganization, upon receipt of the
consideration set forth in the Agreement and Plan of Reorganization, will be
legally issued, fully paid and nonassessable. In addition, based on the
foregoing, we are of
<PAGE> 2
AIM Summit Fund
April 26, 2000
Page 2
the opinion that the Shares to be offered for sale from time to time pursuant to
the Prospectus are duly authorized and, when sold, issued and paid for as
described in the Prospectus, will be legally issued, fully paid and
nonassessable.
We express no opinion concerning the laws of any jurisdiction
other than the federal law of the United States of America and the Delaware
Business Trust Act.
Both the Delaware Business Trust Act and the Trust Agreement
provide that shareholders of the Trust shall be entitled to the same limitation
on personal liability as is extended under the Delaware General Corporation Law
to stockholders of private corporations for profit. There is a remote
possibility, however, that, under certain circumstances, shareholders of a
Delaware business trust may be held personally liable for that trust's
obligations to the extent that the courts of another state which does not
recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. The Trust Agreement also provides for
indemnification out of property of the Trust for all loss and expense of any
shareholder held personally liable for the obligations of the Trust. Therefore,
the risk of any shareholder incurring financial loss beyond his investment due
to shareholder liability is limited to circumstances in which the Trust is
unable to meet its obligations and the express limitation of shareholder
liabilities is determined not to be effective.
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
Statement of Additional Information for the Trust, which is included in the
Registration Statement.
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
<PAGE> 1
EXHIBIT j(1)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors and Shareholders
AIM Summit Fund:
We consent to the use of our report on AIM Summit Fund dated December 3, 1999
included herein and the reference to our firm under the headings "Financial
Highlights" in the Prospectuses and "Reports" in the Statement of Additional
Information.
/s/ KPMG LLP
KPMG LLP
Houston, Texas
April 27, 2000
<PAGE> 1
EXHIBIT m(2)
DISTRIBUTION PLAN
OF
AIM SUMMIT FUND
SECTION 1. AIM Summit Fund (the "Fund") may act as a distributor of its 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 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, AIM Summit Investors
Plans I and AIM Summit Investors Plans II (the "Plans"). The maximum
service fee paid to any service provider shall be twenty-five
one-hundredths of one percent (0.25%) per annum of the average daily net
assets, 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") or other entities as
may be selected from time to time by Distributors for the provision of
personal shareholder services in connection with the Shares or Plans to
the Dealers' clients and customers
1
<PAGE> 2
("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 holders
of the Shares pursuant to Rule 12b-1 under the 1940 Act shall become
effective as to the Shares upon the approval of such amendment by a
"majority of the outstanding voting securities" (as defined in the 1940
Act) of the Fund, provided that the Board of Directors of the Fund has
approved such amendment in accordance with the provisions of 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 the Shares shall become effective as to the Shares until
such amendment has been approved by the shareholders of the Shares 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, 2001, 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.
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:
2
<PAGE> 3
(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
Attest: By:
----------------------------- ----------------------------
Assistant Secretary President
Effective as of ___________________, 2000.
3
<PAGE> 4
EXHIBIT A
SHAREHOLDER SERVICE AGREEMENT
OF AIM SUMMIT FUND,
AIM SUMMIT INVESTORS PLANS I 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 (the "Fund"), under a Distribution Plan of the Fund
(the "Distribution Plan") adopted pursuant to said Rule. This Agreement, being
made between A I M Distributors, Inc. ("AIM 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 Distribution Plan adopted by the Fund. The Distribution 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 Distribution Plan or related agreements (the "Disinterested Directors"), by
votes cast in person at a meeting called for the purpose of voting on the
Distribution 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 Distribution 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 AIM Summit Investors Plans I ("Plans I") and AIM
Summit Investors Plans II ("Plans II")) own shares of the Fund,
including but not limited to, distributing sales literature, answering
routine customer inquiries regarding the Fund, Plans I or Plans II,
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 shares of the Fund will be calculated at
the end of each calendar quarter at the annual rate of [specify rate
not to exceed .25%] as applied to the average daily net asset value of
shares for each account for the quarter for which your firm is the
dealer of record at the close of business on the last business day of
the applicable quarter.
3. The total of the fees shall be paid to you within 45 days after the
close of each calendar quarter.
4. We reserve the right to withhold payment with respect to the 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.
<PAGE> 5
EXHIBIT A
5. This Agreement does not require any broker-dealer to provide transfer
agency and recordkeeping related services as nominee for its customers.
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
Distribution 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 AIM
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 Shares, on sixty (60) days' written notice. It will be
terminated by any act which terminates either the Dealer Agreement
regarding Plans I or Plans II between your firm and us or the
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 Distribution 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 Distribution 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 AIM 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 Plans I and 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.
2
<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(2)
A I M MANAGEMENT GROUP INC.
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED FEBRUARY 24, 2000)
WHEREAS, the members of the AIM Management Group are A I M Management Group
Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly
owned and indirect subsidiaries (individually and collectively referred to as
"AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to
AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as principal
underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the
transfer agent, dividend disbursing agent and shareholder processing agent for
AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect to
each portfolio under management and the interests of the client accounts and of
the shareholders of AIM's investment company clients must take precedence over
the personal interests of the employees of AIM, thus requiring a rigid adherence
to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no intentional
or inadvertent action is taken by an employee of AIM which is, or appears to be,
adverse to the interests of AIM or any of its client accounts, including the
defining of standards of behavior for such employees, while at the same time
avoiding unnecessary interference with the privacy or personal freedom of such
employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the
Code") on May 1, 1981, and adopted amendments thereto in January 1989, October
1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and
now deem it advisable to update and revise said Code in light of new investment
company products developed by AIM and changing circumstances in the securities
markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors
hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1
under the Investment Company Act of 1940 ("1940 Act"), with the intention that
certain provisions of the Code shall become applicable to the officers,
directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers,
directors and employees (as hereinafter designated) of AIM. Unless
otherwise indicated, the term "employee" as used herein means: (i) all
officers, directors and employees of AIM Advisors and its wholly owned
and indirect subsidiaries and (ii) officers, directors and employees
of AIM Management who have an active part in the management, portfolio
selection, underwriting or shareholder
-1-
<PAGE> 2
functions with respect to AIM's investment company clients or provide
one or more similar services for AIM's non-investment company clients.
The term "employee" does not include directors of AIM Management who
do not maintain an office at the home office of AIM Management and who
do not regularly obtain information concerning the investment
recommendations or decisions made by AIM on behalf of client accounts
("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless such
person or entity has adopted a code of ethics in compliance with
Section 17(j) of the 1940 Act; or, in the event that such person or
entity is domiciled outside of the United States, has adopted employee
standards of conduct that provide equivalent protections to AIM's
client accounts. In performing sub-advisory services, such person or
entity will be subject to the direction and supervision of AIM, and
subject to the policies and control of the Boards of
Directors/Trustees of the respective AIM investment company client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a Code of
Ethics Committee ("Committee"). The Committee shall have the
responsibility for interpreting the provisions of the Code, for
adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of the
provisions of the Code, or of any such related Procedures has
occurred. The Committee will appoint an officer to monitor personal
investment activity by "Covered Persons" (as defined in the Procedures
adopted hereunder), both before and after any trade occurs and to
prepare periodic and annual reports, conduct education seminars and
obtain employee certifications as deemed appropriate. In the event of
a finding that a violation has occurred requiring significant remedial
action, the Committee shall take such action as it deems appropriate
on the imposition of sanctions or initiation of disgorgement
proceedings. The Committee shall also make recommendations and submit
reports to the Boards of Directors/Trustees of AIM's investment
company clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor, and a
statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant to
Section 204A under the 1940 Act; and the procedures designed to
prevent the misuse of material non-public information by any
person associated with such sub-advisor; and
o such other information as may reasonably be necessary for AIM to
report to the Boards of Directors/Trustees of its investment
company client account(s) as to such sub-advisor's adherence to
the Boards' policies and controls referenced in Section I.B.
above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out the
intent of the Code. Among other things, the Procedures require certain new
employees to complete an Asset Disclosure Form, a Brokerage Accounts
Listing Form and such other forms as deemed appropriate by the Committee.
Such Procedures are hereby incorporated into the Code and are made a part
of the Code. Therefore, a violation of the Procedures shall be deemed a
violation of the Code itself.
-2-
<PAGE> 3
IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall comply
strictly with all applicable federal and state laws and all rules and
regulations of any governmental agency or self-regulatory organization
governing his/her actions as an employee.
B. Each employee shall comply with all laws and regulations, and AIM's
prohibition against insider trading. Trading on or communicating
material non-public information, or "inside information", of any sort,
whether obtained in the course of research activities, through a
client relationship or otherwise, is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines
established by AIM to ensure compliance with applicable federal and
state laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly participate
in, assist, or condone any act in violation of any statute or
regulation governing AIM or any act that would violate any provision
of this Code, or of the Procedures adopted hereunder.
D. Each employee shall have and maintain knowledge of and shall comply
with the provisions of this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her control, with
a view to preventing any violation by such persons of applicable
statutes or regulations, AIM's corporate procedures, or the provisions
of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of applicable
statutes, regulations or provisions of the Code or of any Procedures
adopted hereunder has occurred shall immediately report such evidence
to the Chief Compliance Officer of AIM. Such action by the employee
will remain confidential, unless the employee waives confidentiality
or federal or state authorities compel disclosure. Failure to report
such evidence may result in disciplinary proceedings and may include
sanctions as set forth in Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the
highest ethical and fiduciary standards. They shall avoid any action,
whether for personal profit or otherwise, that results in an actual or
potential conflict of interest with AIM or its client accounts, or
which may be otherwise detrimental to the interests of the members of
AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary
obligation to clients of AIM, and shall not deprive any client account
of an investment opportunity in order to personally benefit from that
opportunity.
C. Without the knowledge and approval of the Chief Executive Officer of
AIM Management, employees shall not engage in a business activity or
practice for compensation in competition with the members of AIM. Each
employee, who is deemed to be a "Covered Person" as defined in the
Procedures adopted hereunder, shall obtain the written approval of AIM
- -----------------
(1) Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as AIM or
its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and AIM, its
officers, directors and employees, on the other hand, such conflict may result
from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate" of
such individual, as such term is defined in the 1940 Act. Such conflict may also
arise from the purchase or sale for a client account of securities in which an
officer, director or employee of AIM has an economic interest. Moreover, such
conflict may arise in connection with vendor relationships in which such
employee has any direct or indirect financial interest, family interests or
other personal interest. To the extent of conflicts of interest between AIM and
a vendor, such conflicts must be resolved in a manner that is not
disadvantageous to AIM. In any such case, potential or actual conflicts must be
disclosed to AIM and the first preference and priority must be to avoid such
conflicts of interest wherever possible and, where they unavoidably occur, to
resolve them in a manner that is not disadvantageous to a client.
-3-
<PAGE> 4
Management's Chief Executive Officer to participate on a board of
directors/trustees of any of the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend to
raise proceeds in a public securities offering.
In the relatively small number of instances in which board approval is
authorized, investment personnel serving as directors shall be
isolated from those making investment decisions through AIM's "Chinese
Wall" Procedures.
D. Each employee, in making an investment recommendation or taking any
investment action, shall exercise diligence and thoroughness, and
shall have a reasonable and adequate basis for any such recommendation
or action.
E. Each employee shall not attempt to improperly influence for such
person's personal benefit any investment strategy to be followed or
investment action to be taken by the members of AIM for its client
accounts.
F. Each employee shall not improperly use for such person's personal
benefit any knowledge, whether obtained through such person's
relationship with AIM or otherwise, of any investment recommendation
made or to be made, or of any investment action taken or to be taken
by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating to a
client account's portfolio or transactions or to the investment
recommendations of AIM, nor shall any employee disclose any non-public
information relating to the business or operations of the members of
AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker/dealer or other vendor who transacts business with AIM or its
client accounts, any gifts, gratuities or other things of more than de
minimis value or significance that their acceptance might reasonably
be expected to interfere with or influence the exercise of independent
and objective judgment in carrying out such person's duties or
otherwise gives the appearance of a possible impropriety. For this
purpose, gifts, gratuities and other things of value shall not include
unsolicited entertainment so long as such unsolicited entertainment is
not so frequent or extensive as to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of AIM
shall not acquire securities for an account for which he/she has a
direct or indirect beneficial interest in an initial public offering
("IPO") or on behalf of any person, entity or organization that is not
an AIM client. All other employees shall not acquire securities for an
account for which he/she has a direct or indirect beneficial interest
offered in an IPO or on behalf of any person, entity or organization
that is not an AIM client account except in those circumstances where
different amounts of such offerings are specified for different
investor types (e.g., private investors and institutional investors)
and such transaction has been pre-cleared by the Compliance Office.
J. All personal securities transactions by employees must be conducted
consistent with this Code and the Procedures adopted hereunder, and in
such a manner as to avoid any actual or potential conflicts of
interest or any abuse of such employee's position of trust and
responsibility. Unless an exemption is available, employees who are
deemed to be "Covered Persons" as defined in
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the Procedures adopted hereunder, shall pre-clear all personal
securities transactions in securities in accordance with the
Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, (or registered representative and/or
principal of AIM), shall refrain from engaging in personal securities
transactions in connection with a security that is not registered
under Section 12 of the Securities Act of 1933 (i.e., a private
placement security) unless such transaction has been pre-approved by
the Chief Compliance Officer or the Director of Investments (or their
designees).
L. Employees, who are deemed to be "Covered Persons" as defined in the
Procedures adopted hereunder, may not engage in a transaction in
connection with the purchase or sale of a security within seven
calendar days before and after an AIM investment company client trades
in that same (or equivalent) security unless the de minimis exemption
is available.
M. Each employee, who is deemed to be a "Covered Person" as defined in
the Procedures adopted hereunder, may not purchase and voluntarily
sell, or sell and voluntarily purchase the same (or equivalent)
securities of the same issuer within 60 calendar days unless such
employee complies with the disgorgement procedures adopted by the Code
of Ethics Committee. Subject to certain limited exceptions set forth
in the related Procedures, any transaction under this provision may
result in disgorgement proceedings for any profits received in
connection with such transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures adopted
hereunder may be subject to sanctions, which may include, among other
things, restrictions on such person's personal securities transactions; a
letter of admonition, education or formal censure; fines, suspension,
re-assignment, demotion or termination of employment; or other significant
remedial action. Employees may also be subject to disgorgement proceedings
for transactions in securities that are inconsistent with Sections V.L. and
V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common sense)
and good business judgment also apply. Every person subject to this Code
should read and understand these documents thoroughly. They present
important rules of conduct and operating controls for all employees.
Employees are also expected to present questions to the attention of their
supervisors and to the Chief Compliance Officer (or designee) and to report
suspected violations as specified in these documents.
For the Boards of Directors:
The AIM Management Group
by: /s/ CHARLES T. BAUER
------------------------------------
Charles T. Bauer
February 24, 2000
------------------------------------
Date
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EXHIBIT o(4)
CODE OF ETHICS
OF
AIM SUMMIT FUND
WHEREAS, AIM Summit Fund (the "Company") is a registered investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Rule 17j-1 under the 1940 Act requires the Company to adopt a
Code of Ethics ("the Code"); and
NOW, THEREFORE, the Company hereby adopts the following Code,
effective as of December 8, 1999.
I. DEFINITIONS
For the purpose of the Code the following terms shall have the meanings
set forth below:
A. "ACCESS PERSON" means any director, trustee, officer, or advisory
person of the Company; provided, however, that any person who is an
access person of any investment advisor of, or principal underwriter
for, any registered investment company and who is required by Rule
17j-1 of the 1940 Act to report his or her securities transactions
to such investment advisor or principal underwriter, shall not be
deemed an access person of the Company.
B. "ADVISORY PERSON" means
1. any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship with
the Company, its investment advisor or administrator, as
defined in Section I.D. hereof), who, in connection with his
or her regular functions or duties, makes, participates in, or
obtains information (other than publicly available
information) regarding the purchase or sale of a security by
the Company, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
2. any natural person directly or indirectly owning, controlling,
or holding with power to vote, 25% or more of the outstanding
voting securities of any of the Company, its investment
advisor or administrator, who obtains information (other than
publicly available information) concerning recommendations
made by the Company, its investment advisor or administrator
with regard to the purchase or sale of a security.
C. "AFFILIATED PERSONS" or "AFFILIATES" means
1. any employee or access person of the Company, and any member
of the immediate family (defined as spouse, child, mother,
father, brother, sister, in-law or any other relative) of any
such person who lives in the same household as such person or
who is financially dependent upon such person;
2. any account for which any of the persons described in Section
I.C.1. hereof is a custodian, trustee or otherwise acting in a
fiduciary capacity, or with respect to which any such person
either has the authority to make investment decisions or from
time to time give investment advice; and
3. any partnership, corporation, joint venture, trust or other
entity in which any employee of the Company or access person
of the Company directly or indirectly, in the aggregate, has a
10% or more beneficial interest or for which any such person
is a general partner or an executive officer.
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D. "CONTROL" means the power to exercise a controlling influence over
the management or policies of a corporation. Any person who owns
beneficially, either directly or through one or more controlled
corporations, more than 25% of the voting securities of a
corporation shall be presumed to control such corporation.
E. "SECURITY" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral-trust certificate,
pre-organization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas,
or other mineral rights, or, in general, any interest or instrument
commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt of,
guarantee of, or warrant or right to subscribe to or purchase, any
of the foregoing; provided, however, that "security" shall not mean
securities issued or guaranteed by the Government of the United
States, its agencies or instrumentalities, bankers' acceptances,
bank certificates of deposit, commercial paper and shares of
registered open-end investment companies.
F. "PURCHASE OR SALE OF A SECURITY" includes the writing of an option
to purchase or sell a security.
G. "SECURITY HELD OR TO BE ACQUIRED" by the Company means any security
that, within the most recent fifteen (15) days:
1. is or has been held by the Company, or
2. is being or has been considered by the Company for purchase by
the Company.
H. "BENEFICIAL OWNERSHIP OF A SECURITY" by any person includes
securities held by:
1. a spouse, minor children or relatives who share the same home
with such person;
2. an estate for such person's benefit;
3. a trust, of which
a. such person is a trustee or such person or members of
such person's immediate family have a vested interest in
the income or corpus of the trust, or
b. such person owns a vested beneficial interest, or
c. such person is the settlor and such person has the power
to revoke the trust without the consent of all the
beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury shares of
the corporation) of which such person is an officer, director
or 10% stockholder;
6. any other person if, by reason of contract, understanding,
relationship, agreement or other arrangement, such person
obtains therefrom benefits substantially equivalent to those
of ownership; or
7. such person's spouse or minor children or any other person,
if, even though such person does not obtain therefrom the
above-mentioned benefits of ownership, such person can vest or
re-vest title in himself at once or at some future time.
A beneficial owner of a security also includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power
and/or investment power with respect to such security. Voting power
includes the power to vote, or to direct the voting of such
security, and investment power includes the power to
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dispose, or to direct the disposition of such security. A person is
the beneficial owner of a security if he has the right to acquire
beneficial ownership of such security at any time within sixty (60)
days.
II. IDENTIFICATION OF ACCESS PERSONS
A. The Company will maintain a list of all access persons and will
notify each access person in writing that such person is an access
person. Once a person has been so identified, he/she shall continue
to be an access person until otherwise notified in writing by the
Company; PROVIDED, HOWEVER, if such person is an access person
solely because he/she is a director/trustee of the Company, such
person shall cease to be an access person at the time such person
ceases to be a director/trustee.
B. Each access person will be given a copy of the Code at the time such
person becomes an access person.
III. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each access person shall comply strictly with all applicable federal
and state laws and all rules and regulations of any governmental
agency or self-regulatory organization governing his or her
activities.
B. Each access person shall comply strictly with procedures established
by the Company to ensure compliance with applicable federal and
state laws and regulations of governmental agencies and
self-regulatory organizations.
C. Access persons shall not knowingly participate in, assist, or
condone any acts in violation of any statute or regulation governing
securities matters, nor any act that would violate any provision of
this Code or any rules adopted thereunder.
IV. CONFIDENTIALITY OF TRANSACTIONS
A. Information relating to the Company's portfolio and research and
studies activities is confidential until publicly available.
Whenever statistical information or research is supplied to or
requested by the Company, such information must not be disclosed to
any persons other than as duly authorized by the President or the
Board of Directors/Trustees of the Company. If the Company is
considering a particular purchase or sale of a security, this must
not be disclosed except to such duly authorized persons.
B. If any access person should obtain information concerning the
Company's portfolio (including the consideration by the Company of
acquiring or recommending any security for the Company's portfolio),
whether in the course of such person's duties or otherwise, such
person shall respect the confidential nature of this information and
shall not divulge it to anyone unless it is properly part of such
person's services to the Company to do so or such person is
specifically authorized to do so by the President of the Company.
V. ETHICAL STANDARDS
A. Access persons shall conduct themselves in a manner consistent with
the highest ethical standards. They shall avoid any action, whether
for personal profit or otherwise, that results in an actual or
potential conflict of interest, or the appearance of a conflict of
interest, with the Company or which may be otherwise detrimental to
the interests of the Company.
B. Conflicts of interest generally result from a situation in which an
individual has personal interests in a matter that is or may be
competitive with his responsibilities to another person or entity
(such as the Company) or where an individual has or may have
competing obligations or responsibilities to two or more persons or
entities. In the case of the relationship between the
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Company on the one hand, and its employees and access persons and
their respective affiliates on the other hand, such conflicts may
result from the purchase or sale of securities for the account of
the Company and for the personal account of the individual involved
or the account of any affiliate of such person. Such conflict may
also arise from the purchase or sale for the account of the Company
of securities in which an access person or employee of the Company
(or an affiliate of such person) has an interest. In any such case,
potential or actual conflicts must be disclosed to the Company, and
the first preference and priority must be to avoid such conflicts of
interest wherever possible and, where they unavoidably occur, to
resolve them in a manner not disadvantageous to the Company.
VI. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
A. No access person shall recommend to, or cause or attempt to cause,
the Company to acquire, dispose of, or hold any security (including,
any option, warrant or other right or interest relating to such
security) which such access person or an affiliate of such access
person has direct or indirect beneficial ownership, unless the
access person shall first disclose to the Board of
Directors/Trustees all facts reasonably necessary to identify the
nature of the ownership of such access person or his or her
affiliate in such security.
B. No access person or affiliate of such access person shall engage in
a purchase or sale of a security (including, any option, warrant or
other right or interest relating to such security), other than on
behalf of the Company, with respect to any security, which, to the
actual knowledge of such access person at the time of such purchase
or sale, is (i) being considered for purchase or sale by the
Company; or (ii) being purchased or sold by the Company.
C. The prohibitions of Section VI.B. above shall not apply to:
1. Purchases or sales effected in any account over which the
access person has no direct or indirect influence or control.
2. Purchases or sales which are non-volitional on the part of
either the access person or the Company.
3. Purchases that are part of an automatic dividend reinvestment
plan.
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired.
5. Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be very
unlikely to affect trading in or the market value of the
security, or because they clearly are not related economically
to the securities to be purchased, sold or held by the
Company.
D. If, in compliance with the limitations and procedures set forth in
this Section VI, any access person or an affiliate of such person
shall engage in a purchase or sale of a security held or to be
acquired by the Company, first preference and priority must be given
to any transactions that involve the Company, and the Company must
have the benefit of the best price obtainable on acquisition and the
best price obtainable on disposition of such securities.
E. If, as a result of fiduciary obligations to other persons or
entities, an access person believes that such person or an affiliate
of such person is unable to comply with certain provisions of the
Code, such access person shall so advise the Board of
Directors/Trustees in writing, setting forth with reasonable
specificity the nature of such fiduciary obligations and the reasons
why such access person believes such person is unable to comply with
any such provisions. The Board of Directors/Trustees may, in its
discretion, exempt such access person or an affiliate of
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such person from any such provisions, if the Board of Directors/
Trustees shall determine that the services of such access person are
valuable to the Company and the failure to grant such exemption is
likely to cause such access person to be unable to render services
to the Company. Any access person granted an exemption (including,
an exception for an affiliate of such person) pursuant to this
Section VI.E. shall, within three business days after engaging in a
purchase or sale of a security held or to be acquired by a client,
furnish the Board of Directors/Trustees with a written report
concerning such transaction, setting forth the information specified
in Section VII.B. hereof.
VII. REPORTING PROCEDURES
A. Except as provided by Sections VII.C. and VII.D. hereof, every
access person shall report to the Board of Directors/Trustees the
information described in Section VII.B. hereof with respect to
transactions in any security in which such access person has, or by
reason of such transaction acquires, any direct or indirect
beneficial ownership in the security (whether or not such security
is a security held or to be acquired by a client); provided,
however, that any such report may contain a statement that the
report shall not be construed as an admission by the person making
such report that he has any direct or indirect beneficial ownership
in the security to which the report relates.
B. Every report required to be made pursuant to Section VII.A. hereof
shall be made not later than ten days after the end of the calendar
quarter in which the transaction to which the report relates was
effected and shall contain the following information:
1. The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
2. The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or through whom
the transaction was effected.
C. Notwithstanding the provisions of Section VII.A. and VII.B. hereof,
no person shall be required to make a report with respect to
transactions effected for any account over which such person does
not have any direct or indirect influence or control.
D. Notwithstanding the provisions of Section VII.A. and VII.B. hereof,
an access person who is not an "interested person" of the Company
within the meaning of Section 2(a)(19) of the 1940 Act, and who
would be required to make a report solely by reason of being a
director/trustee of the Company, need only report a transaction in a
security if such director/trustee, at the time of the transaction,
knew or, in the ordinary course of fulfilling his official duties as
a director/trustee of the Company, should have known, that, during
the 15-day period immediately preceding or after the date of the
transaction by the director/trustee, such security is or was
purchased or sold, or considered by the Company or its investment
advisor for purchase or sale by the Company.
E. Every access person who beneficially owns, directly or indirectly,
1/2% or more of the stock of any company the securities of which are
eligible for purchase by the Company shall report such holdings to
the Company.
VIII. REVIEW PROCEDURES
A. The reports submitted by access persons pursuant to Section VII.B.
hereof shall be reviewed at least quarterly by the Board of
Directors/Trustees or such other persons or committees as shall
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be designated by the Board of Directors/Trustees, in order to
monitor compliance with this Code.
B. If it is determined by the Board of Directors/Trustees that a
violation of this Code has occurred and that the person violating
this Code has purchased or sold a security at a more advantageous
price than that obtained by the Company, such person shall be
required to offer to sell to or purchase from the Company, as the
case may be, such security at the more advantageous price. If this
cannot be consummated, then the Board of Directors/Trustees shall
take such other course of action as it may deem appropriate. With
respect to any violation of this Code, the Board of
Directors/Trustees may take any preventive, remedial or other action
that it may deem appropriate. In determining whether or not there
has been, or may be, a conflict of interest between the Company and
any person subject to this Code, the Board of Directors/Trustees
shall consider all of the relevant facts and circumstances.
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